United States District Court, D. Hawaii
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT
LESLIE E. KOBAYASHI, UNITED STATES DISTRICT JUDGE
On March 9, 2016, Defendants the Association of Apartment Owners of the Golf Villas (“AOAO”) and Certified Management, Inc., doing business as Certified Hawaii, now known as Associa Hawaii (“Certified, ” collectively “Defendants”), filed their Motion for Summary Judgment (“Motion”). [Dkt. no. 29.] Plaintiff Vincent DeRosa (“Plaintiff”) filed his memorandum in opposition on March 28, 2016, and Defendants filed their reply on April 4, 2016. [Dkt. nos. 32, 36.] This matter came on for hearing on April 18, 2016.
On May 3, 2016, this Court issued an entering order ruling on the Motion (“5/3/16 EO Ruling”). [Dkt. no. 43.] The instant Order supersedes the 5/3/16 EO Ruling. After careful consideration of the Motion, supporting and opposing memoranda, and the arguments of counsel, Defendants’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART. Specifically, the Motion is DENIED WITHOUT PREJUDICE as to Plaintiff’s breach of contract claim, and the Motion is GRANTED in all other respects. As to the remaining claims - breach of contract and the Haw. Rev. Stat. § 515-16(1) claim - any party who desires to file a motion for summary judgment has leave to file by or before May 31, 2016.
Plaintiff filed his Complaint on January 22, 2015 in state court. [Notice of Removal, filed 5/7/15 (dkt. no. 1), Decl. of David R. Major (“Major Removal Decl.”), Exh. A (Complaint).] Defendants removed the case based on federal question jurisdiction. [Notice of Removal at ¶ 2.]
The Complaint alleges that Plaintiff has a disability, as that term is defined in the Americans with Disabilities Act (“ADA”). Plaintiff owns a pug named Jake, who is a certified Emotional Support Animal (“ESA”), registered with the National Service Animal Registry (“NSAR”). [Complaint at ¶¶ 8-10.] Further, Plaintiff alleges that:
“Jake” meets the ADA definition of a service dog. The Fair Housing Amendments Act of 1988, Section 504 of the Rehabilitation Act of 1973 and Title II of the ADA require property managers and landlords to make reasonable accommodations to permit a disabled handler to keep an ESA even when there is a policy explicitly prohibiting pets.
[Id. at ¶ 11.]
The following facts are undisputed. Plaintiff previously owned a condominium unit at the Kapalua Golf Villas (“Golf Villas”), which is part of the Kapalua Resort, a master planned community. [Defs.’ Separate Concise Statement of Facts in Supp. of Motion (“Defs.’ CSOF”), filed 3/9/16 (dkt. no. 30), at ¶¶ 1-2; Pltf.’s Separate Concise Statement of Facts in Supp. of Mem. in Opp. (“Pltf.’s CSOF”), filed 3/28/16 (dkt. no. 33), at ¶¶ 1-2.] The Kapalua Resort is subject to a December 29, 1976 Declaration of Covenants and Restrictions, the applicable version of which was amended and restated, and recorded on September 30, 1987 (“Kapalua Declaration”). [Defs.’ CSOF at ¶ 2; Pltf.’s CSOF at ¶ 2; Defs.’ CSOF, Decl. of Alan Fleisch (“Fleisch Decl.”), Exh. B (Kapalua Decl.).] The Golf Villas’s Declaration of Horizontal Property Regime (“Golf Villas Declaration”) states that it is subject to the Kapalua Declaration. [Defs.’ CSOF at ¶ 4; Pltf.’s CSOF at ¶ 4; Fleisch Decl., Exh. C (Golf Villas Decl.).] The Kapalua Declaration therefore contains numerous covenants and restrictions that encumbered the title to Plaintiff’s Golf Villas unit. [Defs.’ CSOF at ¶ 5; Pltf.’s CSOF at ¶ 5.]
The claims in this case arise from: the AOAO’s refusal to grant Plaintiff an exception to what the AOAO asserts is a no-pets policy in the Golf Villas’s governing documents; and alleged retaliation by the AOAO and its agent, Certified, for Plaintiff’s opposition to a Golf Villas remediation project and for his filing of a disability discrimination complaint against the AOAO with the Hawai`i Civil Rights Commission (“HCRC”) and the United States Department of Housing and Urban Development (“HUD”).
