United States District Court, D. Hawaii
MICHAEL DAVID BRUSER and LYNN BRUSER, Trustees under that certain unrecorded Revocable Living Trust Agreement dated July 11, 1988, as amended, doing business as Discovery Bay Center, Plaintiffs,
BANK OF HAWAII, a Hawaii corporation, as Trustee, as successor by merger with Hawaiian Trust Company, Limited, a former Hawaii corporation and as successor Trustee under that certain Trust Agreement dated June 6, 1974, Defendant,
JULIE G. HENDERSON, as Trustee of the Julie G. Henderson Irrevocable Trust, and as Trustee of the Jean K. Gowans Irrevocable Trust, and as Trustee of the Louis L. Gowans, Jr. Irrevocable Trust; RICHARD L. GOWANS, as Trustee of the Richard L. Gowans Irrevocable Trust; KEVIN I. YOKOHAMA; ASSOCIATION OF APARTMENT OWNERS OF DISCOVERY BAY; SUSAN SHEETZ; and PATRICIA SHEETZ BOW, Intervening Defendants. BANK OF HAWAII, a Hawaii corporation, as Trustee, as successor by merger with Hawaiian Trust Company, Limited, a former Hawaii corporation and as successor Trustee under that certain Trust Agreement dated June 6, 1974. Counterclaim Plaintiff,
MICHAEL DAVID BRUSER and LYNN BRUSER, Trustees under that certain unrecorded Revocable Living Trust Agreement dated July 11, 1988, as amended, doing business as Discovery Bay Center, Counterclaim Defendants.
LESLIE E. KOBAYASHI, UNITED STATES DISTRICT JUDGE
This case came before the Court for a bench trial on February 2, 2016, with Plaintiffs/Counterclaim Defendants Michael David Bruser and Lynne Bruser (“the Brusers”) represented by Gary Victor Dubin, Esq. Defendant/Counterclaim Plaintiff Bank of Hawai'i, as successor Trustee under that certain Trust Agreement dated June 6, 1974 (“BOH”), was represented by Johnathan Bolton, Esq. Defendants/Counterclaim Plaintiffs Julie G. Henderson, Trustee of the Julie G. Henderson Irrevocable Trust; Julie G. Henderson, Trustee of the Jean K. Gowans Irrevocable Trust; Julie G. Henderson, Trustee of the Louis L. Gowans, Jr., Irrevocable Trust; and Richard L. Gowans, Trustee of the Richard L. Gowans Irrevocable Trust (collectively “the Henderson/Gowans”) were represented by Corey Y.S. Park, Esq. Defendants/Counterclaim Plaintiffs Kevin I. Yokoyama, Trustee of the Kevin I. Yokoyama Trust and the Irvine K. Yokoyama, Jr. Trust (collectively “Yokoyama”) were represented by Christopher J.I. Leong, Esq. Defendants/Counterclaim Plaintiffs Susan Sheetz and Patricia Sheetz Bow (collectively “Sheetz Bow”) were represented by Robert Bruce Graham, Jr., Esq. Finally, Defendant/Counterclaim Plaintiff the Association of Apartment Owners of Discovery Bay (“AOAO”) was represented by Andrew V. Beaman, Esq. The Court hereby outlines its decision. BOH is instructed to prepare the proposed Findings of Fact and Conclusions of Law (“FOF/COL”) consistent with the Court’s ruling herein, and annotated to the record and the trial transcript by no later than March 22, 2016. The Brusers may respond to those portions of BOH’s proposed FOF/COL that they object to by filing an alternative proposed FOF/COL, annotated to the record and the trial transcript, and addressing the portions objected to, by no later than April 12, 2016. Thereafter, a final FOF/COL shall be issued by the Court that will supersede any rulings, findings, or conclusions herein, and that will serve as the final decision in this matter.
This matter originally arose out of a dispute regarding liability for payment of trustee fees: on August 29, 2014, the Brusers filed their Complaint for Declaratory Judgment (“Complaint”) against BOH. [Dkt. no. 1.] BOH filed its counterclaims against the Brusers on January 28, 2015 (“BOH Counterclaim”). [Dkt. no. 34.]
