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Adon Construction Inc. v. Renesola America Inc.

United States District Court, D. Hawaii

March 6, 2017

ADON CONSTRUCTION INC. and GREEN VISION LLC, Plaintiffs,
v.
RENESOLA AMERICA INC.; KIVALU RAMANLAL; et al ., Defendants.

          ORDER ADOPTING FINDINGS AND RECOMMENDATION TO DENY PLAINTIFFS ADON CONSTRUCTION INC. AND GREEN VISION LLC'S MOTION TO REMAND MATTER BACK TO THE FIRST CIRCUIT COURT OF THE STATE OF HAWAII

         INTRODUCTION

         Adon Construction Inc. (“Adon”) and Green Vision LLC (collectively, “Plaintiffs”) seek remand on the basis that the Court lacks diversity jurisdiction because both Plaintiffs and Defendant Kivalu Ramanlal are citizens of the State of Hawaii. The Magistrate Judge found removal proper because Plaintiffs failed to state a claim against Ramanlal and fraudulently joined him. Plaintiffs now object to the Magistrate Judge's January 6, 2017 Findings and Recommendation (“F&R”), denying their Motion to Remand.

         Under settled state law, Plaintiffs cannot state a claim against Ramanlal for “breach of duty to mitigate damages, ” the sole claim asserted against him. As a result, Defendants have met their burden of demonstrating that Ramanlal was fraudulently joined. Because the Court has diversity jurisdiction in the absence of Ramanlal, the case was properly removed, and the Magistrate Judge appropriately recommended denial of Plaintiffs' Motion to Remand. The Court adopts the conclusions of the F&R and overrules Plaintiffs' Objections.[1]

         BACKGROUND

         I. Complaint And Notice Of Removal

         Plaintiffs filed a Complaint against Ramanlal and Defendant Renesola America, Inc. (“Renesola”) in state court on September 15, 2016, Civil No. 16-1-1741-09, alleging exclusively state-law claims. Renesola removed the case on October 20, 2016, without the consent of Ramanlal, [2] on the basis of diversity jurisdiction. See Notice of Removal ¶ 25 (Dkt. No. 1). Plaintiffs seek $808, 677.55 in compensatory damages and additional amounts in special and punitive damages. Notice of Removal ¶ 18. Plaintiffs Adon and Green Vision are citizens of Hawaii. Complaint ¶¶ 1-2; Notice of Removal ¶¶ 2-3. Renesola is a Delaware Corporation with its principal place of business in California. Notice of Removal ¶ 4. Although Ramanlal is a citizen of Hawaii, Renesola contends that his presence does not destroy diversity because he was fraudulently joined in this matter. Notice of Removal ¶¶ 6-17.

         A. Plaintiffs' Claims

         Plaintiffs contracted to install photovoltaic (“PV”) panels and systems on residential and commercial properties in Hawaii. Complaint ¶ 3, attached as Ex. A to Notice of Removal (Dkt. No. 1-1). Renesola manufactures and supplied PV panels to Plaintiffs for use in their Hawaii installations. Complaint ¶ 5. According to Plaintiffs, certain Renesola PV panels are defective and have been rejected by their clients. Complaint ¶ 8. They allegedly paid Renesola over $2.5 million for PV products and installed over 2, 858 Renesola PV panels on residential projects and over 6, 030 Renesola PV panels on commercial projects. Complaint ¶¶ 15-17. The majority of the Renesola PV panels installed purportedly have visible signs of defects. Complaint ¶ 29.

         Plaintiffs contracted to install 80 Renesola PV panels on Ramanlal's residence in 2013 at a cost of $76, 128.00 (“Ramanlal Project”). That installation was completed as of February 2014. Complaint ¶¶ 13-14. On December 3, 2014, Ramanlal sued Adon in the First Circuit Court of the State of Hawaii, Civil No. 14-1-2463-12, demanding a full refund of the contract price, $76, 128.00, in part, due to visible defects to the PV panels (“Ramanlal State Court Case”). Plaintiffs allege that although Renesola initially offered to replace certain panels under warranty, “Renesola has denied fixing the damaged and/or defective PV Panels/Modules at the Ramanlal Project and Ramanlal has refused to accept the proposed resolution to replace 78 out of the 80 Renesola PV [panels].” Complaint ¶ 38. According to Plaintiffs, they attempted to work with Renesola to resolve the defective PV panel issues throughout 2015, but Renesola refused to remedy the defects, Complaint ¶¶ 41-50, while Plaintiffs continue to incur damages by having to defend the Ramanlal State Court Case. Complaint ¶ 39-40.