Plaintiff’s Complaint does not set forth his claims as numbered counts. He lists them in one paragraph:
The actions and omissions of the AOAO and Certified constitute retaliation, bad faith, selective enforcement of the governing documents, negligence, gross negligence, breach of contract, breach of fiduciary duty, negligent and intentional emotional distress, prima facie tort, racketeering, and violations of [Haw. Rev. Stat.] §§ 515-16(1), 515-16(6), 514B-9, 514B-105, 514B-105 [sic] and [Haw. Admin. R.] §§ 12-46-301, 12-46-310(1) and 12-46-310(6).
[Complaint at ¶ 29.] The Complaint seeks the following relief: a declaratory judgment that Defendants violated § 515-16(1) and (6), § 12-46-301, and § 12-46-310(1) and (6); “[j]ust compensation including general, special, and punitive damages[;]” attorneys’ fees and costs; and any other appropriate relief. [Id. at pg. 8.]
In the instant Motion, Defendants argue that all of Plaintiff’s claims should be dismissed with prejudice or this Court should grant summary judgment in Defendants’ favor.
I. Procedural Issues
In his memorandum in opposition, Plaintiff asks that he be allowed to continue discovery, pursuant to Fed.R.Civ.P. 56(d), before this Court rules on the Motion. [Mem. in Opp. at 2.] In an April 13, 2016 entering order (“4/13/16 EO”), this Court denied Plaintiff’s request because he failed to follow the requirements for a Rule 56(d) request. [Dkt. no. 37.]
This Court also notes that Plaintiff failed to include a declaration or affidavit authenticating his exhibits. Although Plaintiff submitted a declaration, [Decl. of Vincent DeRosa (“Plaintiff Declaration”), filed 3/28/16 (dkt. no. 34), ] it is not sufficient to authenticate any of his exhibits. In the 4/13/16 EO, this Court informed the parties that it would not consider any exhibits that were not properly authenticated. However, out of fairness, this Court recognizes that: several of Plaintiff’s exhibits are documents that are included among Defendants’ exhibits; some of Plaintiff’s other exhibits are described - although not specifically identified according to exhibit number - in his declaration; and still more of Plaintiff’s exhibits could have been authenticated by Plaintiff because they are correspondence either from him or to him.
This Court does not condone Plaintiff’s failure to follow the applicable rules, and this Court could rightly refuse to take Plaintiff’s exhibits into account because of the lack of authentication. However, this Court, in its discretion, declines to strike Plaintiff’s exhibits, and it has taken his exhibits into account in considering Defendants’ Motion. Even though this Court has considered Plaintiff’s exhibits, they do not establish a genuine issue of material fact for trial. See Fed.R.Civ.P. 56(a) (“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”).
This Court now turns to the merits of the Motion.
II. Claims Subject to Dismissal
Even though Defendants titled their motion “Motion for Summary Judgment, ” they argue that some of Plaintiff’s claims should be dismissed because, based upon the allegations of the Complaint, those claims fail as a matter of law. This Court will therefore apply the dismissal standards in considering those claims. See Fed.R.Civ.P. 12(b)(6) (“failure to state a claim upon which relief can be granted”); Levitt v. Yelp! Inc., 765 F.3d 1123, 1135 (9th Cir. 2014) (stating that, in order to survive a Rule 12(b)(6) motion to dismiss, a plaintiff’s “factual allegations must suggest that the claim has at least a plausible chance of success” (alteration, citation, and internal quotation marks omitted)).
A. Bad Faith
Under Hawai`i law, the tort of bad faith is also known as breach of the duty of good faith and fair dealing. Because this Court has supplemental jurisdiction over Plaintiffs’ state law claims, it must apply Hawai`i substantive law to those claims. See Mason & Dixon Intermodal, Inc. v. Lapmaster Int’l LLC, 632 F.3d 1056, 1060 (9th Cir. 2011). This Court has recognized that:
When interpreting state law, a federal court is bound by the decisions of a state’s highest court. Trishan Air, Inc. v. Fed. Ins. Co., 635 F.3d 422, 427 (9th Cir. 2011). In the absence of a governing state decision, a federal court attempts to predict how the highest state court would decide the issue, using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance. Id.; see also Burlington Ins. Co. v. Oceanic Design & Constr., Inc., 383 F.3d 940, 944 (9th Cir. 2004) (“To the extent this case raises issues of first impression, our court, sitting in diversity, must use its best judgment to predict how the Hawai`i Supreme Court would decide the issue.” (quotation and brackets omitted)).
