DAVID ALAN EZRA, District Judge.
Pursuant to Local Rule 7.2(d), the Court finds this matter suitable for disposition without a hearing. After reviewing Defendants' motions and the supporting and opposing memoranda, the Court: GRANTS IN PART AND DENIES IN PART Defendants Robert Emmett Hamilton, Susan Weinert Hamilton, and Hula Brothers, Inc.'s Motion for Summary Judgment as to Plaintiff Shikwan Sung's Remaining Claims (Doc. # 59); GRANTS Defendants Robert Emmett Hamilton and Susan Weinert Hamilton's Motion for Partial Summary Judgment as to Counterclaim (Doc. # 61); and GRANTS Defendants Big Island Land Co., Ltd., and Gregory Gadd's Motion for Summary Judgment (Doc. # 83).
Many of the facts of this case have been described in a previous order by this Court. (See "Order," Doc. # 54.) Accordingly,
Defendants Robert Emmett Hamilton and Susan Weinert Hamilton (the "Hamiltons") are trustees under The Hamilton Joint Revocable Trust dated March 7, 1991 ("Hamilton Trust"). (Order at 2.) As of February 2008, the Hamiltons as trustees of the Hamilton Trust (the "Trustees") owned about 31.174 acres of land identified as Lot 33-B-2 of Land Court Application 1053 (amended), Keaau, District of Puna, Hawai`i, (TMK [3] 1-6-003:104) and an appurtenant 7,500 square foot warehouse and fruit orchard (together, the "Property"). (Id. at 2-3.) Defendant Hula Brothers, Inc. ("Hula Brothers"), is a fruit packing business on the Property owned and operated by the Hamiltons.
The Hamiltons negotiated with Shikwan Sung ("Plaintiff" or "Sung") for purchase of the property and the assets of Hula Brothers. The negotiations involved the consideration of multiple agreements, including: an "Agreement for Keaau Property (TMK [3]1-6-003-0104) which provided Plaintiff an option to purchase the Property (the "Property Option") for $2.9 million, (Compl. ¶ 12; MPSJ, Ex. A at 1) and an "Agreement for Hula Brothers, Inc. Assets" (the "Asset Option"), which provided Plaintiff with an option for the purchase of Hula Brothers' assets, including a forklift, for $100,000 (MPSJ, Ex. B at 3, ¶ 1.2(a); Compl. ¶ 12; MPSJ, Ex. A ¶ 3.4.; MPSJ, Ex. B).
On May 12, 2009, Plaintiff filed a Complaint for declaratory judgment (Count I), breach of contract and anticipatory breach (Count II), rescission (Count III), and unjust enrichment (Count IV) against the Hamilton Defendants. ("Compl." at 15-17, ¶¶ 52-63, Doc. # 1.) Additionally, Plaintiff alleged conversion (Count V) against the Hamiltons and TGES (Id. at 18, ¶¶ 64-69); misrepresentation (Count VI) and fraudulent misrepresentation (Count VII) against Robert Hamilton, Hula Brothers, Gregory Gadd ("Gadd") and the Big Island Land Co., Ltd., ("BILC") (Id. at 18-21, ¶¶ 70-80); fraudulent concealment (Count VIII) and negligent and intentional interference with contract and prospective advantage (Count IX) against the Hamilton Defendants, Gadd and BILC (Id. at 21-23, ¶¶ 81-89); a declaratory judgment (Count X) and breach of contract (Count XI) against TGES (Id. at 23-4, ¶¶ 90-95); and breach of implied covenant of good faith and fair dealing (Count XII), HRS Chapter 480-unfair or deceptive acts or practices (Count XIII), negligence (Count XIV), conspiracy (Count XV), and punitive damages (Count XVI) against all defendants (Id. at 24-27, ¶¶ 96-112.).
On June 2, 2009, TGES filed a cross-claim against the Hamilton Defendants, Gregory Gadd and BILC alleging non-liability and requesting indemnification, escrow costs, costs of suit and attorneys' fees, inter alia. ("Cross-claim," Doc. #11.) On June 17, 2009, the Hamilton Defendants counterclaimed against Plaintiff alleging Plaintiff caused damage to the Property, that the Hamiltons are entitled to retain the $20,000.00 lease amount paid by Plaintiff, and that the monies held in escrow by TGES be applied toward these amounts. ("Counterclaim" at 7, Doc. # 12.)
On August 20, 2009, Plaintiff filed a Motion for Partial Summary Judgment on Counts I, III, V, and X of Plaintiff's Complaint.
On February 3, 2010, the Hamilton Defendants filed a Motion for Summary Judgment as to Plaintiff's remaining claims. ("MSJ," Doc. # 59.) On the same day, the Hamiltons filed a Motion for Partial Summary Judgment as to their Counterclaim. ("MPSJ," Doc. # 61.) On March 4, 2010, Defendants BILC and Gadd filed a Motion for Summary Judgment. ("BILC/Gadd MSJ," Doc. # 83.) On March 29, 2010, BILC and Gadd filed statements of no opposition as to the Hamilton MPSJ and MSJ. (respectively, Docs. ## 101, 102.) Also on March 29, 2010, Plaintiff filed an opposition to the BILC/ Gadd MSJ ("Opp'n to BILC/Gadd MSJ," Doc. # 103), the Hamilton MPSJ ("Opp'n to MPSJ," Doc. # 105), and the Hamilton MSJ. ("Opp'n to MSJ," Doc. # 106.) On April 5, 2010, BILC and Gadd filed its Reply in support of the BILC/Gadd MSJ. ("Reply to BILC/Gadd MSJ," Doc. # 115.) On the same day, the Hamilton Defendants filed their reply to the Hamilton MPSJ ("Reply to MPSJ," Doc. # 117), and the Hamiltons filed their reply to the Hamilton MSJ ("Reply to MSJ," Doc. # 116.).
Rule 56 requires summary judgment to be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Porter v. Cal. Dep't of Corr., 419 F.3d 885, 891 (9th Cir.2005); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000). A main purpose of summary judgment is to dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
Summary judgment must be granted against a party that fails to demonstrate facts to establish what will be an essential element at trial. See id. at 323, 106 S.Ct. 2548. The burden initially falls upon the moving party to identify for the court those "portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548).
Once the moving party has carried its burden under Rule 56, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial" and may not rely on the mere allegations in the pleadings. Porter, 419 F.3d at 891 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). If the nonmoving party produces direct evidence of a material fact, the court may not assess the credibility of this evidence nor weigh against it any conflicting evidence presented by the moving party. T.W. Electrical Service, 809 F.2d at 632.
The instant action was filed in the District of Hawaii pursuant to 28 U.S.C. § 1332, diversity jurisdiction. Therefore, this Court is required to look to the substantive law of Hawai`i. Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Sales of land are governed by the law of the state within which it is located. In re Grayco Land Escrow, Ltd., 57 Haw. 436, 559 P.2d 264, 274 (1977). In the absence of controlling state law, a "federal court sitting in diversity must use
The Court shall address all of the motions together according to the remaining counts below. In the interests of clarity, the Court first summarizes the counts contained in Plaintiff's Complaint that are not directly moved on in the instant motions.
