United States District Court, D. Hawaii
ORDER GRANTING DEFENDANT TOM MATSUDA, INDIVIDUALLY,
AND AS A DIRECTOR AND/OR OFFICER OF HAWAII HEALTH
CONNECTOR'S MOTION TO DISMISS COMPLAINT FILED OCTOBER 28,
2016 AND GRANTING DEFENDANTS CLIFF ALAKAI AND JEFFREY
KISSEL'S PRE-ANSWER MOTION TO DISMISS FILED ON OCTOBER
C. Kay Sr. United States District Judge
reasons discussed below, the Court GRANTS Defendant Tom
Matsuda, Individually, and as a Director and/or Officer of
Hawaii Health Connector's Motion to Dismiss Complaint
Filed October 28, 2016, ECF No. 12, to which Defendants Cliff
Alakai and Jeffrey Kissel filed a joinder, ECF No. 21, and
GRANTS Defendants Cliff Alakai and Jeffrey Kissel's
Pre-Answer Motion to Dismiss Complaint Filed on October 28,
2016, ECF No.
2010, the Affordable Care Act (“ACA”) required
states to establish health exchanges to facilitate, for
individuals and entities, the selection, purchase, and
enrollment in private health insurance plans. Compl. ¶
13, ECF No. 1. As a result, the State of Hawaii established
the Hawaii Health Connector (“HHC” or the
“Connector”), the State's health insurance
exchange. Id. ¶ 14. To assist with its
obligations, and in particular, to implement necessary
information technology programs and systems, HHC retained
Plaintiff Mansha Consulting, LLC (“Mansha” or
“Plaintiff”). Id. ¶¶ 12, 16,
entered into a contract with HHC (the “IPMO
Contract”) which totaled over 21 million dollars.
Id. ¶ 17. The IPMO Contract was funded through
grants from the federal government, and accordingly, payment
to Mansha was to be supplied by the Centers for Medicare and
Medicaid Services (“CMS”), the responsible
federal agency. Id. ¶ 18. Mansha began work
under the IPMO contract on or around April 2013. Id.
¶ 19. On September 1, 2014 and thereafter, HHC failed to
forward Mansha's invoices for payment. Id.
¶ 20. Following several months of unpaid invoices, each
of which was in the amount of $677, 842.61 plus excise taxes,
Mansha on or around December of 2014, was unable to continue
to perform under the IPMO Contract because of financial
constraints. Id. ¶ 21. From July 2014 to
December 2014, Mansha continued its work under the contract
based on assurances by the Defendants, who were directors
and/or officers of HHC, that payment would be made to Mansha
based on its invoices. Id. ¶¶ 12, 21.
HHC collapsed. Id. ¶ 22. Since HHC's
collapse, Mansha has attempted to recover its losses by
demanding compensation from HHC, contacting CMS directly, and
communicating with other relevant third parties. Id.
relation to Defendants actions in mishandling the invoice
payments, Mansha alleges that Defendants were negligent and
breached their fiduciary duties. Id. ¶ 23. As a
result, Mansha claims, inter alia, that its value as
a company has been diminished, a pending acquisition of
Mansha was derailed, and that it has lost millions of
respect to the specific Defendants at issue in the instant
Motions to Dismiss, the Complaint contains the following
Cliff Alakai (“Alakai”) was the Chairman of the
Board of Directors for HHC during the relevant time period
and at some point served as Treasurer for the Board of
Directors. Id. ¶ 26(a). Alakai's duties in
this role included ensuring proper operation of HHC.
Id. ¶ 26(c). Mansha informed Alakai that the
invoices were not being forwarded to CMS. Id. ¶
26(b). Alakai failed to properly manage and oversee HHC with
respect to the handling of invoices and the issues raised by
Mansha, and took no actions to correct the issues.
Id. ¶¶ 26(d), (e).
Tom Matsuda (“Matsuda”) was the Interim Executive
Director of HHC “from a date unknown” until
approximately October of 2014. Id. ¶ 27(a).
Matsuda's duties in this role included responsibility
over the overall administration of HHC including financial,
personnel, and operational requirements. Id. ¶
27(b). Matsuda failed to investigate and resolve the ongoing
issues faced by Mansha and misinformed Mansha about the
reasons for delay of payment. Id. ¶ 27(d).
particular, Matsuda negligently misinformed Mansha that the
invoices were not being forwarded to CMS because there was a
restriction on funds initiated by either CMS or HHC.