Evanston Ins. Co. v. Nagano, 891 F.Supp.2d 1179, 1189 (D. Hawai`i 2012) (some citations omitted). This Court has stated:
Hawai`i courts have recognized 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 Hawai`i 120, 123-24, 920 P.2d 334, 337-38 (1996) (citations omitted). “Good faith performance ‘emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party.’” Hawaii Leasing v. Klein, 5 Haw.App. 450, 456, 698 P.2d 309, 313 (1985) (quoting Restatement (Second) of Contracts § 205 cmt. a (1981)). This district court, however, has observed that:
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 Hawai`i 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.
Sung v. Hamilton, 710 F.Supp.2d 1036, 1050 (D. Hawai`i 2010).
Flynn v. Marriott Ownership Resorts, Inc., No. CV 15-00394 LEK-BMK, 2016 WL 843251, at *21-22 (D. Hawai`i Feb. 29, 2016).
The instant case does not arise from the insurance context, nor is the relationship between Plaintiff and Defendants the type of special relationship that supports a bad faith claim, such as “an innkeeper, a common carrier, a lawyer, [or] a doctor.” See id. at *22 (quoting Best Place, 82 Hawai`i at 131, 920 P.2d at 345). Although the Hawai`i Supreme Court has never expressly addressed whether it would recognize a bad faith claim in the context of the relationship between an apartment owner and the apartment owners’ association, this Court predicts that the supreme court would decline to do so because of the lack of a special relationship.
This Court therefore CONCLUDES that Plaintiff’s bad faith claim fails to state a claim upon which relief can be granted and must be DISMISSED. Further, this Court CONCLUDES that the dismissal must be WITH PREJUDICE because it is not possible for Plaintiff to cure the defect in the bad faith claim by amendment. See Sonoma Cty. Ass’n of Retired Emps. v. Sonoma Cty., 708 F.3d 1109, 1118 (9th Cir. 2013) (“As a general rule, dismissal without leave to amend is improper unless it is clear . . . that the complaint could not be saved by any amendment.” (brackets, citation, and internal quotation marks omitted)). The Motion is GRANTED as to the bad faith claim.
B. Prima Facie Tort Claim
Defendants next argue that Plaintiff’s prima facie tort claim is not cognizable under Hawai`i law. Plaintiff relies on Metzler Contracting Co. v. Stephens, Civil No. 07-00261 LEK, 2009 WL 1046666, at *5 (D. Hawai`i Apr. 17, 2009), in which this Court predicted that the Hawai`i Supreme Court would “recognize a separate cause of action for prima facie tort under facts virtually identical to” Giuliani v. Chuck, 1 Haw.App. 379, 620 P.2d 733 (Ct. App. 1980). In Metzler, this Court pointed out that, in Giuliani, the Hawai`i Intermediate Court of Appeals (“ICA”) “did not recognize prima facie tort as an alternative to another well-recognized cause of action.” 2009 WL 1046666, at *5. Plaintiff argues that the Hawai`i Supreme Court would allow him to pursue a prima facie tort claim in this case because, like Giuliani, “Plaintiff does not assert the claim for prima facie tort as an alternative to another well-recognized cause of action.” [Mem. in Opp. at 16.]
Plaintiff’s argument is misplaced. This Court again predicts, for the reasons stated in Metzler, that the Hawai`i Supreme Court would only recognize a prima facie tort claim in cases with facts that are virtually identical to Giuliani. See Metzler, 2009 WL 1046666, at *5. In Giuliani, the plaintiffs entered into an agreement to purchase residential property from the defendant. They did not complete the sale because of disputes regarding the sale documents, and the defendant’s attorney deemed the plaintiffs’ deposit forfeited, alleging that the plaintiffs breached the agreement. The plaintiffs filed suit to rescind the contract and to obtain the return of their deposit. Giuliani, 1 Haw.App. at 381, 620 P.2d at 735. The ICA held that “the amended complaint [was] sufficient to state a cause of action for intentional harm to a property interest, a cognizable cause of action sounding in tort, ” but it was insufficient to allege any other cause of action. Id. at 386, 620 P.3d at 738 (citing Restatement, Second, Torts § 871). This Court cannot find that the facts of this case are virtually identical to Giuliani. This Court therefore predicts that the Hawai`i Supreme Court would not recognize a prima facie tort claim under the facts of this case.