Count II was plead as an alternative to Count I. Because this Court found there was no valid contract for sale of the Property, no contract is in existence to support Plaintiff's claim for breach of contract under Count II. (See Compl. ¶ 55 ("In the alternative, if the Court were to find the existence of a valid and enforceable contract, the Hamiltons and Hula Brothers have materially breached, or anticipatorily breached, such contract.").) As to Count III: recession of the DROA, Plaintiff's claim that he is entitled to recision of the lease agreement with the Hamiltons, this issue is necessarily addressed as part of Plaintiff's defense to the Hamilton's MPSJ on their counterclaim, infra Section XI. Count X: Declaratory Relief and Count XI: Breach of Contract were plead only against defendant TGES. TGES is not involved in any of the motions addressed herein.
The Court will discuss Plaintiff's claim for unjust enrichment together with the Hamilton Defendants' MPSJ on Count III of their Counterclaim. See infra Section XI.
In their instant MSJ, Hamilton Defendants seek summary judgment on Plaintiff's claim of conversion. The common law tort claim of conversion involves "wrongful dominion over the property of another." Matsuda v. Wada, 101 F.Supp.2d 1315, 1321 (D.Haw.1999) (citing Tsuru v. Bayer, 25 Haw. 693, 1920 WL 830, *2 (Haw.Terr.1920)); see also Bank of N.Y. v. Fremont Gen. Corp., 523 F.3d 902, 914 (9th Cir.2008) (stating that "to establish conversion, a plaintiff must show (1) his ownership of or right to possess the property at the time of the conversion, (2) that the defendant disposed of the plaintiff's property rights or converted the property by a wrongful act, and (3) damages."). In Tsuru, the Supreme Court of Hawai`i defined the tort of conversion as
Tsuru, 25 Haw. 693, 1920 WL 830 at *2. The Tsuru court stated the elements of conversion as: "(1) A taking from the owner
Plaintiff argues that because there was no contractual basis for the deposit of his $280,000, i.e., the Purchase Option was never exercised, he had a right to immediate possession of his funds in escrow. (Opp'n to MSJ at 25.) Plaintiff further asserts that the funds were withheld from him for ten months and that, consistent with what is required by case law, he demanded return of the funds and was refused possession by the Hamilton Defendants. (Opp'n to MSJ at 25; Doc. # 108, Exs. S & T.) Hamilton Defendants argue that they are entitled to summary judgment as a matter of law because they were justified in detaining the escrow funds in good faith, as there was a reasonable dispute as to the ownership of the funds. (MSJ at 5-6.)
In support of their position of good faith, Hamilton Defendants rely on cases out of Texas, Nebraska, and Colorado. See e.g., Edmunds v. Sanders, 2 S.W.3d 697, 704 (Tex.App.1999) (providing that "refusal to deliver property on request may be justified in order to investigate the rights of the parties, and no conversion results if such refusal is in good faith to resolve a doubtful matter."); Zimmerman v. FirsTier Bank, N.A., 255 Neb. 410, 585 N.W.2d 445, 453 (1998) (under Nebraska common law, in the context of the actions of a third party bank, "a bona fide reasonable detention of property by one who has assumed some duty respecting it, for the purpose of ascertaining its true ownership, or of determining the right of the demandant to receive it, will not sustain an action for conversion.") (citation omitted); Obodov v. Foster, 105 Colo. 254, 97 P.2d 426, 428 (1939) (stating in the context of a receivership, "[w]hen refusals are not absolute, but are qualified by certain conditions which are reasonable, and which are imposed in good faith and in recognition of the rights of plaintiff, such refusals are an insufficient basis for an action in conversion.").
Pursuant to this Court's previous Order, no genuine issue of material fact exists as to whether Hamilton Defendants asserted wrongful dominion over the $280,000 escrow funds. However, there remains a genuine issue of material fact as to whether the Hamilton Defendants possessed "a constructive or actual intent to injure." See Brooks, 153 P.3d at 1100. Hamilton Defendants assert that a reasonable dispute as to the ownership of the funds existed and that this dispute negated any bad faith on their part. Similarly, the Hamilton Defendants state that they only withheld the funds subject to the condition that any real estate commission owed be taken care of, the escrow costs covered or waived, the well be properly shut down, and all claims and rights of Sellers and Buyer be terminated and that such actions were not in bad faith. (Doc. # 60, Ex. 4 at 3.) Whether such actions negated any constructive or actual intent to injure Plaintiff is an issue of fact.
While it is clear now that Plaintiff had a right to the $280,000 escrow funds because the Purchase Option was not executed, it remains in dispute whether at the time of Plaintiff's demand, the Hamilton Defendants wrongfully detained the funds in bad faith and would thereby be liable to Plaintiff.
Count VI of the Complaint alleges misrepresentation against the Hamilton Defendants, Gadd and BILC (Compl. ¶¶ 70-74) due to their failure to notify Plaintiff that the Hamiltons had not signed the Asset Option (Opp'n to MSJ at 20.) Similarly, Count VII alleges fraudulent misrepresentation based upon the same factual allegations. (Compl. ¶¶ 75-80; Opp'n to MSJ at 18-20.) In Count VIII of the Complaint, Plaintiff alleges fraudulent concealment against the Hamilton Defendants, Gadd, and BILC based upon the same factual allegations and an additional allegation that Susan Hamilton executed
Intentional (or fraudulent) and negligent misrepresentation
Plaintiff alleges the Hamilton Defendants, Gadd and BILC misrepresented (knowingly) that the Asset Option had been signed when, in fact, it had not been signed and Defendants should have known (or knew) that Plaintiff would reasonably rely on such misrepresentation. (Compl. ¶¶ 71-73, 76-78.) Plaintiff states that he relied on the alleged misrepresentation to his detriment by leasing the Property, drilling the well, and making other preparations for the development of the bottling facility. (Id. ¶ 79.) Hamilton Defendants argue that Plaintiff cannot assert a claim for misrepresentation because the Court has already determined that the Plaintiff never effectively exercised the Purchase Option or the Asset Option. (MSJ at 7.) The Court agrees. The Court finds that there is no genuine issue of material fact as to Plaintiff's reliance on the alleged misrepresentation. As a matter of law, Plaintiff cannot argue that he relied on the Asset Option having been signed because he did not actually comply with the terms of the Asset Option.
Plaintiff's argument is speculative as to what he would have done if not for the alleged misrepresentation. However, the law does not ask the Court to speculate, but instead requires the Court to look as if Plaintiff relied on the misrepresentation, and if so, if such reliance was to his detriment. Plaintiff did not rely on the Asset Option because he did not comply with its mandates. The Asset Option specifically required that it be exercised by 5:00 p.m. Hawai`i Standard time, September 15, 2008, or it expired and was of no further force or effect. (See Order at 18.) Plaintiff failed to timely or properly exercise the Property Option and did not even attempt
As to Plaintiff's claim for fraudulent concealment, again, the elements of fraud under Hawai`i law include: (1) false representations made by the defendant; (2) with knowledge of their falsity (or without knowledge of their truth or falsity); (3) in contemplation of plaintiff's reliance upon them; and (4) plaintiff's detrimental reliance. See Larsen v. Pacesetter Systems, Inc., 74 Haw. 1, 837 P.2d 1273, 1288 (1992) (citation omitted); see also Associated Engineers & Contractors, Inc. v. State, 58 Haw. 187, 567 P.2d 397, 418 (1977) ("Fraud in its generic sense, especially as the word is used in courts of equity, comprises all acts, omissions and concealments involving a breach of legal or equitable duty and resulting in damage to another.") "Fraud can be perpetrated by non-disclosure as well as by affirmative misrepresentation." Matsuda, 101 F.Supp.2d at 1324.