         Plaintiffs allege multiple state-law claims against Renesola, [3] but assert a single cause of action against Ramanlal: “breach of duty to mitigate damages.” Complaint ¶¶ 176-184. That claim alleges that Ramanlal “failed to exercise reasonable diligence to mitigate his damages” when he refused to allow representatives from Renesola to access his property and refused to accept the replacement of defective PV panels as a remedy in the Ramanlal State Court Case. Complaint ¶ 180. More specifically, the Complaint alleges in Count X that-

177. Plaintiff has been injured by Renesola's intentional, reckless and/or negligent fraudulent, misrepresentations, breach of contract, unfair competition and business, as well [as] breach of express warranty relating to the damages and/or defects in the form of micro-fracturing, and/or cracking, a defect also known as “snail trail(s)” on the installed Renesola PV Panels/Modules at the Ramanlal Project, as well as the 5 Commercial Sites.
178. Plaintiff provided notice and demand to Renesola to honor their promises, literature and/or representations made to defend their product and mitigate the damages as alleged.
179. Renesola did visit the 5 Commercial Sites and did acknowledge and admit to the existence of the damages and/or defects in the form of micro-fracturing, and/or cracking, a defect also known as “snail trail(s)” on the installed Renesola PV Panels/Modules.
180. Ramanlal has failed to exercise reasonable diligence to mitigate his damages by refusing to allow Renesola representatives onto the Ramanlal Project and thereafter refusing to accept the replacement of damaged and/or defective PV Panels/Modules as a possible remedy.
181. Renesola has failed to exercise reasonable diligence to mitigate the damages as provided by Plaintiff as they relate to the Ramanlal Project and 5 Commercial Sites.
182. By each party refusing to cooperate and mitigate their damages reasonably and fairly, the pending Ramanlal Project has continued to damage Plaintiff.
183. Plaintiff was forced to mitigate its damages as alleged by the owners of the 5 Commercial Sites without the assistance of Renesola by providing a $501, 064.75 damage-charge discount on the agreed-to price of the work.
184. As a direct and proximate result of both Ramanlal and Renesola [sic] to reasonably mitigate their damages, Plaintiff has suffered direct, proximate, incidental and consequential damages, as well as general and special damages, including but not limited to disparagement of business reputation, loss of time due to fielding client dissatisfaction and complaints, service calls, and loss of profits, business opportunities and contracts in the total amount of $808, 677.55, including attorney's fees and costs, in an amount to be proven at trial.

Complaint ¶¶ 177-184.

         B. Ramanlal State Court Case (Civil No. 14-1-2463-12)

         Ramanlal, as plaintiff, sued Adon for installing the defective PV panels and for the lack of necessary permits, alleging, among other claims, breach of contract and misrepresentation. See Ramanlal State Court Case Complaint ¶¶ 21-43, attached as Ex. C to Notice of Removal (Dkt. No. 1-3). On December 1, 2015, Adon answered and counterclaimed. The Answer asserts the defense that Ramanlal “failed to mitigate any damage to which [Ramanlal] may be entitled[.]” Ramanlal State Court Case Answer ¶ 49, attached as Ex. D to Notice of Removal (Dkt. No. 1-4). Adon also brought a Counterclaim for breach of contract against Ramanlal for “refusing to allow [a] Renesola engineer access to the worksite to verify if there is a possible defect and warranty issue, and therefore interfered with [Adon's] performance on delivery of a satisfactory product per contract requirements.” Ramanlal State Court Case Counterclaim ¶ 49, attached as Ex. D to Notice of Removal (Dkt. No. 1-4).

         The Ramanlal State Court Case was pending at the time Plaintiffs filed the instant action against Ramanlal and Renesola in ...


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