While the Brusers’ Complaint was filed against a single defendant (that is, BOH), several parties sought permission to intervene as defendants and, upon being granted intervention, they filed their own respective counterclaims: on March 13, 2015, the Henderson/Gowans were permitted to intervene as defendants, and on March 20, 2015, they filed their answer to the Complaint and a counterclaim against the Brusers (“Henderson/Gowans Counterclaim”). [Dkt. nos. 41, 42.] On March 27, 2015, Yokoyama, Sheetz Bow, and AOAO were permitted to intervene as defendants. [Dkt. nos. 43-45.] Yokoyama filed an answer to the Complaint and a counterclaim on April 2, 2015 (“Yokoyama Counterclaim”), [dkt. no. 46, ] and Sheetz Bow and AOAO filed their respective answers to the Complaint and counterclaims on April 3, 2015 (“Sheetz Bow Counterclaim” and “AOAO Counterclaim”) [dkt. nos. 47, 48].
In the Complaint, the Brusers seek declaratory judgment that: they are not liable for the payment of the trustee fees (“Trustee Fee”) under the Trust Agreement dated June 6, 1974 (“Trust Agreement”); or, in the alternative, they are liable only for the actual percentage of their undivided interest or only reasonable fees as determined at trial. In addition, they seek additional relief such as an accounting, and reasonable attorneys’ fees and costs.
The BOH Counterclaim has five claims: (1) declaratory judgment that, pursuant to the Condominium Conveyance Document, dated December 1, 1976 (“CCD”), the Brusers are obligated to pay the Trustee Fee as determined under the Trust Agreement; (2) breach of contract under the CCD; (3) breach of contract under the Trust Agreement; (4) breach of the covenant of good faith and fair dealing; and (5) recovery of attorneys’ fees and costs incurred as a result of enforcing the CCD pursuant to the terms of the Trust Agreement.
The AOAO Counterclaim contains four claims: (1) declaratory judgement that the Brusers are obligated to pay the Trustee Fee as determined under the Trust Agreement and/or the CCD; (2) breach of contract under the CCD; (3) breach of contract under the Trust Agreement; and (4) breach of the covenant of good faith and fair dealing.
The Sheetz Bow Counterclaim, Yokoyama Counterclaim, and Henderson/Gowans Counterclaim each contains a single claim for declaratory relief that the Brusers are in breach of the CCD and/or the Trust Agreement for failing to pay the Trustee Fee.
On April 16, 2015, BOH filed its Motion for Partial Summary Judgment as to its First Counterclaim Against Plaintiffs/Counterclaim Defendants (“Motion”). [Dkt. no. 50.] On July 21, 2015, this Court issued its Order Granting Defendant/Counterclaim Plaintiff Bank of Hawaii’s Motion for Partial Summary Judgment as to its First Counterclaim Against Plaintiffs/Counterclaim Defendants, and Joinder of Intervenor Defendant Association of Apartment Owners of Discovery Bay; and Denying the Other Joinders Thereto (“7/21/15 Order”). [Dkt. no. 88. The 7/21/15 Order notes that “[a]lthough the Complaint and Counterclaim raise issues related to the Trust Agreement, and, in particular, the reasonable Trustee Fee, none of those issues are relevant to the instant Motion.” [Id. at 11.] The Court agreed with BOH, stating “the plain language of the CCD requires payment of fees under the Trust Agreement, which includes the Trustee Fee.” [Id. at 12.] More specifically, the Court concluded “that the plain and ordinary meaning of the terms of the Apartment Deed and the CCD require the Brusers to pay ‘all fees and expenses’ as provided by the Trust Agreement, ” [id. at 15 (citing Cho Mark Oriental Food v. K & K Intern., 73 Haw. 509, 520, 836 P.2d 1057, 1064 (1992)), ] and that there is no ambiguity in the terms of the Apartment Deed or the CCD [id. (citing Airgo v. Horizon Cargo Transp., 66 Haw. 590, 594, 670 P.2d 1277, 1280 (1983))].
The 7/21/15 Order was careful to point out the limits of its ruling, namely that “it makes no judgment as to what the Trustee Fee should be, who must mutually agree to it, and what is reasonable.” [Id. at 16.] The Court also made clear that it “does not interpret Paragraph 12 of the CCD in the context of the Trustee Agreement as a whole, or the understandings of the parties to that agreement” because “[t]hose issues are best left for the Trust Litigation,  where the content of the Trust Agreement is already being litigated.” [Id.]
In an entering order filed on January 8, 2016 (“1/8/16 EO”), and in light of the 7/21/15 Order, the Court found that:
As to the Complaint, there are no remaining claims.
As to the BOH Counterclaim, there are three remaining claims for the jury to decide: (1) breach of contract under the CCD; (2) breach of the covenant of good faith and fair dealing as to the CCD only; and (3) whether BOH incurred costs and expenses in enforcing the CCD, and, if so, in what amount(s).
As to the AOAO Counterclaim, there are two remaining claims for ...