Under Hawai`i law, liability for fraudulent nondisclosure
Id. Also, although it has not been cited by any Hawai`i court for the proposition, Restatement (Second) of Torts § 550 provides
Id. In the instant case, however, the Court need not address the elements Plaintiff's claim under either statement of the law because here, as above, there is no genuine issue of material fact as to reliance or causation that could result in damages. See Larsen, 837 P.2d at 1288; Associated Engineers & Contractors, 567 P.2d at 418.
As discussed above, any nondisclosure or fraudulent concealment regarding whether the Asset Option was signed clearly did not cause Plaintiff to rely on the viability of the option because he failed to execute the Asset Option as described above. In other words, Plaintiff has not provided any evidence to suggest that his perception that the Asset Option had been
Accordingly, the Court GRANTS Hamilton Defendants' Motion for Summary Judgment as to Counts VI, VII, and VIII. The Court also GRANTS BILC/Gadd's Motion for Summary Judgment as to Counts VI, VII, and VIII.
In Count IX, Plaintiff alleges negligent and intentional interference with contract and prospective advantage against the Hamilton Defendants, Gadd, and BILC. (Compl. ¶¶ 88-89.) Plaintiff provides no authority to support a cause of action for "negligent" interference with contract or prospective business advantage, and the Court finds no cases in Hawai`i establishing such a cause of action. In the Restatement (Second) of Torts, the comments to "negligent interference with contract or prospective contractual relation" state that
Restatement (Second) of Torts § 766C cmt. Specifically, the Restatement (Second) of Torts § 766C states:
Restatement (Second) of Torts § 766C. A plaintiff alleging the intentional tort of interference with prospective contractual relations must plead and prove the following:
Hawaii Medical Ass'n v. Hawaii Medical Service Ass'n, Inc., 113 Haw. 77, 148 P.3d 1179, 1218 (2006) (adopted from Restatement (Second) of Torts § 766B (1979)) (citations omitted).
As to each of the causes of action above, the Court may rule as matter of law because there is no genuine issue of material fact as to causation or proper justification. The only evidence that Plaintiff puts forth is that in December 2008, Plaintiff notified his investors that the Hamiltons intended to renegotiate the terms of the Asset Option and that as a result of the uncertainty of the agreement, the investors were no longer interested in proceeding with the project. (Doc. # 106, Declaration of Shikwan Sung ¶¶ 23-26 & Ex. T.) As noted above, in order to have timely executed the Property and Asset Options, each option had to have been properly executed by Plaintiff prior to 5:00 p.m. Hawai'i Standard time, September 15, 2008 or both options expired and were of no further force or effect. (See Order at 16, 18.) Plaintiff failed to timely exercise either option and this failure was prior to any attempt by the Hamiltons to renegotiate the Asset Option. (Id.; see also (Doc. # 106, Ex. T.))
The Court's analysis as to Count IX is similar as to Plaintiff's claims of misrepresentation and concealment, Section IV, supra. Here, Plaintiff alleges that because the Hamilton Defendants did not sign the Asset Option, Plaintiff lost investors that would have subsequently acquired the Property from him. (See Opp'n to MSJ at 3, 26.) As explained above, Plaintiff did not properly or timely execute the Purchase or Asset Options. These failures were prior to any actions alleged by Plaintiff to have caused his loss of financing. (Doc. # 106, Declaration of Shikwan Sung ¶¶ 23-26 & Ex. T.) If Plaintiff believed, as he asserts, that the Asset Option was signed by the Hamiltons and effective, then his own failure to properly execute both options independently caused his investor contracts to fail and resulted in his loss of financing. (See Doc. # 106, Ex. T at 1 ("In the event HRWC [Plaintiff's business] does not acquire said property, and then this agreement shall be Null and void."), 3 ("In the event HRWC does not acquire said property, then this agreement shall be null and void.").) The investor contract expressly provides that Plaintiff will use his best efforts to acquire the Property and the agreement became effective only when such Property was acquired; here, Plaintiff's own actions caused his purchase of the Property to fail. (See id.; Order at 16-17, 18.)
Moreover, even had Hamilton Defendants signed the Asset Option, Plaintiff's failure to execute the Asset Option (or the Property Option) would have provided the Hamilton Defendants with cause to renegotiate its terms, which is the specific act alleged to have caused the loss of investors. Therefore, as a matter of law, the Hamiltons were justified in attempting to renegotiate the Asset Option.
Accordingly, the Court GRANTS the Hamilton Defendants' Motion for Summary Judgment as to Count IX. The Court also GRANTS BILC/Gadd's Motion for Summary Judgment as to Count IX.
Hamilton Defendants, Gadd and BILC move for summary judgment on Count XII
Hawai`i law recognizes that "every contract contains an implied covenant of good faith and fair dealing that neither party will do anything that will deprive the other of the benefits of the agreement." Best Place, Inc. v. Penn Am. Ins. Co., 82 Haw. 120, 920 P.2d 334, 337-38 (1996) (citations omitted). However, Hawai`i courts have not recognized a separate tort cause of action for bad faith or breach of the duty of good faith and fair dealing based upon any type of contract in any circumstances. Moreover, in Francis v. Lee Enterprises, Inc., 89 Haw. 234, 971 P.2d 707, 711-12 (1999), the Hawai`i Supreme Court stressed the importance that claims of bad faith be limited to "the insurance context or situations involving special relationships characterized by elements of fiduciary responsibility, public interest, and adhesion." The Hawai`i Supreme Court stated that the limitation on the tort of bad faith was important due to the fact that recovery in tort was very different from contractual remedies. Id. at 712-13. Accordingly, the Hawai`i Supreme Court stated that Hawai`i law will not allow a recovery in tort "in the absence of conduct that (1) violates a duty that is independently recognized by principles of tort law and (2) transcends the breach of the contract." Id. at 717.
It is unclear to the Court what Plaintiff is attempting to allege. Plaintiff's claim as to Count XII is vague and states only "[i]n all contracts, including the above-described agreement between Plaintiff and the Hamiltons, there is an implied covenant of good faith and fair dealing." (Compl. ¶ 97.) Plaintiff has not identified which contract, if any, gave rise to the alleged duty of good faith in relation to the Hamilton Defendants, nor has Plaintiff offered evidence that a special relationship existed between the himself and the Hamilton Defendants such that the tort of bad faith should extend to this context. Neither has Plaintiff explained which allegations show conduct that transcends breach of contract. Because Plaintiff offers no evidence in relation to this claim, there can be no genuine issue of material fact. The Court finds that Plaintiff has failed to state a claim upon which relief may be granted.