This Court CONCLUDES that Plaintiff’s prima facie tort claim fails to state a claim upon which relief can be granted. Further, this Court CONCLUDES that it is not possible for Plaintiff to cure the defects in this claim by amendment. Accord Barber v. Ohana Military Communities, LLC, Civil No. 14-00217 HG KSC, 2014 WL 3529766, at *13-14 (D. Hawai`i July 15, 2014) (concluding that the plaintiffs’ prima facie tort claim was futile and dismissing the claim with prejudice because “[t]he circumstances of [the] case would not give rise to a prima facie tort claim”). The Motion is GRANTED insofar as the prima facie tort claim is DISMISSED WITH PREJUDICE.
C. Selective Enforcement of Governing Documents
Plaintiff cites Restatement (Third) of Property: Servitudes §§ 6.13 and 6.14 and Haw. Rev. Stat. §§ 514B-9 and 514B-10 as the legal authority for his claim alleging selective enforcement of the governing documents. However, Plaintiff has not cited, nor is this Court aware of, any case in which the Hawai`i Supreme Court has adopted §§ 6.13 and 6.14 and recognized a cause of action for selective enforcement under those sections. Further, Plaintiff has not cited, nor is this Court aware of, any case in which the Hawai`i Supreme Court has recognized that an apartment owner may bring a selective enforcement claim pursuant to §§ 514B-9 and 514B-10. Based upon this lack of precedent, this Court predicts that the Hawai`i Supreme Court would not recognize a cause of action for selective enforcement pursuant to these sections.
This Court CONCLUDES that Plaintiff’s selective enforcement claim fails to state a claim upon which relief can be granted, and that it is not possible for Plaintiff to cure the defects in this claim by amendment. The Motion is GRANTED insofar as the claim for selective enforcement of the governing documents is DISMISSED WITH PREJUDICE.
D. Breach of Fiduciary Duty
Plaintiff argues that, based on Restatement (Third) of Property: Servitudes §§ 6.13 and 6.14, the board of directors of an apartment owners’ association owes a fiduciary duty to all members of the association, not just to the association itself. Plaintiff also argues that, in Lee v. Puamana Community Ass’n, 109 Hawai`i 561, 128 P.3d 874 (2006), the Hawai`i Supreme Court recognized that an owners’ association owes a fiduciary duty to its members.
In Lee, the Hawai`i Supreme Court did state that “other courts have stated that nonuniform amendments and amendments that breach any fiduciary duties owed by an association to its members are invalid unless approved by every member whose interest is adversely affected.” Id. at 571, 128 P.3d at 884 (citations omitted). However, the issue of whether an owners’ association owes fiduciary duties to individual owners was not before the supreme court in Lee. It made that statement in discussing exceptions to the general rule that an “amendment made pursuant to a general amendment provision will be upheld.” Id. at 570-71, 128 P.3d at 883-84. This district court has concluded that Lee did not recognize that an owners’ association owes a fiduciary duty to its individual members. See Baham v. Ass’n of Apartment Owners of Opua Hale Patio Homes, Civ. No. 13-00669 HG-BMK, 2014 WL 2761744, at *9-10 (D. Hawai`i June 18, 2014). This Court agrees with the analysis in Baham, where the district court stated that the plaintiff’s claims were “based on the AOAO’s actions with respect to [his] failure to pay his maintenance fees, ” and therefore his claims were “more akin to those brought by a lender against a borrower, a relationship in which a fiduciary duty does not exist.” Id. at *10.
Thus, this Court CONCLUDES that Plaintiff’s relationship with Defendants was not the type of relationship that gave rise to a fiduciary duty. This Court CONCLUDES that Plaintiff’s claim for breach of fiduciary duty fails to state a plausible claim for relief, and it is not possible for Plaintiff to cure the defects in this claim by amendment. The Motion is GRANTED insofar as the claim for breach of fiduciary duty is DISMISSED WITH PREJUDICE.
E. Statute of Limitations
Defendants argue that several of Plaintiff’s claims should be dismissed with prejudice because they are barred by the statute of limitations. This Court has considered the parties’ exhibits in ruling on the issue of whether those claims are barred by the statute of limitations. This Court will therefore apply the summary judgment standard to those claims. See Daniels-Hall v. Nat’l Educ. Ass’n, 629 F.3d 992, 998 (9th Cir. 2010) (stating that ...