Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Bruser v. Bank of Hawaii

United States District Court, D. Hawaii

June 28, 2016

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
v.
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,
v.
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
v.
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.

          FINDINGS OF FACT AND CONCLUSIONS OF LAW AND ORDER

          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, having considered the pleadings, the exhibits admitted into evidence, and the arguments and representations of counsel, makes the following Findings of Fact and Conclusions of Law and Order pursuant to Fed.R.Civ.P. 52. The Court FINDS in favor of BOH, the Henderson/Gowans, Yokoyama, Sheetz Bow, and AOAO. Any finding of fact that should more properly be deemed a conclusion of law and any conclusion of law that should more properly be deemed a finding of fact shall be so construed.

         BACKGROUND

         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].

         The Complaint seeks declaratory judgment that the Brusers are, inter alia: not liable for the payment of the trustee fees (“Trustee Fee”) under the Trust Agreement dated June 6, 1974 (“Trust Agreement”);[1] or, in the alternative, only liable 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”), [2] 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.[3] The Motion sought summary judgment only on BOH’s first counterclaim, which focused entirely on the CCD. 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.”[4] Bruser v. Bank of Hawai`i, Civil No. 14-00387 LEK-KSC, 2015 WL 4469850, at *4 (D. Hawai`i July 21, 2015).

         The Court also stated that it “does not interpret Paragraph 12 of the CCD in the context of the Trustee Agreement as a whole, ” and “makes no judgment as to what the Trustee Fee should be, who must mutually agree to it, and what is reasonable.” Id. at *5. Further, in an Entering Order filed on January 8, 2016 (“1/8/16 EO”), and in light of the 7/21/15 Order, the Court explained that it

may not act as an appellate court and review the state probate court’s rulings related to the Trust Agreement. Therefore, it must dismiss as a matter of law, pursuant to the Rooker-Feldman doctrine, [5] any claims related to the interpretation of the Trust Agreement or the reasonableness of the trustee fees, including: the Brusers’ claim seeking declaratory judgment that the Trust Agreement does not hold them liable for payment of trustee fees; and BOH and AOAO’s counterclaims for breach of the Trust Agreement.

[1/8/16 EO at 4.] As such, only the following claims remained:

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 the jury to decide:
(1) breach of contract under the CCD; and
(2) breach of the covenant of good faith and fair dealing of the CCD.
As to the Sheetz Bow Counterclaim, Yokoyama Counterclaim, and Henderson/Gowans Counterclaim, there is a single claim for the jury to decide, which is whether the Brusers are in breach of the CCD for failing to pay trustee fees.

[Id. at 3-4.]

         On January 20, 2016, the Brusers filed a Notice of Withdrawal of Jury Trial Demand. [Dkt. no. 150.] The same day, the Henderson/Gowans, AOAO, Yokoyama, BOH, and Sheetz Bow all filed statements of no opposition. [Dkt. nos. 145-49.] In an Entering Order filed on January 25, 2016, and pursuant to Federal Rules of Civil Procedure 38(d) and 39(a)(1), the Court withdrew the Brusers’ jury demand. [Dkt. no. 152.] Finally, in a stipulation filed on February 2, 2016 (“Stipulation”): BOH stipulated to dismiss its third and fourth counterclaims without prejudice;[6] AOAO stipulated to dismiss its second, third, and fourth counterclaims without prejudice; and the Henderson/Gowans, Yokoyama, and Sheetz Bow stipulated to dismiss their claims for declaratory relief that the Brusers breached the Trust Agreement without prejudice. [Dkt. no. 179 at ¶¶ 1-4.] The only remaining claims in the instant matter are therefore: BOH’s second counterclaim for breach of contract under the CCD; and the Henderson/Gowans, AOAO, Yokoyama, and Sheetz Bow’s claim for declaratory relief that the Brusers are in breach of the CCD for failing to pay the Trustee Fee.

         I. Findings of Fact

         The Court makes the following findings of fact based upon the undisputed witness testimony and exhibits submitted by BOH and AOAO.

         A. The Trustee Agreement, CCD, and the Commercial Unit

          1. The Trust Agreement, dated June 6, 1974, was executed by various parties, including MEPC Properties (Hawaii) Inc. (“MEPC”), [7] as settlors; the Hawaiian Trust Company, Ltd. (“Hawaiian Trust”), as trustee; and MEPC as lessee. It was filed in the Office of the Assistant Registrar of the Land Court of the State of Hawai`i as Land Court Document No. 687964, as subsequently amended.[8] The trust res consisted of cash and the leased fee interests in the parcels that underlie Discovery Bay.[9] [Trust Agreement, Exh. A-B (describing the land parcels).]

         2. In a paragraph titled “Trustee’s Fees, ” the Trust Agreement provides:

The Trustee shall be entitled to such reasonable fees as from time to time may be mutually agreed upon. In addition to said reasonable fees, the Trustee shall have the right to incur such expenses and to be reimbursed by the Lessee as provided for by the leases; and to incur such expenses and be reimbursed for extraordinary services. The Lessee or its assigns will pay the Trustee’s fee and expenses until December 31, 2039 or the earlier termination of this trust.

[Trust Agreement at ¶ 11 (emphases added).]

         3. The CCD pertains to the only commercial unit out of the 666 units in Discovery Bay (“Commercial Unit”). It was entered into on December 1, 1976, by Hawaiian Trust, as Trustee, and MEPC, as the Apartment Owner of the Commercial Unit. The CCD refers to the Trustee as the “Lessor.” It was executed on December 15 and 16, 1976. [CCD at 1, 3, 5, 34-36.]

         4. Section IV of the CCD, titled “Lessors’ Costs and Expenses, ” provides that “[t]he Apartment Owner shall also pay to the Lessor all fees and expenses charged or incurred by the Lessor as Trustee under the terms of said Trust Agreement dated June 16, 1974, as amended, as the same become due or are incurred.” [CCD at 14-15 (emphasis added).] The CCD, thus, specifies the parties’ obligations owed to each other and makes ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.