Helen Gillmor, United States District Judge.
Plaintiff Masahiro Wada claims that in 2009 he rented a storage unit at a Honolulu storage facility owned by Defendant Aloha King, LLC. Plaintiff Masahiro Wada alleges that his fifteen year-old
Plaintiffs assert that Defendant TNT Self Storage Management, Inc. managed the storage facility for Defendant Aloha King, LLC, and contracted with Defendant Total Storage Solutions for the facility's personnel and staffing matters.
Plaintiffs assert that Defendant Total Storage Solutions contracted for Defendant Abso to conduct a background check on Dale McShane, but Defendant Abso did not disclose that McShane had a criminal record and was a registered sex offender.
On July 21, 2015, the Plaintiffs filed a First Amended Complaint (ECF No. 73), naming the following Defendants:
There are three separate Crossclaims filed against Cross-Defendants Abso/SterlingBackcheck.
Cross-Claimant TSS Staffing Agent filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck with the following causes of action:
(Cross-Claimant TSS Staffing Agent's Crossclaim, ECF No. 87).
Cross-Claimant TNT Management filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck for contribution and indemnification. (Defendant TNT Management's Crossclaim, ECF No. 89-1).
Cross-Claimant Aloha King has also filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck for contribution and indemnification. (Defendant Aloha King's Crossclaim, ECF No. 109-1).
Defendants/Cross-Defendants Abso/SterlingBackcheck have filed the following four Motions before the Court:
Defendants Abso/SterlingBackcheck have filed a Motion to Dismiss the First
Defendants Abso/SterlingBackcheck argue that, even if the claims are not preempted, Plaintiffs' claims are barred by the applicable statutes of limitations and Plaintiffs have not otherwise stated a claim upon which relief may be granted.
Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss the Plaintiffs' First Amended Complaint (ECF No. 99) is
Cross-Defendants Abso/SterlingBackcheck assert in their Motion that Cross-Claimant TSS Staffing Agent's claims for breach of contract, negligence, indemnification, and contribution are preempted by the Fair Credit Reporting Act. Cross-Defendants Abso/SterlingBackcheck assert that the allegations in TSS Staffing Agent's Crossclaim do not state a claim pursuant to the Fair Credit Reporting Act.
Cross-Defendants Abso/SterlingBackcheck argue that, even if the claims are not preempted, TSS Staffing Agent has not provided sufficient allegations to state a claim upon which relief can be granted. Cross-Defendants Abso/SterlingBackcheck also assert that TSS Staffing Agent's claims are barred by the applicable statutes of limitations.
Cross-Defendants Abso/SterlingBackcheck also argue that TSS Staffing Agent's tort claims are barred by the economic loss doctrine.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss the Crossclaims filed by Cross-Claimant TSS Staffing Agent (ECF No. 100) is
Cross-Defendants Abso/SterlingBackcheck filed a Motion to Dismiss TNT Management's Crossclaim for indemnification and contribution. Cross-Defendants argue that TNT Management's Crossclaim does not contain sufficient facts to state a claim. They also argue that TNT Management's claims are barred by the economic loss rule.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss the Crossclaims filed by Cross-Claimants TNT Management (ECF No. 101) is
Cross-Defendants Abso/SterlingBackcheck filed a Motion to Dismiss Aloha King's Crossclaim for indemnification and contribution. Cross-Defendants argue there are insufficient allegations in the Crossclaim to state a claim for either indemnification or contribution.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss Crossclaim filed by Aloha King (ECF No. 120) is
On June 17, 2014, Plaintiffs Maho and Masahiro Wada filed a Complaint against Defendants Aloha King, LLC (
On September 17, 2014, Plaintiffs filed a Notice of Dismissal Without Prejudice as to Defendant Aloha-Island King, LLC. (ECF No. 16).
On March 17, 2015, Defendant TNT Management filed a Motion for Leave to File a Third-Party Complaint. (ECF No. 49).
