United States District Court, D. Hawaii
ORDER: (1) DENYING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT, ECF NO. 146; AND (2) GRANTING IN PART AND DENYING
IN PART PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT,
ECF NO. 154; EXHIBIT “A”
Michael Seabright Chief United States District Judge.
HTK Hawaii, Inc. (“HTK Hawaii”) is solely owned
by William Hsia, president of HTK Hawaii. Kimberly Hsia,
William Hsia's wife, is secretary and treasurer of HTK
Hawaii. HTK Hawaii brings this action against Defendants
Kevin Sun and Nicole Sun (formerly “Nicole Yang”)
primarily seeking a declaratory judgment that a document
titled “Contract Agreement for HTK California”
(“the Document”) is not an enforceable
contract. A business arrangement between William
Hsia and Kimberly Hsia (“the Hsias”) and
Defendants Kevin Sun and Nicole Sun (“the Suns”),
originally created to help the Hsias expand HTK Hawaii's
mainland business, fell apart, leading to this litigation.
Suns filed a counterclaim against HTK Hawaii and, as
Third-Party Plaintiffs, filed claims against the Hsias in
their individual capacities. The counterclaim alleges
multiple claims, primarily breach of contract -- related to
the Document -- and various employment law violations.
Because Plaintiff HTK Hawaii, Third-Party Defendant William
Hsia, and Third-Party Defendant Kimberly Hsia are closely
related and argue as one, they will be collectively referred
to as “HTK.”
before the court is the Suns' Motion for Summary Judgment
(“Suns' Motion”), ECF No. 146, and HTK's
Counter-Motion for Partial Summary Judgment (“HTK's
Motion”), ECF No. 154. For the reasons that follow, the
court DENIES the Suns' Motion and GRANTS in part and
DENIES in part HTK's Motion.
Hsia is the president and sole owner of HTK Hawaii. ECF No.
147-5, at 7:3-16. Kimberly Hsia, William Hsia's wife, is
the secretary and treasurer of HTK Hawaii. Id. at
8:15-18. HTK Hawaii sells shave ice products. ECF No. 155-2,
Suns are residents of California. ECF No. 155-3, Ex. 1.
William Hsia and Kevin Sun first met sometime in 2007. ECF
No. 155-2, ¶ 7. On June 10, 2013, Kevin Sun sent William
Hsia an email seeking employment with HTK Hawaii. ECF No.
155-6, Ex. 4. Sometime shortly thereafter, Kevin Sun began
working for HTK Hawaii in California. ECF No. 155-2,
¶¶ 9-10; ECF No. 147-1, ¶¶ 9-11. The
nature of this employment relationship is at issue in this
October 2013, the Hsias went to California to meet with the
Suns. ECF No. 155-2, ¶ 13; ECF No. 147-1, ¶ 12. The
Hsias and the Suns discussed a potential business arrangement
where the Suns would purchase 50% of the mainland business
and help expand it. ECF No. 155-2, ¶¶ 13-14; ECF
No. 147-1, ¶ 12. William Hsia and Kevin Sun subsequently
exchanged several emails discussing the specifics of the
potential partnership. ECF No. 155-8, Ex. 6 (memorializing
the conversation in California); ECF No. 147-8, Ex. 4
(answering follow up questions about the potential
November 30, 2013, and December 5, 2013, William Hsia and
Kevin Sun exchanged a series of emails negotiating specific
terms to be included in any agreement. ECF No. 155-9, Ex. 7;
ECF No. 147-10, Ex. 6. In these emails, the parties
explicitly used phrases such as “Current counter offer
by W and K” and “Current revised 2nd offer by K
and N” to label proposed terms for the potential
agreement. ECF No. 155-9, Ex. 7; ECF No. 147-10, Ex. 6.
Hsias drafted the Document to reflect the terms discussed in
the emails. ECF No. 155-11, Ex. 9; ECF No. 147-12, Ex. 8. The
first paragraph of the Document describes the agreement:
“The buyers are hereby agreeing to purchase and be
responsible for 50% of all gross sales and profits of HTK
Hawaii's sales in the mainland for the sum of $250, 000
paid over the period of three years starting January
2014.” ECF No. 155-11, Ex. 9; ECF No. 147-12, Ex. 8.
The remainder of the Document consists of twenty-one bullet
points, setting forth “contract terms and
conditions.” Id. As an example, the first
bullet point states: “Selling price of $250, 000 paid
through 3 years starting January 2014.” Id.
The Hsias signed the Document on December 12, 2013, and the
Suns signed the Document on December 26, 2013. ECF No.
155-11, Ex. 9; ECF No. 147-12, Ex. 8. After both parties
signed the Document, they continued to discuss details of the
arrangement by email. ECF No. 155-12, -13, Ex. 10-11.
January 1, 2014, William Hsia and Kevin Sun signed a
partnership agreement to create HS International. ECF No.
147-16, Ex. 12. For several months after that, the
relationship continued amicably. ECF No. 154-2, at 8; ECF No.
147-1, ¶ 27; ECF No. 147-2, ¶ 10. And, several
payments (the purposes of which are in dispute) were made
between the parties -- on January 23, 2014, the Suns paid the
Hsias $10, 000; on March 3, 2014, the Suns paid the Hsias
$39, 314.07; and on July 1, 2014, Kimberly Hsia paid Kevin
Sun $99, 077.62. ECF No. 147-17, Ex. 13; ECF No. 147-19, Ex.