As to BILC and Gadd, Plaintiff asserts that Gadd owed Plaintiff a duty of due care and violated this duty by failing to properly advise Plaintiff, and cites extensive out of state case law in support of this proposition. (See Opp'n to BILC/Gadd MSJ at 5-16.) The case law cited by Plaintiff relates to a duty of fairness and honesty imposed by out of state courts on real estate brokers to all parties in a real estate transaction—even those to whom they are not agents. (See id. at 5-9.) The facts in those cases involved buyers who "justifiably believe the seller's broker is also protecting their interest...." Nguyen v. Scott, 206 Cal.App.3d 725, 253 Cal.Rptr. 800, 806 (1988) (quotation omitted); see e.g. Ward v. Taggart, 51 Cal.2d 736, 336 P.2d 534 (1959). In the instant case, BILC/Gadd represented the Hamiltons in the attempted sale of the Property and Sung, as a licensed broker in Hawaii, represented himself. (See Doc. # 60, Ex. 4 ¶ 2.3 (providing a four percent real estate commission to BILC and stating that "Sung is a licenced real estate broker in the State of Hawaii and represents the buyer in this transaction."); see also Doc. # 108 ¶ 4.) Plaintiff also previously held and currently holds a broker's license in California. (Doc. # 108 ¶ 4.)
It appears to the Court that Count XII is a restatement of his claim for misrepresentation, as addressed by the Court above. (See Opp'n to BILC/Gadd MSJ at 10-16.) Whether or not Plaintiff was justified on relying on Gadd, he did not act in reliance on Gadd's alleged misrepresentations that the Asset Option had been signed because Plaintiff never attempted to execute the option.
Further, Plaintiff's allegations against BILC/Gadd regarding their alleged failure to meet their duty to provide copies of documents to all parties, failure to carefully draft the DROA, failure to properly supervise office staff, and failure to adequately disclose agency relationships are not properly alleged in Count XII and, even assuming the existence of a special relationship, does not violate a duty that is independently recognized by principles of tort law or transcend breach of the contract.
Accordingly, the Court GRANTS Hamilton Defendants' Motion for Summary Judgment as to Count XII. The Court also GRANTS BILC/Gadd's Motion for Summary as to Count XII.
Defendants argue that Plaintiff is precluded from bringing suit for unfair or deceptive acts or practices pursuant to HRS Chapter 480 because Plaintiff does not qualify was a "consumer" under the Chapter. HRS § 480-2 provides in relevant part:
HRS § 480-1 defines "consumer" as "a natural person who, primarily for personal, family, or household purposes, purchases,
To support their arguments, the Hamilton Defendants and Plaintiff rely on the same Hawai`i case. In Cieri v. Leticia Query Realty, Inc., 80 Haw. 54, 905 P.2d 29 (1995), the Supreme Court of Hawai`i held that:
Id. at 42 (emphasis added). Plaintiff seeks to characterize this language as meaning any real estate purchase by an individual constitutes a "personal investment." The Court is not inclined to extend the holding of Cieri so broadly. The situation confronted by the court in Cieri was whether the purchase of a home constituted a personal investment. Plaintiff presents no case law to support his proposition that the definition of a personal investment primarily for personal, family, or household purposes be extended to include real estate purchased with the intent to develop and operate as a business.
Chapter 480 was specifically designed to protect individual consumers rather than businesses. See Joy A. McElroy, M.D., Inc. v. Maryl Group, Inc., 107 Haw. 423, 114 P.3d 929, 942 (Haw.Ct. App.2005) (referencing a Hawai`i legislature standing committee report and noting that the report "clearly evinced the legislature's intent that the provision be used to protect individual consumers rather than businesses."). Although Plaintiff commenced his purchase of the Property as an individual, his purchase of the Property was for developing and operating a bottling business, namely Hawaiian Rain Forest Water Co., LLC, and Plaintiff even procured investment financing to do so and negotiated sale of his completed business for six million dollars. (Doc. # 108, Ex. B; Compl. ¶ 24) ("Plaintiff proceeded to take substantial actions to prepare for the beverage production and bottling business he indented to undertake on the Property, including, but not limited to: (a) arranging for financing; (b) hiring experts and consultants to assist with obtaining a County special permit to allow commercial water bottling and beverage facility on a portion of the Land; (c) applying for and obtaining a well permit from the State Commission on Water Resource Management to drill a well to provide potable water for the beverage production; (d) hiring a well driller to assist with the location and drilling of the well; (e) applying for and obtaining an individual wastewater system permit through the State of Hawai`i Department of Health; (f) applying for a loan guaranty from the U.S. Department of Agriculture; (g) enrolling in the Enterprise Zones Partnership Program under the State of Hawai`i Department of Business Economic Development & Tourism; and (h) making frequent trips to Hawai`i to participate in and oversee the progress of these efforts.... Plaintiff, to said Defendants' express knowledge, also obtained investors to finance the transaction."); Opp'n to MSJ at 3 ("Sung had an agreement with the investor/partners that if he succeeded with the venture, they would purchase the completed enterprise from him for $6 million." (citing Doc. # 108, Sung Declaration ¶ 9.).)
Plaintiff acted as a business in regards to his purchase of the Property and signed contracts which regarded Plaintiff and Plaintiff's relation to the Property as a business. (See Doc. # 108, Ex. B; Reply
Moreover, in addition to being the purchaser, Plaintiff also acted as his own broker in the transaction. (See Doc. # 60, Ex. 4 ¶ 2.3) (providing a four percent real estate commission to BILC and stating that "Sung is a licenced real estate broker in the State of Hawaii and represents the buyer in this transaction.") Additionally, the Court notes that Plaintiff has failed to identify any unfair or deceptive practices attributable to any defendant and on this basis has failed to meet the required pleading requirements. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007); Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
For all the reasons above, Plaintiff's investment was for business purposes, not for personal, family, or household purposes. Therefore, Court finds that Plaintiff's bottling business, for which he sought out and acquired investors, does not constitute a "personal investment" within the meaning of Chapter 480. As such, Plaintiff does not satisfy the definition of a "consumer" and may not bring a cause of action under HRS Chapter 480-2.
Accordingly, the Court GRANTS the Hamilton Defendants' Motion for Summary Judgment as to Count XIII. The Court also GRANTS BILC/Gadd's Motion for Summary Judgment as to Count XIII.
Hamilton Defendants, BILC, and Gadd also move for summary judgment on Count XIV, Plaintiff's claim of negligence against all Defendants. The Hamilton Defendants argue that Plaintiff has not met his pleading burden pursuant to Federal Rule of Civil Procedure 12(b)(6). (MSJ at 12.) Consequently, Hamilton Defendants argue that, as a matter of law, Plaintiff's negligence claim should be dismissed for failure to state a claim upon which relief can be granted because the Complaint fails to explain how the Hamiltons were negligent or how Plaintiff was damaged. (Id.) No opposition to Count XIV was filed by Plaintiff.
Pursuant to Fed.R.Civ.P. 12(b)(6), a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. Review is limited to the contents of the complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.1994). Allegations of fact in the complaint must be taken as true and construed in the light most favorable to the plaintiff. See Zucco Partners, LLC v. Digimarc Corp., 552 F.3d 981, 989 (9th Cir.2009); Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005). A complaint need not include detailed facts to survive a Rule 12(b)(6) motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In providing grounds for relief, however, a plaintiff must do more than recite the formulaic elements of a cause of action. See id.; Ashcroft v. Iqbal, ___ U.S. ___, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). A plaintiff must include enough facts to raise a reasonable expectation that discovery will reveal evidence. In other words, a plaintiff must allege enough facts to state a claim for relief that is plausible on its face.
In the Complaint, Plaintiff asserts that the Hamilton Defendants' "aforesaid actions were negligent, careless and reckless and they "knew or should have known that their actions would result in harm to Plaintiff." (Compl. ¶ 103.) Plaintiff asserts this conclusory allegation without specific reference to which facts involving the Hamilton Defendants support this allegation, in what manner the Hamilton Defendants were negligent, or how Plaintiff was harmed by the Hamilton Defendants.