On May 12, 2015, the Magistrate Judge issued an Order Granting Defendant TNT Management's Motion for Leave to File Third-Party Complaint. (ECF No. 55).
On May 26, 2015, TNT Management, as a Third-Party Plaintiff, filed a Third-Party Complaint against Defendants Abso/SterlingBackcheck (
On July 6, 2015, the Magistrate Judge approved a Stipulation among Plaintiffs and Defendants to permit Plaintiffs to file an Amended Complaint. (ECF No. 62).
On July 21, 2015, Plaintiffs filed a FIRST AMENDED COMPLAINT, adding Abso/SterlingBackcheck as Defendants. (ECF No. 73).
On August 7, 2015, Cross-Claimant TSS Staffing Agent filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck. (ECF No. 87).
On August 10, 2015, Cross-Claimant TNT Management filed a Crossclaim against Cross-Defendants Aloha King and Abso/SterlingBackcheck. (ECF No. 89).
On September 4, 2015, Third-Party Plaintiff TNT Management filed a Notice of Dismissal Without Prejudice of its Third-Party Complaint against Third-Party Defendants Abso/SterlingBackcheck. (ECF No. 98).
On September 8, 2015, Defendants Abso/SterlingBackcheck filed a Motion to Dismiss Plaintiffs' First Amended Complaint. (ECF No. 99).
On the same date, Abso/SterlingBackcheck, as Cross-Defendants, filed a Motion to Dismiss Cross-Claimant TSS Staffing Agent's Crossclaims Filed August 7, 2015. (ECF No. 100).
They also filed Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss Cross-Claimant TNT Management's Crossclaims Filed August 10, 2015. (ECF No. 101).
On September 16, 2015, Cross-Claimant Aloha King filed Crossclaims against Defendants Abso/SterlingBackcheck, Cross-Defendant TNT Management, and Cross-Defendant TSS Staffing Agent. (ECF No. 109).
On September 23, 2015, Plaintiffs filed their Memorandum in Opposition to Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss their First Amended Complaint. (ECF No. 112).
On the same date, Cross-Claimant TNT Management filed its Memorandum in Opposition to Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss its Crossclaim. (ECF No. 113).
Also on September 23, 2015, Cross-Claimant TSS Staffing Agent filed its Memorandum in Opposition to Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss its Crossclaim. (ECF No. 114).
On October 7, 2015, Cross-Defendants Abso/SterlingBackcheck filed their Reply in Support of their Motion to Dismiss Plaintiffs' First Amended Complaint.
On the same date, Cross-Defendants Abso/SterlingBackcheck filed a Motion to Dismiss Cross-Claimant Aloha King's Crossclaim. (ECF No. 120).
On October 15, 2015, Defendants/Cross-Defendants Abso/SterlingBackcheck sent a letter requesting that the hearing on their four Motions set for November 16, 2015, be continued. (ECF No. 124).
On October 16, 2015, the Court granted the request and set the hearing for November 20, 2015. (ECF No. 125).
On October 27, 2015, Cross-Claimant Aloha King filed an Ex Parte Motion for Extension of Time to File its Memorandum in Opposition to Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss its Crossclaim. (ECF No. 126).
On October 28, 2015, Cross-Defendants Abso/SterlingBackcheck filed a Statement of Position Regarding Aloha King's Ex Parte Motion. (ECF No. 127).
On the same date, the Court granted Cross-Claimant Aloha King's Motion for Extension of Time and provided Cross-Defendants Abso/SterlingBackcheck with additional time to file their Reply. (ECF No. 128).
On October 30, 2015, Cross-Claimant Aloha King filed its Memorandum in Opposition to Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss its Crossclaim. (ECF No. 129).
On November 12, 2015, Cross-Defendants Abso/SterlingBackcheck filed their Reply Memorandum in Support of their Motion to Dismiss Cross-Claimant Aloha King's Crossclaim. (ECF No. 132).
