FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO.
Christopher A. Dias (of counsel) for Plaintiff-Appellant.
Jeffrey A. Griswold (Lyons, Brandt, Cook & Hiramatsu) for
PRESIDING JUDGE, LEONARD AND REIFURTH, JJ.
Alii Security Systems, Inc. (Alii) appeals from the October
24, 2012 "Order Granting Defendants Professional
Security Consultants and Professional Security Consultants,
Inc.'s Motion To Dismiss Or, In The Alternative, For
Summary Judgment, Filed August 21, 2012" (Order); and
July 24, 2013 Final Judgment (Judgment), both entered in the
Circuit Court of the First Circuit (circuit court).
underlying action, Alii sought damages from
Defendants-Appellees Professional Security Consultants and
Professional Security Consultants, Inc. (together,
for PSC's alleged tortious interference with Alii's
contractual relationship and tortious interference with
Alii's prospective business advantage with the Department
of Transportation, State of Hawai'i (DOT). PSC moved to
dismiss the complaint, arguing that Alii failed to state a
claim upon which relief could be granted and that the claims
were statutorily barred. The circuit court granted the
motion. On appeal, Alii seeks to have the Order vacated and
the Judgment set aside.
of 2008, the DOT awarded Alii a three-year contract to
provide security services in Oahu's commercial harbors.
The contract term commenced in September of 2008, terminated
in September of 2011, but provided for two optional one-year
extensions. In late 2010, Alii met with DOT Operations
Supervisor Bill Davis (Davis) to discuss the manner of
exercising the option for the first one-year extension. In
this meeting, Davis allegedly told Alii that the contract
required Alii to write a letter to the DOT district manager
seeking written confirmation of the extension. Davis
allegedly stated that he expected "the extension would
be routinely granted because of Alii['s] satisfactory
performance." Alii thereafter sent a letter to DOT
documenting the "agreement" to extend the contract
and requesting "confirmation of the extension."
June 22, 2011 meeting, DOT informed Alii that instead of
being renewed, the contract would go out for bid because of
"material changes and a significant increase in the scope of
the contract." DOT thereafter offered to extend the
contract with Alii for a 6 to 9 month period while the new
contract was being assembled, and Alii agreed. The contract
was set to terminate around April 2012. On or about July 25,
2011, DOT issued its request for proposals for the new
Harbors Contract. The contract was to be awarded to "the
lowest responsive and responsible bidder whose proposal
complies with all the prescribed requirements." Alii and
PSC were two of thirteen bidders. The contract was awarded to
PSC on November 1, 2011. Alii was the second-lowest bidder.
November 30, 2011, Alii filed a formal bid protest with the
director of DOT challenging the award pursuant to Hawaii
Revised Statutes (HRS) § 103D-701 (2012
Repl.). The protest was denied as untimely and
lacking sufficient content. Alii requested a hearing with the
Office of Administrative Hearings of the Department of
Commerce and Consumer Affairs (DCCA) to contest the denial of
its protest. The hearings officer affirmed the denial in its
February 24, 2012, "Findings of Fact, Conclusions of
Law, and Decision" (FOFs/COLs and Decision). Alii
appealed the FOFs/COLs and Decision to the circuit court,
which affirmed the hearings officer's denial on the
grounds of inadequate contents of the protest. Alii then
appealed the circuit court's decision to this court,
which affirmed the circuit court decision. See Alii Sec.
Sys., Inc., v. Dep't. of Transp., No.
CAAP-12-0000790 (App. Feb. 13, 2014) (mem).
filed the present action on February 14, 2012, alleging three
counts against PSC: Count I, Tortious Interference with
Contractual Relations (TICR); Count II, Tortious Interference
with Prospective Business Advantage (TIPBA); and Count III,
punitive damages. Alii alleged that PSC
disrupted [Alii's] existing contractual relationship and
its prospective business advantage with the DOT by, inter
alia, knowingly misrepresenting possessing necessary
qualifications, making materially false statements to the
DOT, making materially false statements to the [DCCA],
falsely representing the capability to perform the
requirements of the successor contract, falsely, representing
being a business entity licensed to transact business in
Hawaii, providing false Hawaii principal office addresses,
inducing the DOT to terminate its Contract with [Alii], and
inducing the DOT to award the successor contract to [PSC].
Count I, Alii alleged that the three-year security contract
created a contractual relationship between Alii and DOT, that
PSC had knowledge of the contract, that PSC intentionally
induced DOT to breach the contract, that there was no
justification for PSC's actions, that DOT breached the
contract, and that Alii suffered resulting damages.