Under Hawai`i law, the elements of a cause of action for negligence are:
Doe Parents No. 1 v. State Dep't of Educ., 100 Haw. 34, 58 P.3d 545, 579 (2002) (citing Dairy Road Partners v. Island Ins. Co., Ltd., 92 Haw. 398, 992 P.2d 93, 114 (2000)).
"[I]t is fundamental that a negligence action lies only where there is a duty owed by the defendant to the plaintiff." Bidar v. Amfac, Inc., 66 Haw. 547, 669 P.2d 154, 158 (1983). A duty "`is owed only to those who are foreseeably
Generally, "`[t]o recover in negligence[,] there must be a showing of harm above and beyond disappointed expectations. A buyer's desire to enjoy the benefit of his bargain is not an interest that tort law traditionally protects.'" Ass'n of Apartment Owners of Newtown Meadows v. Venture 15, Inc., 115 Haw. 232, 167 P.3d 225, 282 (2007) (quoting Redarowicz v. Ohlendorf, 92 Ill.2d 171, 65 Ill.Dec. 411, 441 N.E.2d 324, 327 (1982)) (second set of brackets in original) (emphasis added).
Plaintiff's vague allegations fail to state a claim of negligence against the Hamilton
Accordingly, the Court GRANTS Hamilton Defendants' Motion for Summary Judgment and Count XIV is hereby dismissed WITHOUT PREJUDICE as to the Hamilton Defendants. Similarly, the Court GRANTS BILC/Gadd's Motion for Summary Judgment on Count XIV and Count XIV is hereby dismissed WITHOUT PREJUDICE as to the BILC/Gadd. Plaintiff has until May 30, 2010, to file an Amended Complaint with this Court as to Count XIV. Any Amended Complaint must comply with the dictates of this Order and cure all deficiencies for Count XIV.
The Hamilton Defendants also move for summary judgment on Count XV alleging conspiracy against all Defendants.
"`[T]he accepted definition of a conspiracy is a combination of two or more persons [or entities] by concerted action to accomplish a criminal or unlawful purpose, or to accomplish some purpose not in itself criminal or unlawful by criminal or unlawful means.'" Robert's Haw. Sch. Bus, Inc. v. Laupahoehoe Transp. Co., Inc., 91 Haw. 224, 982 P.2d 853, 881 n. 28 (1999) (quoting Duplex Printing Press Co. v. Deering, 254 U.S. 443, 466, 41 S.Ct. 172, 65 L.Ed. 349 (1921)). The plaintiff must allege an underlying actionable claim because "there can be no civil claim based upon a conspiracy alone...." Weinberg v. Mauch, 78 Haw. 40, 890 P.2d 277, 286 (1995); See Ellis v. Crockett, 51 Haw. 45, 451 P.2d 814, 822-23 (1969).
"A conspiracy is constituted by an agreement ... No formal agreement between the parties is essential to the formation of the conspiracy, for the agreement may be shown `if there be concert of action, all the parties working together understandingly, with a single design for the accomplishment of a common purpose.'" Marino v. United States, 91 F.2d 691, 694 (9th Cir.1937) (citation omitted);
Kazuo Hashimoto v. Halm, No. 2847, 40 Haw. 354, 1953 WL 7576, at *5 (Haw.Terr. Nov. 20, 1953); State v. Yoshida, 45 Haw. 50, 361 P.2d 1032, 1042 (1961) ("[t]he existence of a conspiracy may be inferred from the circumstances."). Accordingly, determining whether a conspiracy exists involves multiple credibility and factual determinations.
The Hamilton Defendants, argue that they are entitled to summary judgment on the conspiracy claim because no actions of the Hamiltons alleged by Plaintiff are unlawful. However, as noted in Section III of this Order, genuine issues of material fact exist as to whether the Hamilton Defendants
There is, however, no genuine issue of material fact regarding the conspiracy claim against BILC/Gadd. Pursuant to this order, the Court has dismissed all of Plaintiff's claims against BILC/Gadd for any underlying actionable claim. (See supra Sections IV-IX.)
Accordingly, the Court DENIES Hamilton Defendants' Motion for Summary Judgment as to Count XV. The Court GRANTS BILC/Gadd's Motion for Summary Judgment as to Count XV.
Finally, the Hamilton Defendants, BILC, and Gadd move for summary judgment on Count XVI, which asserts a claim for punitive damages. A claim for punitive damages is not an independent tort, but a remedy that is incidental to another cause of action. See Ross v. Stouffer Hotel Co. (Hawai`i) Ltd., 76 Haw. 454, 879 P.2d 1037, 1049 (1994) (citing Kang v. Harrington, 59 Haw. 652, 587 P.2d 285, 291 (1978) (holding that a claim for punitive damages "is not an independent tort, but is purely incidental to a separate cause of action")). The Court will construe Plaintiff's claim for punitive damages as a prayer for relief ancillary to his other causes of action. See S. Port Marine, LLC v. Gulf Oil Ltd. Partnership, 234 F.3d 58, 64 (1st Cir.2000) ("Punitive damages ... do not constitute a separate cause of action, but instead form a remedy available for some tortious or otherwise unlawful acts.")
Due to the fact that a cause of action remains for conversion and conspiracy against the Hamilton Defendants, it is premature at this time for the Court to rule as to the availability of punitive damages. Ditto v. McCurdy, 86 Haw. 84, 947 P.2d 952, 959 (1997) ("[O]ne circumstance in Hawai'i that warrants an award of punitive damages is when "there has been some wilful misconduct or that entire want of care which would raise presumption of a conscious indifference to consequences." ") (citation and internal quotation marks omitted). As to BILC/Gadd, no underlying cause of action remains that would support a claim for punitive damages.
Accordingly, the Court DENIES WITHOUT PREJUDICE Hamilton Defendants' Motion for Summary Judgment as to Count XVI. The Court GRANTS BILC/Gadd Motion's for Summary Judgment as to Count XVI.
Hamilton Defendants move for summary judgment on Counts I and III of their Counterclaim against Plaintiff.
Count I alleges that Plaintiff breached the Property Option, and the Hamilton's are entitled to the costs incurred to fill in an unfinished well on the Property that was drilled by Plaintiff during his lease term. (MPSJ at 4-5.) Hamilton Defendants contend that pursuant to Section 8 of the Property Option, Plaintiff agreed to bear all costs associated with inspection and testing of the Property during his lease term. (Id. at 5.) In support, Hamilton Defendants quote Section 8 that provides that Plaintiff agrees to "indemnify and hold harmless the Hamiltons from any costs, expenses, claims or liability of any kind arising out of the inspection and testing, including property damage, personal injury or death." (Id.; Property Option ¶ 8.) Hamilton Defendants argue that consent to Plaintiff's inspecting and testing of the land by drilling a well was only granted pursuant to the Property Option. (Reply to MPSJ at 10.) Hamilton Defendants
Plaintiff argues that the Property Option did not require Plaintiff to return the Property to its original condition. (Doc. # 105, ("Opp'n to MPSJ") at 5.) Citing authority from New Mexico, Kansas, and Louisiana, Plaintiff argues that in the absence of an express provision, a lessee is not obligated to restore the land to its pre-leased condition. (Id. at 6.) Plaintiff contends that the record does not support any finding of the parties' intent regarding a covenant to restore because the indemnification provision relates to inspection and testing and the drilling of a well for its use as part of a bottling operation is neither inspection nor testing. (Id. at 9-11.) Furthermore, Plaintiff argues that if such a covenant could be implied, it would be a question of fact and not properly entertained in a motion for summary judgment. (Id. at 9.) Moreover, Plaintiff maintains that the Hamilton Defendants expressly consented to Plaintiff's drilling of the well and thus are precluded from asserting a duty to restore. (Id.) Alternatively, Plaintiff argues that the well was an improvement to the Property and the expenses Defendants incurred to fill the well were unreasonable. (Id. at 10-11.) Plaintiff argues that a question of whether Hamilton Defendants were damaged by the well and the reasonableness of their actions and expenses to fill the well are issues of fact not properly entertained in a motion for summary judgment. (Id.)