On November 20, 2015, the Court held a hearing on Defendants/Cross-Defendants Abso/STERLINGBACKCHECK'S four Motions to Dismiss (ECF Nos. 99, 100, 101, and 120).
The central claim in the First Amended Complaint involves allegations that in 2009, Plaintiff Masahiro Wada's fifteen year-old daughter, Plaintiff Maho Wada, was sexually assaulted by Dale McShane, the manager of a storage facility located in Honolulu.
Plaintiffs' First Amended Complaint asserts negligence claims against the numerous entities that owned, managed, and contracted with the storage facility, claiming that they knew or should have known about Dale McShane's prior criminal history and registration as a sex offender.
The First Amended Complaint states that on January 14, 1985, McShane was convicted of attempted rape in the third degree and burglary in the first degree. (First Amended Complaint at ¶ 12, ECF No. 73).
Plaintiffs assert McShane is and has been a registered sex offender. (Id. at ¶ 22).
The storage facility at issue, Aloha Island Self Storage, is owned by Defendant
In February 2006, Defendant Aloha King contracted with Defendant TNT Self Storage Management, Inc. (
Defendant TNT Management contracted with Defendant Total Storage Solutions (
In June 2008, Defendant TSS Staffing Agent entered into a contract with Defendant Abso (
In November 2008, TNT Management hired Dale McShane as manager for the storage facility. (
Defendant SterlingBackcheck acquired Abso in 2010 and is a successor to Defendant Abso's liabilities. (
In May 2009, Plaintiff Masahiro Wada rented a storage unit at the storage facility. (First Amended Complaint at ¶¶ 7, 16, ECF No. 73). Plaintiff Masahiro Wada frequented the storage facility and respected and trusted the storage facility's manager, Dale McShane. (Id. at ¶ 17). Plaintiff Masahiro Wada brought his fifteen year-old daughter, Plaintiff Maho Wada, to the storage facility in August 2009, and when he was out of sight, Plaintiff Maho Wada was kissed by McShane. (
On September 11, 2009, McShane drove Plaintiff Maho Wada from the storage facility to her home. (
Plaintiffs' First Amended Complaint names the following Defendants:
(First Amended Complaint, ECF No. 73).
Plaintiffs' First Amended Complaint (ECF No. 73) contains the following causes of action against each of the Defendants:
(First Amended Complaint at pp. 9-17, ECF No. 73).
Plaintiffs' counsel agreed at the hearing to dismiss
There are three Crossclaims filed against Cross-Defendants Abso/SterlingBackcheck.
TSS Staffing Agent, as a co-Defendant, has filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck. (TSS Staffing Agent's Crossclaim, ECF No. 87).
Cross-Claimant TSS Staffing Agent asserts in its Crossclaim that Plaintiffs Masahiro and Maho Wada filed a police report on September 19, 2009, alleging improper conduct by Dale McShane. (
Cross-Claimant TSS Staffing Agent asserts claims for breach of contract, negligence, and indemnification and contribution against Cross-Defendants Abso/SterlingBackcheck for failing to properly perform the background check on McShane. (
Cross-Claimant TNT Management has filed a Crossclaim in which it seeks indemnification and contribution from Cross-Defendants Abso/SterlingBackcheck as a result of Abso's failure to accurately perform the background check. (TNT Management's Crossclaim at pp. 3-6, ECF No. 89-1).
Cross-Claimant Aloha King also alleges claims for indemnification and contribution against Cross-Defendants Abso/SterlingBackcheck for Abso's failure to conduct a proper background check for Dale McShane. (Aloha King's Crossclaim at ¶¶ 1-3, 7, ECF No. 109-1).
Defendants/Cross-Defendants Abso/SterlingBackcheck have filed four motions. Defendants/Cross-Defendants seek to dismiss Plaintiffs' First Amended Complaint and the three Crossclaims filed by Cross-Claimants TSS Staffing Agent, TNT Management, and Aloha King.