Id. ¶¶ 27(d), (e). Mansha later learned
that although such a restriction may have existed for a short
period of time, the restrictions had been cleared and its
invoices could have been paid. Id. ¶ 27(d). As
a result of this misinformation, Mansha was unable to take
action which would have resulted in proper payment.
Id. Matsuda also made erroneous assurances to Mansha
that it would be paid on its submitted invoices. Id.
Jeffrey Kissel (“Kissel”) was HHC's Executive
Director starting in October of 2014. Id. ¶
28(a). Kissel failed to properly ensure investigation and
resolution of ongoing issues faced by Mansha. Id.
¶ 28(c). Kissel made similar statements as Matsuda
regarding the reasons for delay, including misinforming
Mansha about the restrictions on funds. Id.
¶¶ 28(d), (e). In addition, Kissel erroneously
reassured Mansha that it would be paid according to its
submitted invoices. Id. ¶ 28(e).
filed a Complaint against Defendants on October 28, 2016. The
Complaint raises claims for negligence and breach of
fiduciary duty against all Defendants.
December 5, 2016, Matsuda filed a Motion to Dismiss Complaint
Filed October 28, 2016. ECF No. 12. Mansha filed its
Opposition on December 30, 2016. ECF No. 19. Alakai and
Kissel filed a Non-Substantive Joinder to Matsuda's
Motion to Dismiss on December 30, 2016. ECF No. 21. Matsuda
filed a Reply on January 20, 2017. ECF No. 26.
December 30, 2016, Alakai and Kissel filed a Pre-Answer
Motion to Dismiss Complaint Filed on October 28, 2016. ECF
No. 20. Plaintiff filed its Opposition on January 13, 2017.
ECF No. 25. Alakai and Kissel filed a Reply on January 20,
2017. ECF Nos. 27-28. On January 20, 2017 Matsuda filed a
Non-Substantive Joinder to Defendants Alakai and Kissel's
Reply. ECF No. 29.
Court held a hearing on both Motions to Dismiss on February
Rule of Civil Procedure (“Rule”) 12(b)(6)
authorizes the Court to dismiss a complaint that fails
“to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). Rule 12(b)(6) is read
in conjunction with Rule 8(a), which requires only “a
short and plain statement of the claim showing that the
pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2).
The Court may dismiss a complaint either because it lacks a
cognizable legal theory or because it lacks sufficient
factual allegations to support a cognizable legal theory.
Balistreri v. Pacifica Police Dep't, 901 F.2d
696, 699 (9th Cir. 1988).
resolving a Rule 12(b)(6) motion, the Court must construe the
complaint in the light most favorable to the plaintiff and
accept all well-pleaded factual allegations as true.
Sateriale v. R.J. Reynolds Tobacco Co., 697 F.3d
777, 783 (9th Cir. 2012). The complaint “must contain
sufficient factual matter, accepted as true, to ‘state
a claim to relief that is plausible on its face.'”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)). “The plausibility standard . . . asks for more
than a sheer possibility that a defendant has acted
unlawfully.” Id. “Where a complaint
pleads facts that are ‘merely consistent with' a
defendant's liability, it ‘stops short of the line
between possibility and plausibility of entitlement to
relief.'” Id. (quoting Twombly,
550 U.S. at 557).
the Court dismisses a complaint pursuant to Rule 12(b)(6) it
should grant leave to amend unless the pleading cannot be
cured by new factual allegations. OSU Student All. v.
Ray, 699 F.3d 1053, 1079 (9th Cir. 2012).
Statute of Limitations
claim may be dismissed as untimely pursuant to a 12(b)(6)
motion ‘only when the running of the statute [of
limitations] is apparent on the face of the
complaint.'” U.S. ex rel. Air Control Techs.,
Inc. v. Pre Con Indus., Inc., 720 F.3d 1174, 1178 (9th
Cir. 2013) (alteration in original) (quoting Von Saher v.
Norton Simon Museum of Art at Pasadena, 592 F.3d 954,
969 (9th Cir. 2010)). Moreover, “a complaint cannot be
dismissed unless it appears beyond doubt that the plaintiff
can prove no ...