Count II, Alii alleged that it had a "business
relationship and/or prospective advantage or expectancy"
with DOT "which was sufficiently definite, specific, and
capable in the sense that at all material times there was a
reasonable probability of it maturing into a contract"
providing "future economic benefit" to Alii, that
PSC had knowledge of the expectancy, that PSC intentionally
interfered with the expectancy, that the impairment of the
expectancy was the legal and proximate result of the
interference by PSC, and that Alii suffered resulting
August 21, 2012, PSC filed a motion to dismiss the complaint
under Hawai'i Rules of Civil Procedure (HRCP) Rule
12(b)(6), or in the alternative, for summary judgment under
HRCP Rule 56 (Motion to Dismiss or for Summary
Judgment). PSC contended that Count I
"fail[ed] to allege fact [sic] sufficient to establish
two of the necessary elements of the claim for tortious
interference with contract[ual relations], " and that
both Counts I and II are barred by the exclusivity provisions
of HRS § 103D-704 (2012 Repl.) (the Exclusive Remedy
Provision). PSC attached several documents and exhibits in
support of its Motion to Dismiss or for Summary Judgment. In
a September 14, 2012 reply memorandum in support of the
Motion to Dismiss or for Summary Judgment, PSC subsequently
withdrew the HRCP Rule 56 motion for summary judgment
portion, stating that "it is unnecessary for the court
to consider matters outside of the pleadings in order to
confirm that the Complaint fails to state a claim upon which
relief can be granted and should be dismissed" under
HRCP Rule 12(b)(6). In the reply memorandum, PSC limited the
basis of the HRCP Rule 12(b)(6) portion of the Motion to
Dismiss or for Summary Judgment to two arguments: (1) that
Alii failed to state a valid TICR claim because "the
nonrenewal of [Alii's] prior contract does not constitute
a breach of contract" and (2) that the TIPBA claim was
barred by the exclusive remedy provisions of HRS §
103D-704. After a September 20, 2012 hearing on PCS's
Motion to Dismiss or for Summary Judgment, the circuit court
issued the Order granting the motion to dismiss and held:
The Court having reviewed all memoranda, declarations and
affidavits, and exhibits submitted thereto, having heard and
considered the arguments of counsel, being fully apprised of
the circumstances of the case and having viewed the record
and construing the allegations of the Complaint in the light
most favorable to [Alii], finds and declares as follows:
Plaintiff's Motion is granted as to Count I of the
Complaint on the ground that the Complaint fails to allege
the necessary facts to sustain a cause of action for [TICR].
Plaintiff's Motion [(See n.11)] is granted as to Count II
of the Complaint because [Alii's] claim for damages
relating to a solicitation or award is barred by the
exclusivity provisions of Section 103D-704 of the [HRS].
. . . .
HRS § 103D-101[(b)] provides that, "Any actual or
prospective bidder, offeror, (contractor), or business taking
part in the conduct of public procurement, shall act in good
faith to practice purchasing ethics[.]"
Furthermore, HRS § 103D-704 provides, "The
procedures and remedies provided for in this part, and the
rules adopted by the [p]olicy [b]oard, shall be the exclusive
means available for persons aggrieved in connection with the
solicitation or award of a contract, a suspension or
debarment proceeding, or in connection with a contract
controversy, to resolve their claims or differences[.]"
The Court determines that HRS § 103D imposes duties not
only on government officials but also any prospective bidder.
Because [Alii's] Complaint seeks relief in connection
with the solicitation of the award of .a contract,
[Alii's] exclusive means of remedy are governed by HRS
§ 103D. As such, [Alii's] claims for damages are
barred by the exclusivity provisions of HRS § 103D-704.
Alii filed this timely appeal on August 21, 2013.
POINTS OF ERROR ON APPEAL
appeal, Alii contends the circuit court committed
reversible error in treating PSC's motion as an HRCP Rule
12(b)(6) motion to dismiss for failure to state a claim upon
which relief can be granted rather than as an HRCP Rule 56
motion for summary judgment;
reversible error in concluding that Alii's claims were
barred by the Exclusive Remedy Provision of the Procurement
reversible error in dismissing Alii's TICR claim for
failure to allege the necessay facts to sustain a cause of
STANDARD OF REVIEW
A trial court's ruling on [an HRCP Rule 12(b)(6)] motion
to dismiss is reviewed de novo. The court must accept
plaintiff's allegations as true and view them in the
light most favorable to the plaintiff; dismissal is proper
only if it appears beyond doubt that the plaintiff can prove
no set ...