Defendants/Cross-Defendants Abso/SterlingBackcheck argue that the negligence claims in the First Amended Complaint and TSS Staffing Agent's
Defendants/Cross-Defendants Abso/SterlingBackcheck also seek to dismiss the First Amended Complaint and all three Crossclaims for failure to state a claim upon which relief can be granted.
A Court must dismiss a complaint as a matter of law pursuant to Federal Rule of Civil Procedure 12(b)(6) where it fails "to state a claim upon which relief can be granted." Rule (8)(a)(2) of the Federal Rules of Civil Procedure requires "a short and plain statement of the claim showing that the pleader is entitled to relief." When considering a Rule 12(b)(6) motion to dismiss, the Court must presume all allegations of material fact to be true and draw all reasonable inferences in favor of the non-moving party.
In
Most recently, in
The complaint "must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively" and "must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation."
Defendants/Cross-Defendants Abso/SterlingBackcheck contend that the negligence claims in Plaintiffs' First Amended Complaint and the Crossclaim filed by Cross-Claimant TSS Staffing Agent are preempted by Section 1681h(e) of The Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681h(e).
Section 1681h(e) of the Fair Credit Reporting Act states:
15 U.S.C. § 1681h(e).
Section 1681h(e) preempts state law claims for negligence to the extent such claims are based on disclosure of certain types of information in an individual's consumer report furnished by a consumer reporting agency.
A "consumer reporting agency" is defined under the Fair Credit Reporting Act as:
15 U.S.C. § 1681a(f).
A consumer reporting agency prepares a "consumer report" for a "consumer." The term "consumer report" as used in the Fair Credit Reporting Act has a broad definition. The Act defines "consumer report" as:
15 U.S.C. § 1681a(d)(1) (emphasis added).
The majority of cases that arise under the Fair Credit Reporting Act involve a specific type of consumer report, namely a credit report.
Employee background checks are another main type of "consumer report" under the Fair Credit Reporting Act. A background check constitutes a "consumer report" for purposes of the Fair Credit Reporting Act when it is performed for the purpose of evaluating a "consumer" for employment, promotion, reassignment or retention as an employee. 15 U.S.C. § 1681a(h);
The Fair Credit Reporting Act defines a "consumer" as "an individual." 15 U.S.C. § 1681a(c). The "consumer" in a Fair Credit Reporting Act claim is the individual for whom a consumer report has been sought.
The "consumer" is not the employer who requested a consumer report in order to evaluate the prospective employee's background for employment purposes. 15 U.S.C. § 1681a(c) (defining "consumer" as an "individual");
Defendants/Cross-Claimants Abso/SterlingBackcheck assert that the state law negligence claims filed by Plaintiffs Masahiro and Maho Wada and Cross-Claimant TSS Staffing Agent are preempted pursuant to 15 U.S.C. § 1681h(e) of the federal Fair Credit Reporting Act.
Section 1681h(e) preempts negligence causes of action brought by a "consumer" against a "consumer reporting agency" for inaccurate information in his "consumer report."
Here, Defendant Abso is the "consumer reporting agency" who prepared a "consumer report" when it conducted a background check on Dale McShane. 15 U.S.C. § 1681a(f); 15 U.S.C. § 1681a(d)(1); 15 U.S.C. § 1681a(h).
The "consumer" at issue is Dale McShane. McShane is the individual for whom an evaluation was made into his character, general reputation, or personal characteristics in establishing the "consumer's" eligibility for employment. 15 U.S.C. § 1681a(d)(1);
McShane has not filed any claims and is not a party to these proceedings.
Plaintiffs Masahiro Wada and Maho Wada are not "consumers" for purposes of the preemption provision found in Section 1681h(e) of the Fair Credit Reporting Act. 15 U.S.C. § 1681h(e). Section 1681a(d)(1) explicitly provides that a consumer report is conducted for purposes of evaluating the "consumer's" eligibility for credit, insurance, or employment.
Defendant Abso never prepared a "consumer report" that evaluated Plaintiffs. Plaintiffs Masahiro and Maho Wada's claims that Defendant Abso was negligent in performing its background check of Dale McShane are not subject to preemption pursuant to 15 U.S.C. § 1681h(e).