The Court finds that Section 8 of the Property Option requires Plaintiff to indemnify Hamilton Defendants from all costs arising from Plaintiff's inspection and testing of the Property. Section 8 of the Property Option states:
It is well established that "the construction and legal effect to be given a contract is a question of law to be decided by the court." Reed & Martin, Inc. v. City & County of Honolulu, 50 Haw. 347, 440 P.2d 526, 527 (1968) (citation omitted). In Hawai`i, "it is established that the court's function is to construe and enforce contracts made by the parties, not to make or alter them." Heatherly v. Hilton Hawaiian Village Joint Venture, 78 Haw. 351, 893 P.2d 779, 793 (1995) (citation omitted). "Absent an ambiguity, contract terms should be interpreted according to their plain, ordinary, and accepted sense in common speech." Whether a contract is ambiguous is a question of law. Brown v. KFC Nat'l Management Co., 82 Haw. 226, 921 P.2d 146, 160 (1996) (citation omitted). "Ambiguity exists only when the contract taken as a whole is reasonably subject to differing interpretation." County of Kaua`i v. Scottsdale Ins. Co., Inc., 90 Haw. 400, 978 P.2d 838, 844 (1999) (citation omitted).
The Court finds that Section 8 is not ambiguous. The language of the section
"The general obligation of the lessee to repair and his covenants to do so are not to be enlarged beyond their fair intent, and the tenant should not be held responsible for any damages in case of injury or destruction not anticipated, contemplated or intended when the lease was made, and the usual and commonly accepted meaning of the words used in the ordinary transactions of life should be given to the language used in the covenant." Orient Ins. Co. v. Pioneer Mill Co., 27 Haw. 698, 1924 WL 2881, *3 (Haw.Terr.1924) (quotation omitted). Moreover, under Hawai`i law, independently of express covenant, "a lessee is obligated to return leased premises at the termination of a tenancy in substantially the same condition as at the inception of a lease, subject to reasonable use." See Schimmelfennig v. Grove Farm Co., 41 Haw. 124, 1955 WL 8784, *3 (Haw. 1955). Section 8 obligated Plaintiff to return the Property upon the end of the Lease term without property damage, i.e., in substantially the same condition as he received it, subject to normal deterioration and wear and tear. See Lee v. Hwang, 115 Haw. 147, 165 P.3d 1048, 2007 WL 967112, *5 (Hawai`i App.2007) (unpublished decision).
Moreover, the Court finds that Plaintiff has failed to raise a genuine issue of material fact regarding whether the drilling of the well was an inspection or testing activity. Under the Property Option, drilling a well falls within Section 8 as an inspection and testing activity. Section 2.5 of the Property Option explicitly states that the Hamilton Defendants do not warrant the suitability of the land for Plaintiff's expressed purpose of creating a bottling facility (Doc. # 108, Declaration of Shikwan Sung ¶¶ 5-13) and makes Plaintiff "responsible for conducting any inquiry or testing that he wishes to determine such suitability of the Property." Drilling of the well was contemplated by the parties as part of their agreement to allow Plaintiff to assess whether the Property was suited to his purposes. As Plaintiff stated "[t]he purpose of the lease was to prepare the Property for its future intended use in a water bottling operation. Therefore, I entered into possession of the four acres and with the Hamiltons' knowledge and agreement I drilled a well on the Property." (Doc. # 108, Declaration of Shikwan Sung ¶ 13.) It is Section 8 of the Property Option that provides Plaintiff with the right to drill such a well in order to test and inspect the Property's appropriateness as a bottling facility. Additionally, Hamilton Defendants point to the construction permit for the well which provides that such permit is for "construction and testing of the well only." (Reply to MPSJ, Ex. 3.) Plaintiff also tested the soil in conjunction with his effort to drill the well. (Id., Ex. 4.) Plaintiff has offered no evidence to the contrary.
Plaintiff argues that Hamilton Defendants consented to Plaintiff drilling the well, and therefore are precluded from asserting a duty to restore. As discussed above, such consent was subject to Section 8 of the Property Option. Together, Section 8 and Section 2.5 of the Property Option provide that Plaintiff is responsible for conducting any inquiry or testing that he wishes to determine the suitability of the property at his sole cost, and he will indemnify the Hamiltons from any costs,
As to damages, the Court finds that Plaintiff has failed to raise a genuine issue of material fact regarding whether Plaintiff's well caused property damage to the Property and whether Hamilton Defendant's actions in filling the well were reasonable. Plaintiff hired, and subsequently fired, Fred Page Drilling International ("Fred Page") to drill the well on the Property. (See Reply to MPSJ, Ex. 6) (February 7, 2009 letter from Fred Page Drilling to Plaintiff.) The record shows that Plaintiff abandoned the well in a "precarious condition." (See id.) (stating that ceasing drilling operations "caused the hole to be left in a precarious condition creating the possibility for contamination from the unsealed 40 feet of the unconsolidated section.") The Court notes that the well was not functioning and was simply a dangerous condition created by Plaintiff on the Property that required either completion or appropriate disposal. Although Fred Page agreed to seal and secure the top 40 feet, the company stated
(Id.) Hawai`i Administrative Rules § 13-168-16 governs abandoned wells. Hawai`i Administrative Rules § 13-168-2 defines an abandoned well as "any well that has been permanently discontinued." The rules require owners of abandoned wells to dispose of the wells in accordance a manner approved by the Commission on Water Resource Management. See Haw. Admin. R. § 13-168-16(a) ("The owner or operator of any well which has been determined by the commission or voluntarily declared by the owner or operator to be abandoned as defined in § 13-168-2, after written notification, shall be required, at owner's or operator's expense, to re-case, cement, plug back, cap, or otherwise repair the well or fill and seal the well with cement in a manner approved by the commission."). Fred Page confirmed that the well was filled-in per the specifications of the Commission. (See Reply to MPSJ, Ex. 7 (April 20, 2009 letter from Fred Page to the Hamiltons).)