15. Pursuant to the Document, Kevin Sun received a monthly
salary of $3, 000; these payments began January 2014 and
ended September 2014. ECF No. 147-5, Ex. 1, at 96:8-12; ECF
No. 147-1, ¶ 25.
November 20, 2014, William Hsia formed Hawaiian Snow Nevada,
Inc. (“Hawaiian Snow Nevada”), a Nevada
corporation, without the Suns' knowledge. ECF No. 180-23,
Ex. 20; ECF No. 188, at 11. On January 2, 2015, Kimberly Hsia
emailed the Suns about Nicole Sun's upcoming trip to
Hawaii, noting that the Hsias “had been working with
[their] lawyer to draft up a term sheet for [their]
engagement.” ECF No. 147-23, Ex. 19. On January 3,
2015, Kimberly Hsia emailed the Suns listing reasons why she
wanted to change their business arrangement to a
“40/60” split from their existing 50% split. ECF
No. 147-24, Ex. 20. On January 7, 2015, Nicole Sun emailed
Kimberly Hsia refusing to agree to the “40/60”
split. ECF No. 147-25, Ex. 21.
in January 2015, William Hsia changed the locks and passwords
to HTK's mainland business operations, preventing the
Suns from operating the business. ECF No. 147-5, Ex. 1 at
149:2-8. The Hsias never paid the Suns for the profits from
the second half of 2014, and the Suns never paid any portion
of the $250, 000 purchase price. Id. at 146:11-16;
ECF No. 155-4, Ex. 2, at 78:12-79:11.
Sun filed a Notice of Removal from the Circuit Court of the
First Circuit, State of Hawaii, on April 2, 2015. ECF No. 1.
HTK Hawaii filed a First Amended Complaint on September 8,
2015. ECF No. 51.
Sun filed a Motion to Transfer and a Motion to Dismiss on
November 23, 2015. ECF No. 58; ECF No. 61. On January 25,
2016, the court denied Defendants' Motion to Transfer
Venue, and granted in part and denied in part Defendants'
Motion to Dismiss. ECF No. 77.
Hawaii filed a Fourth Amended Complaint on March 3, 2016,
asserting the following claims against the Suns: (1)
declaratory judgment that the Document is not a binding
contract; and (2) unjust enrichment. ECF No. 92.
Suns filed a Counterclaim against HTK Hawaii on March 17,
2016, asserting the following claims against HTK Hawaii: (1)
breach of contract; (2) unjust enrichment; (3) breach of the
implied covenant of good faith and fair dealing; (4)
conversion; (5) fraud; (6) failure to timely pay wages; (7)
failure to timely pay wages at termination; (8) failure to
pay overtime; (9) failure to provide itemized wage
statements; and (10) unlawful and unfair business activity.
ECF No. 105.
Suns filed a Third Party Complaint against the Hsias in their
individual capacities on March 18, 2016, with Counts 1-3, 6,
and 7 reasserting Counts 1-5 and 10 of their Counterclaim,
respectively, and adding claims for promissory estoppel and
breach of fiduciary duty. ECF No. 106.
27, 2016, the Suns filed a Motion for Summary Judgment on
their breach of contract claim against HTK Hawaii and the
Hsias and on both counts in HTK Hawaii's Fourth Amended
Complaint. ECF No. 146. On August 3, 2016, the Hsias filed a
Motion for Partial Summary Judgment as to Counts 1, 3, and
5-10 of the Suns' Counterclaim, and Counts 1, 3-5, and 7
of the Suns' Third-Party Complaint. ECF No. 154. On
September 2, both parties filed their Opposition briefs, and
on September 12, both parties filed their Reply briefs. ECF
No. 179, 181, 187, 188. A hearing was held on September 26,
2016. Supplemental letter briefing was provided to the court
on September 30, 2016.
STANDARD OF REVIEW
judgment is proper where there is no genuine issue of
material fact and the moving party is entitled to judgment as
a matter of law. Fed.R.Civ.P. 56(a). Rule 56(a) mandates
summary judgment “against a party who fails to make a
showing sufficient to establish the existence of an element
essential to the party's case, and on which that party
will bear the burden of proof at trial.” Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also
Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252,
1258 (9th Cir. 1999).
party seeking summary judgment bears the initial burden of
informing the court of the basis for its motion and of
identifying those portions of the pleadings and discovery
responses that demonstrate the absence of a genuine issue of
material fact.” Soremekun v. Thrifty Payless,
Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing
Celotex, 477 U.S. at 323); see also Jespersen v.
Harrah's Operating Co., 392 F.3d 1076, 1079 (9th
Cir. 2004). “When the moving party has carried its
burden under Rule 56[(a)] its opponent must do more than
simply show that there is some metaphysical doubt as to the
material facts [and] come forward with specific facts showing
that there is a genuine issue for trial.”
Matsushita Elec. Indus. Co. v. Zenith Radio, 475
U.S. 574, 586-87 (1986) (citation and internal quotation
marks omitted); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (stating that a party
cannot “rest upon the mere allegations or denials of
his pleading” in opposing summary judgment).
issue is ‘genuine' only if there is a sufficient
evidentiary basis on which a reasonable fact finder could
find for the nonmoving party, and a dispute is
‘material' only if it could affect the outcome of
the suit under the governing law.” In re
Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing
Anderson, 477 U.S. at 248). When considering the
evidence on a motion for summary judgment, the court must
draw all reasonable inferences on behalf of the nonmoving
party. Matsushita Elec. Indus. Co., 475 U.S. at 587.
Cross Motions Concerning the Document's ...