The negligence claims of Cross-Claimant TSS Staffing Agent are also not
The definition of a "consumer" in the Fair Credit Report Act was intended to limit the Act's preemption provisions to claims filed by individuals who were the subject of a consumer report.
Business entities, such as Cross-Claimant TSS Staffing Agent, are not consumers who have had a consumer report furnished on their behalf under the Act. The Federal Credit Reporting Act is clear that a "consumer report" is conducted for an individual and evaluates the individual's personal characteristics. 15 U.S.C. § 1681a(d)(1)(A)-(B).
Nothing in the Fair Credit Reporting Act indicates that a "consumer" is a business entity. Plaintiffs have not pointed to any cases that have found a business entity to be a "consumer" pursuant to the Fair Credit Reporting Act.
The state law claims in Plaintiffs' First Amended Complaint and Cross-Claimant TSS Staffing Agent's Crossclaim are not preempted by Section 15 U.S.C. § 1681h(e) of the Fair Credit Reporting Act.
In the First Amended Complaint, Plaintiffs assert a number of state law negligence causes of action against Defendants Abso, and against Defendant SterlingBackcheck based on its acquisition of Defendant Abso. Under Hawaii law, a successful negligence claim must satisfy the following four elements:
A prerequisite to any negligence action is the existence of a duty owed by the defendant to the plaintiff.
Hawaii state law imposes a duty to control the conduct of another in order to protect a third party when a special relationship exists.
Hawaii law follows the Restatement (Second) of Torts §§ 315, 319, which provide:
Here, the First Amended Complaint contains numerous allegations that Defendant Abso owed Plaintiffs a duty of care because it knew or should have known that Dale McShane was likely to cause harm to patrons of the storage facility based on his criminal history and registration as a sex offender. (First Amended Complaint at ¶¶ 22, 26, 28-29, 35, 38, 45, ECF No. 73).
Plaintiffs' First Amended Complaint asserts "[g]iven Defendants' actual or constructive knowledge of McShane's status as a convicted felon and registered sex offender and/or Defendants' actual or constructive knowledge that McShane had a sexual and or otherwise inappropriate interest in children visiting the Storage Facility, Defendants had a duty to warn Masahiro and other parents not to let their children be alone with McShane." (
A special relationship exists between Defendant Abso and Dale McShane as they agreed to assess his criminal background in order to evaluate any threat he may pose to patrons of the storage facility. There are allegations that Defendant Abso knew or should have known that Dale McShane posed a risk to the patrons of the storage facility based on his felony conviction and registered sex offender status.
Defendant Abso had a responsibility to exercise reasonable care in performing its background check services based on the special relationship found in Restatement (Second) of Torts §§ 315, 319.
Once the existence of a special relationship is established, the determination of whether there is a duty turns upon whether the actions of the third party are reasonably foreseeable.
Evidence of prior criminal acts by the third party is probative of the foreseeability of harm, but such proof is not a prerequisite to a finding of foreseeability.
Here, the totality of the circumstances supports finding that Defendant Abso owed a duty of care to Plaintiffs. Storage facilities are accessible by patrons at nearly any time during the day or night and they contain small and confined spaces. It is reasonably foreseeable that a registered sex offender working as a manager at a storage facility could foreseeably pose a threat to any patron, regardless of age.
There are specific allegations that Defendant Abso knew or should have known that Dale McShane had previously committed criminal acts and that his behavior
The Hawaii Supreme Court has found that the duty provided by the special relationship in Restatement (Second) of Torts § 319 is not extended to the general public when the police department releases a criminal from custody because there is not sufficient foreseeability to the potential victim.
Unlike in
Other jurisdictions have found a duty of care based on similar allegations. In
State courts have also found a duty of care pursuant to Restatement (Second) of Torts § 319 when there are allegations that an employer or its agent knew of the threat a person it controlled posed to its patrons.