Before filling in the well, however, Hamilton Defendants attempted to include Plaintiff in the decision for how to dispose of the well that Plaintiff abandoned in a precarious condition. (See Reply to MPSJ, Exs. 8-11.) In addition to the fact that the well was not functional and was in a precarious condition, Hamilton Defendants had no desire for a well on the Property and therefore no desire to pay for the well's completion. (See id.; see also id., Declaration of Robert Emmett Hamilton ¶ 5.) Alan Okamoto, attorney for the Hamiltons, requested Plaintiff's input on two separate occasions and provided Plaintiff with the final estimate to fill-in the well. (See Reply to MPSJ, Exs. 8-11.) In response to these requests and the final estimate, Plaintiff's attorney, Donald Cooper, stated "What your clients do with the
Moreover, Plaintiff has offered no evidence besides his own unsupported declaration to establish that the Hamiltons could have, or should, have capped the well instead of filling it. (Doc. # 108, Declaration of Shikwan Sung ¶¶ 25, 27-28.) Plaintiff also fails to point to any legal or contractual obligation that would require the Hamiltons to have proceeded in the manner that Plaintiff now asserts. Although all inferences are decided in favor of the nonmoving party, this Court's review of Ninth Circuit precedent indicates that, when a party's conclusory allegations are entirely unsupported by evidence and are contradicted by opposing evidence, that party has not created a legitimate genuine issue of fact for trial. The Ninth Circuit has "refused to find a `genuine issue' where the only evidence presented is `uncorroborated and self-serving' testimony." Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002) (citing Kennedy v. Applause, Inc., 90 F.3d 1477, 1481 (9th Cir.1996)). "Conclusory allegations unsupported by factual data cannot defeat summary judgment." Rivera v. Nat'l R.R. Passenger Corp., 331 F.3d 1074, 1078 (9th Cir.2003).
Likewise, Plaintiff offers no evidence to refute Hamilton Defendants' assertion and evidence that the expenses to fill the well were reasonable and necessary. Hamiltons assert that they should be awarded
For all the reasons above, the Court finds that Plaintiff breached the Property Option and lease agreement by abandoning the well in a precarious condition and refusing to repair the resulting property damage. Accordingly, the Court GRANTS Hamilton's Motion for Partial Summary Judgment as to Counterclaim as to Count I and finds that the Plaintiff owes the Hamiltons damages in the amount of $26,041.50.
Count III of the Hamilton Defendants' Counterclaim (Doc. # 12-3) requests a declaration that the Hamilton Defendants are permitted to retain the Plaintiff's $20,000 payment to lease a portion of the Property. (MPSJ at 6.) In support of this request, the Hamilton Defendants rely on Section 4.1 of the Property Option which provides that "[i]f the Option is not exercised, then the Hamiltons may retain the lease sum without further obligation to Sung."
In opposition, Plaintiff asserts that Defendants will be unjustly enriched if they are permitted to retain the lease payment. (Opp'n to MPSJ at 13.) Plaintiff argues a lease agreement was never drafted between the two parties and therefore the term "lease sum" in Section 4.1 of the Property Option is ambiguous. Plaintiff further contends that the Hamilton Defendants' burden of proof to show that a lease existed rather than merely an agreement to lease or a license has not been satisfied. (Id.) In relation to this argument, Plaintiff asserts the Property Option contained merely an agreement to lease the Property and therefore Defendants' granted Plaintiff permission to drill a well by license. (Id. at 15.) Plaintiff argues that, in the absence of a written lease, whether there is a lease or a license is a question of fact based on the intent of the parties and summary judgment is inappropriate. (Id.) Because Plaintiff's defense is directly related to his claims for unjust enrichment (Count IV) and rescission (Count III), the Court will discuss both below.
Hamilton Defendant's assert that they are entitled to retain the $20,000 payment from Plaintiff pursuant to the Property Option. (MSJ at 4; MPSJ at 6.) Section 4.1 of the Property Option provides that "[i]f the Option is not exercised, then the Hamiltons may retain the lease sum without further obligation to Sung." ("Property Option," Doc. # 60 Ex. 2 at 7.) Plaintiff argues that because the terms of the lease were never attached to the Property Option, a lease for the Property was never validly executed. (See Opp'n to MSJ at 23 (incorporating by reference Plaintiff's Opp'n to MPSJ at 13).)
The Court notes that both Plaintiff and Hamilton Defendants signed the Property Option and that the language of Property Option clearly provides the terms by which the parties agreed and subsequently abided. By signing the Property Option, the Parties formed a contract as to its terms regardless of whether the Purchase Option was ever properly exercised. (See Order at 3-4, 14.) It is clear that the Parties are bound by the terms of the Property Option because the Court expressly ruled that a Purchase Option was not properly executed
The Court finds that a lease was properly formed between the parties. "While a lease is both a conveyance and a contract, its essence is contractual; accordingly, we review the lease under principles of contract law." Cho Mark Oriental Food, Ltd. v. K & K Intern., 73 Haw. 509, 836 P.2d 1057, 1063 (1992) (citing Maui Land & Pineapple Co. v. Dillingham Corp., 67 Haw. 4, 674 P.2d 390, 394 (1984)). Absent an ambiguity, contract terms should be interpreted according to their plain, ordinary, and accepted sense in common speech. See Maui Land, 674 P.2d at 394. In the instant case, the Property Option contained all terms essential to the lease between the parties, including the names and signatures of the parties, the area for which the Hamiltons were relinquishing possession and special conditions, the term of the lease, and the lease payment, and special provisions regarding extension of the lease and condition precedents to the lease. (See Property Option ¶¶ D, 4-4.3.) See Amjur Landlord § 22 (describing the essential terms of a lease).
In addition, the fact that additional separate terms of the lease were not included in the Property Option is irrelevant. Any additional terms that may have been included with the lease do not bear on the lease's existence. "[W]here, upon all the evidence, but one inference may reasonably be drawn, there is no issue for the jury." Amfac, Inc. v. Waikiki Beachcomber Inv. Co., 74 Haw. 85, 839 P.2d 10 (1992) (quoting Broad & Branford Place Corp. v. J.J. Hockenjos Co., 132 N.J.L. 229, 39 A.2d 80, 82 (N.J.Sup.1944); cf. Parker v. Nakaoka, 68 Haw. 557, 722 P.2d 1028, 1031 (1986) ("When the evidence is so clear that reasonable minds could only come to one conclusion, it is not error for the trial judge to remove the ... question from the jury and to determine the question as a matter of law."); Restatement (Second) of Contracts § 212 cmt. e (1981) ("[A] question of interpretation is not left to the trier of fact where the evidence is so clear that no reasonable person would determine the issue in any way but one.")). Here, it is undisputed that a the Property Option contained the essential provisions of the lease under which the parties operated,
Although Plaintiff asserts that the lease was a license, Plaintiff offers no support for this proposition and does not allege that he was not allowed exclusive possession of the leased land. Unlike Kiehm v. Adams, 109 Haw. 296, 126 P.3d 339, 346 (2006) (involving the an informal arrangement whereby the tenant and man who had been living with her while they had a romantic relationship and paying half the rent in residence), here, there was a written agreement for a lease that contained a fixed term and lease payment. Whether an agreement is a license or a lease depends on the intention of the parties as ascertained from the nature of the agreement. Id. (citation omitted.) The Kiehm court explained: "(1) Most importantly,
Plaintiff was even provided with the ability to cancel the Lease within 45 days. (See id. ¶ 4.3.) To now argue that there was no lease is disingenuous. Moreover, Plaintiff in the Addendum A to his purchase contract ("DROA") for the land acknowledged that he was currently leasing the property and had "satisfactorily completed his inspections and testing of the property completing his due diligence inspection." (See Doc. # 30-6, Addendum A.) Accordingly, Plaintiff has failed to raise a genuine issue of material fact as to the lack of a valid lease on the Property. For all the reasons above, the Court finds that a valid lease was created providing Plaintiff with a definite parcel of land for a fixed term.
Plaintiff argues that the Hamiltons should not be able to retain the lease sum because Defendants' misrepresented the fact that they signed the Asset Option. (Opp'n to MPSJ at 13.) In support, Plaintiff contends that he never would have leased the Property had he known the sale could not go through. (Id.) Because this argument has already been addressed by the Court in favor of the Hamilton Defendants, the Court need not address it again in relation to the counterclaim. If by this argument, Plaintiff is attempting to assert a claim for rescission of the Property Option and lease agreement, this claim is parallel to Plaintiff's misrepresentation and fraud claims. "Hawai'i courts are clearly in accord with the basic contract principle that a party defrauded on a contract may seek rescission of the contract." Exotics Hawaii-Kona, Inc. v. E.I. Du Pont De Nemours & Co., 116 Haw. 277, 172 P.3d 1021, 1033 (2007). Hawaii law allows rescission if there was "`(1) a representation of a material fact, (2) made for the purpose of inducing the other party to act, (3) known to be false but reasonably believed true by the other party, and (4) upon which the other party relies and acts to [his or her] damage.'" Matsuura v. E.I. du Pont de Nemours and Co., 102 Haw. 149, 73 P.3d 687, 701 (2003) (quoting Haw. Community Federal Credit Union v. Keka, 94 Haw. 213, 11 P.3d 1, 18 (2000)) (emphasis added); Restatement (Second) Contracts § 164 (1981) ("[i]f a party's manifestation of assent is induced by either a fraudulent or a material misrepresentation by the other party upon which the recipient is justified in relying, the contract is voidable by the recipient"). In the instant order, the Court found that Plaintiff failed to demonstrate facts to establish an essential element—reliance— necessary for Plaintiff's claims of misrepresentation, fraudulent misrepresentation or fraudulent concealment and equally necessary to assert rescission of contract.
For all the reasons above, a valid lease was formed on the terms contained in the Property Option. Therefore, Plaintiff expressly
Plaintiff argues that the Hamilton Defendants' retention of the $20,000 would be unjust. (See Opp'n to MSJ at 23 (incorporating by reference Plaintiff's Opp'n to MPSJ at 13).) Claims for unjust enrichment derive from principles of equity. See Porter v. Hu, 116 Haw. 42, 169 P.3d 994, 1007 (Haw.Ct.App.2007); Hiraga v. Baldonado, 96 Haw. 365, 31 P.3d 222, 229 (Haw.Ct.App.2001). A valid "claim for unjust enrichment requires only that a plaintiff prove that he or she conferred a benefit upon the opposing party and that the retention of that benefit would be unjust." Id. (citing Durette v. Aloha Plastic Recycling, Inc., 105 Haw. 490, 100 P.3d 60, 74 (2004)).
Hawai`i law has approved "the principle, long-invoked in the federal courts, that `equity has always acted only when legal remedies were inadequate.'" Id. (quoting Beacon Theatres, Inc. v. Westover, 359 U.S. 500, 509, 79 S.Ct. 948, 3 L.Ed.2d 988 (1959)). The absence of an adequate remedy at law, therefore, is the "necessary prerequisite" to maintaining equitable claims. Id. (quoting Bd. of Dirs. of the Ass'n of Apt. Owners of Regency Tower Condo. Project v. Regency Tower Venture, 2 Haw.App. 506, 635 P.2d 244, 249 (1981)).
Equitable remedies are not available when an express contract exists between the parties concerning the same subject matter. See id.; see also Paracor Fin. v. Gen. Elec. Capital Corp., 96 F.3d 1151, 1167 (9th Cir.1996) (analyzing both California and New York law). The purpose of the rule is to guard against the use of equitable remedies to "distort a negotiated arrangement by broadening the scope of the contract." Gibbs-Brower Intern. v. Kirchheimer Bros. Co., 611 F.Supp. 122, 127 (D.C.Ill.1985) (analyzing Illinois law) (citation omitted). Where the parties to a contract have bargained for a particular set of rights and obligations, all claims involving those express rights and obligations properly lie in contract law and not in equity.
In their Motion, Hamilton Defendants argue that Plaintiff's unjust enrichment claim should be dismissed as a matter of law because (1) the Hamilton Defendants have not benefitted from any of Plaintiff's actions because they do not intend to construct or operate a bottling facility; (2) they have not received a benefit from the well drilled by Plaintiff on the Property, and moreover Plaintiff abandoned the well and failed to fill it; and (3) the $20,000 lease sum was paid to the Hamilton Defendants pursuant to a valid lease agreement contained in the Property Option. (MSJ at 3-4.)
As to the Hamilton Defendants first and second arguments, the fact that the Hamilton Defendants filled the well and are pursuing a counterclaim to recover expenses incurred for doing so supports the Defendants' assertions that they did not intend to operate a bottling facility. (Id. at 4.) Furthermore, the Court has already found that the Hamiltons were damaged by Plaintiff's actions in abandoning the unfinished well in a precarious condition on the Property, therefore the Hamiltons clearly did not benefit from the well. As to Hamilton Defendants third argument, the
To support his argument that the Hamilton Defendants received a benefit from his work in preparation for development of the bottling facility, Plaintiff asserts, without setting forth specific facts or evidence to support his proposition, that in addition to creating the well, Plaintiff obtained a special permit obtained in the Hamilton's name that adds significant value to the property. (Compl. ¶ 24; Opp'n to MSJ at 9.) However, the Court finds that the permit is specifically for use of the Property as a bottling facility and moreover relies on the existence of a potable well, which the Hamilton Defendants have filled. (See Doc. # 108, Declaration of Shikwan Sung, Ex. K.) Plaintiff may not rely on the mere allegations in the pleadings, Porter, 419 F.3d at 891 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)), and provides nothing but argument in support of this proposition that the Hamilton's have benefitted from Plaintiff's actions.
Plaintiff has failed to raise any genuine issue of material fact as to whether Plaintiff conferred a benefit upon the Hamilton Defendants the retention of which would be unjust. Therefore, the Court may decide the issue as a matter of law. Because it is well settled in federal courts that equitable remedies are not available when an express contract exists between the parties concerning the same subject matter, the Court finds, as a matter of law, that Plaintiff is not entitled relief under his claim for unjust enrichment against the Hamilton Defendants.
Accordingly, the Court GRANTS Hamilton Defendants' Motion for Summary Judgment as to Count IV. The Court also GRANTS the Hamilton's Motion for Partial Summary Judgment as to Counterclaim as to Count III.
As set forth herein, the Court GRANTS IN PART AND DENIES IN PART Defendants Robert Emmett Hamilton, Susan Weinert Hamilton, and Hula Brothers, Inc.'s Motion for Summary Judgment as to Plaintiff Shikwan Sung's Remaining Claims (Doc. # 59); GRANTS Defendants Robert Emmett Hamilton and Susan Weinert Hamilton's Motion for Partial Summary Judgment as to Counterclaim (Doc. # 61); and GRANTS Defendants Big Island Land Co., Ltd. and Gregory Gadd's Motion for Summary Judgment (Doc. # 83).
IT IS SO ORDERED.
Pulawa, 143 P.3d at 1214 (quoting Blair v. Ing, 95 Haw. 247, 21 P.3d 452, 464-65 (2001)).