A duty of care may also be found in Haw. Rev. Stat. § 657-1.8. Haw. Rev. Stat. § 657-1.8 provides a basis for a cause of action against a legal entity for sexual abuse of a minor that occurred under its control.
Haw. Rev. Stat. § 657-1.8(b)(2) provides that a plaintiff may recover for damages against a legal entity when the abuser and the victim were engaged in an activity over which the legal entity had a degree of responsibility or control.
Plaintiffs have sufficiently alleged a duty of care. Plaintiffs claim Defendant Abso had a responsibility to the patrons of the storage facility to conduct accurate background checks for the employees of the storage facility. Plaintiffs have alleged that potential harm to the patrons of the storage facility was reasonably foreseeable as Defendant Abso, and Defendant SterlingBackcheck as its successor, knew or should have known that Dale McShane posed a threat to patrons of the storage facility.
The elements of breach of duty and causation are questions of fact.
The First Amended Complaint alleges that Defendants Abso/SterlingBackcheck breached the duties of care owed to Plaintiffs because they "knew or should have known that McShane was a convicted felon and a registered sex offender prior to the above-referenced incidents when McShane kissed and touched Maho." (First Amended Complaint at ¶¶ 22, ECF No. 73).
Plaintiffs allege the duties of care were breached when Defendant Abso failed to identify McShane as a convicted felon and registered sex offender in the background check it conducted. (
Defendants Abso/SterlingBackcheck claim they could not have breached any duty because they were prevented from disclosing McShane's 1985 criminal conviction pursuant to Haw. Rev. Stat. § 378-2.5(c).
Haw. Rev. Stat. § 378-2.5 provides that an employer may inquire about and consider an individual's criminal conviction record for a period that does not exceed the most recent ten years when making employment decisions. Haw. Rev. Stat. §§ 378-2.5(a), (c).
Defendants Abso/SterlingBackcheck have not pointed to any provision in Haw. Rev. Stat. § 378-2.5 that prohibits the disclosure of a person's requirement to register as a sex offender. To the contrary, Haw. Rev. Stat. § 846E-1 et seq. requires public disclosure of information about covered sex offenders, such as Dale McShane. Haw. Rev. Stat. §§ 846E-1, 2(a), 3(e)-(g).
There are sufficient facts as pled in the First Amended Complaint that Defendants Abso/SterlingBackcheck breached their duty of care and caused harm to Plaintiffs.
Plaintiffs allege that Defendants Abso/SterlingBackcheck knew that McShane was a registered sex offender and that he posed a threat to patrons of the storage facility but failed to control Dale McShane or otherwise protect potential victims such as Plaintiffs.
There are sufficient facts for a trier of fact to find that the potential harm to patrons of the storage facility was reasonably foreseeable.
The First Amended Complaint contains sufficient facts that Plaintiffs Masahiro and Maho Wada were injured as a result of Defendants Abso/STERLINGBACKCHECK'S negligence. (First Amended Complaint at ¶¶ 39, 43, 47, 53, 62-63, 65, ECF No. 73).
Defendants Abso/SterlingBackcheck assert that Plaintiffs' claims are barred pursuant to the statute of limitations for tort claims found in Haw. Rev. Stat. § 657-7.
Haw. Rev. Stat. § 657-7 provides, in relevant part, that "[a]ctions for the recovery of compensation for damage or injury to persons or property shall be instituted
Pursuant to Haw. Rev. Stat. § 657-7, a tort claim accrues when the plaintiff discovers, or through the use of reasonable diligence should have discovered, the negligent act, the damage, and the causal connection between the two.
Plaintiffs have not provided sufficient facts to demonstrate when they discovered the negligent act, the damage, and the causal connection between the two.
Plaintiffs are given leave to amend the First Amended Complaint to include sufficient facts to establish that their causes of action in
Plaintiffs' counsel agreed at the hearing to dismiss
Defendants Abso and STERLINGBACKCHECK'S Motion to Dismiss the First Amended Complaint Filed on July 21, 2015 (ECF No. 99) is
Crossclaims are affirmative claims for relief filed by one party against a coparty.
Pursuant to Federal Rule of Civil Procedure 13(g), a pleading may state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action. The crossclaim may include a claim that the coparty is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant. Fed. R. Civ. P. 13(g).
In considering whether to dismiss a crossclaim, the Court must accept the allegations of the crossclaim as true, construe the pleadings in the light most favorable to the pleading party, and resolve all doubts in the pleader's favor.
Cross-Claimant TSS Staffing Agent filed a Crossclaim against Cross-Defendants Abso/SterlingBackcheck with the following causes of action:
Cross-Claimant TSS Staffing Agent has filed a breach of contract claim against Cross-Defendant Abso.
The Court takes notice that there was a contract entered into between Cross-Claimant TSS Staffing Agent and Abso asserts that the "Agreement shall be governed by and construed in accordance with the laws of the State of California." (
A breach of contract claim under California law requires the plaintiff to provide sufficient allegations that a contract existed between the parties, that the plaintiff performed under the contract, and that the defendant failed to perform an obligation under the contract, which caused damage to the plaintiff.
Cross-Claimant TSS Staffing Agent's Crossclaim alleges that in June 2008 it entered into a contract with Defendant Abso to provide employment and background screening services. (Cross-Claimant TSS Staffing Agent's Crossclaim at ¶ 3, ECF No. 87).
Cross-Claimant TSS Staffing Agent states that in November 2008, it hired Dale McShane and requested a background report from Cross-Defendant Abso pursuant to their June 2008 contract. (
Cross-Claimant TSS Staffing Agent alleges that "Defendant ABSO breached the contract with [Cross-Claimant TSS Staffing Agent] in failing to provide a complete and accurate background check on Dale McShane." (
Cross-Defendant Abso asserts that Cross-Claimant TSS Staffing Agent's breach of contract claim is barred by the applicable statute of limitations.
Crossclaims for affirmative relief are subject to the operation of applicable statutes of limitations. 3
California has a four-year statute of limitations for breach of written contract claims. Cal. Civ. Proc. Code § 337.
Here, Cross-Claimant TSS Staffing Agent asserts that it entered into a contract with Cross-Defendant Abso in June 2008 and received background reports from Defendant Abso on February 5, 2009 and September 23, 2009. (Cross-Claimant TSS Staffing Agent's Crossclaims at ¶¶ 3, 4, 6, ECF No. 87). Cross-Claimant TSS Staffing Agent did not file its breach of contract claim until August 7, 2015, more than four years after it alleges Defendant Abso failed to provide accurate background reports for Dale McShane.
Under California law, an important exception to the general rule of accrual to begin the statute of limitations period is the "discovery rule," which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action.
Cross-Claimant TSS Staffing Agent has not provided sufficient facts in its Crossclaim to show the time and manner of discovery of the alleged breach of contract and/or has not explained its inability to have made earlier discovery despite reasonable diligence.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss (ECF No. 100) as to Count I for breach of contract in Cross-Claimant TSS Staffing Agent's Crossclaim is
Cross-Claimant TSS Staffing Agent has filed a Crossclaim for negligence against Cross-Defendant Abso.
To state a negligence claim under Hawaii law, the pleading must contain sufficient allegations to state a duty of care, a breach of the duty, causation, and injury.
Cross-Claimant TSS Staffing Agent has not provided sufficient facts to establish a duty of care necessary for a negligence cause of action.
Cross-Claimant TSS Staffing Agent's Crossclaim asserts that "Defendant ABSO owed a duty of care to advise it of any limitations in its ability to research and investigate background checks. Defendant ABSO owed a duty of care in its investigation and preparation of the background check report requested and eventually provided to [Cross-Claimant TSS Staffing Agent] on Dale McShane." (Cross-Claimant TSS Staffing Agent's Crossclaim at ¶ 13, ECF No. 87).
Cross-Claimant TSS Staffing Agent has not provided sufficient facts to establish a duty of care owed by Defendant Abso that could be recognized outside of the terms of their contractual relationship.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss (ECF
Indemnification can be imposed when "two persons are liable in tort to a third person for the same harm and one of them discharges the liability of both." Restatement (Second) of Torts § 886B(1). Under those circumstances, the party is entitled to indemnity from the other if the other would be unjustly enriched at his expense by the discharge of the liability.
Contribution is found pursuant to Hawaii statutory law when there is liability among joint tortfeasors. Haw. Rev. Stat. § 663-12; Restatement (Second) of Torts § 886A(1).
Cross-Claimant TSS Staffing Agent has sufficiently alleged indemnification and contribution claims as joint tortfeasors against Cross-Defendants Abso/SterlingBackcheck. (TSS Staffing Agent's Crossclaim at ¶¶ 18-22, ECF No. 87).
Fed. R. Civ. P. 13(g) provides that a crossclaim can be brought if the party against whom it is asserted "is or
Contrary to Cross-Defendants Abso/STERLINGBACKCHECK'S arguments in their Motion to Dismiss, the crossclaim provision in Federal Rule of Civil Procedure 13(g) does not require that the indemnification or contribution claims be mature at the time of pleading. 6
The Tenth Circuit Court of Appeals explained in
A crossclaim can be contingent upon the ultimate adjudication of the crossclaimant's liability to plaintiff.
Cross-Claimant TSS Staffing Agent has stated claims for indemnification and contribution based on its allegations that it may be found liable for injuries to Plaintiffs and that Cross-Defendants Abso/SterlingBackcheck are responsible for the injuries. (Cross-Claimant TSS Staffing Agent's Crossclaims at ¶¶ 18-19, 21-22, ECF No. 87).
Cross-Defendants Abso/SterlingBackcheck assert that the indemnification and contribution claims contained in the Cross-Claims filed by Cross-Claimant TSS Staffing
Under Hawaii law, the so-called "economic loss rule" applies to bar recovery in product liability cases for pure economic loss in actions stemming from injury only to the product itself.
The Hawaii Supreme Court has recognized exceptions to the economic loss rule and found that it does not apply when a defective product causes personal injury or damage to "other property."
A court evaluating the applicability of the economic loss rule must analyze the object of the bargain between the parties in order to determine what constitutes "the product" and what constitutes "other property."
Here, Cross-Defendants Abso/SterlingBackcheck have not established that the rule barring tort claims for purely economic losses applies. Cross-Claimant TSS Staffing Agent's Crossclaim is predicated on the original personal injury claims asserted by Plaintiffs, and Plaintiffs' claims are not exclusively for economic loss.
Cross-Claimant TSS Staffing Agent's indemnification and contribution claims are seeking damages as joint tortfeasors and these claims directly relate to Plaintiffs' personal injuries. Such injuries are not subject to the economic loss rule.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss (ECF No. 100) as to Cross-Claimant TSS Staffing Agent's Crossclaim for indemnification and contribution is
Cross-Defendants Abso/SterlingBackcheck filed a Motion to Dismiss TNT Management's Crossclaim for indemnification and contribution.
Cross-Claimant TNT Management has stated sufficient allegations to state contribution and indemnification claims.
Cross-Claimant TNT Management's Crossclaim is not barred by the economic loss rule.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motions to Dismiss the Crossclaim filed by Cross-Claimants TNT Management (ECF No. 101) is
Cross-Defendants Abso/SterlingBackcheck filed a Motion to Dismiss Aloha King's Crossclaim for indemnification and contribution. Cross-Defendants argue that Aloha King's Crossclaim does not contain sufficient facts to state a claim.
Cross-Claimant Aloha King has stated sufficient allegations to state contribution and indemnification claims.
Cross-Defendants Abso/STERLINGBACKCHECK'S Motion to Dismiss the Crossclaim filed by Cross-Claimant Aloha King (ECF No. 120) is
IT IS SO ORDERED.
