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Field v. Mirikitani

United States District Court, D. Hawaii

March 14, 2017

DANE S. FIELD, bankruptcy trustee of the estate of Winston Mirikitani, Plaintiff,
v.
MARIAN MIRIKITANI, individually and as Trustee under Revocable Declaration of Trust dated March 20, 1982, et al., Defendant.

          ORDER ADOPTING THE AMENDED PROPOSED FINDINGS AND RECOMMENDED DECISION ON FRAUDULENT TRANSFER AND RELATED CLAIMS

          Leslie E. Kobayashi United States District Judge

         On December 19, 2016, the bankruptcy judge issued his Amended Proposed Findings and Recommended Decision on Fraudulent Transfer and Related Claims (“Recommended Decision”). The Recommended Decision was transmitted to this district court on December 21, 2016. [Dkt. no. 10.[1] On December 30, 2016, Defendants Marian Mirikitani, individually and as Trustee under Revocable Declaration of Trust dated March 20, 1982 (“Marian Mirikitani”); Eleanor Mirikitani; Irene Mirikitani; and Mirikitani Investment Corporation (“MIC, ” all collectively “Defendants”) filed their objections to the Recommended Decision (“Defendants' Objections”). [Dkt. no. 11.] On January 3, 2017, Plaintiff Dane S. Field, bankruptcy trustee of the estate of Winston Mirikitani (“Plaintiff” or “the Trustee”), filed his objections to the Recommended Decision (“Plaintiff's Objections”). [Dkt. no. 15.] Plaintiff filed his response to Defendants' Objections (“Plaintiff's Response”) on January 13, 2017, and Defendants filed their response to Plaintiff's Objections (“Defendants' Response”) on January 17, 2017. [Dkt. nos. 22, 24.] The Court finds these matters suitable for disposition without a hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i (“Local Rules”). After careful consideration of the Recommended Decision, objections, responses, and the relevant legal authority, Defendants' Objections and Plaintiff's Objections are HEREBY DENIED, and the Recommended Decision is HEREBY ADOPTED, for the reasons set forth below.

         BACKGROUND

         In November 1992, Winston Mirikitani (“the Debtor”) executed documents transferring his interests in MIC and Kozan Company (“Kozan”) to his sisters, Defendants Marian Mirikitani, Eleanor Mirikitani, and Irene Mirikitani (“the Mirikitani Sisters”). Kozan was a Hawai`i limited partnership. MIC was the general partner, and the Debtor and the Mirikitani Sisters were limited parties. [Recommended Decision at 2-3.]

         In 2005, the Debtor opened Chapter 7 proceedings in the bankruptcy court, In re Winston Mirikitani, Case No. 05-03693. He obtained a discharge, and the case closed. [Recommended Decision at 2.]

         In 2013 the Debtor asserted that the transfer of his interests in MIC and Kozan were for the purpose of shielding his assets from his creditors and that the Mirikitani Sisters promised to return the interests to him at a later date. The Mirikitani Sisters deny this and they refused to return his interests in the entities. On March 14, 2014, the Debtor sued the Mirikitani Sisters in state court, seeking recovery of the assets, and other relief. The state court dismissed the case, ruling that the Debtor lacked standing because any claim that the Debtor had to the assets was still the property of his bankruptcy estate. On November 23, 2014, the Debtor filed a motion to reopen the Chapter 7 proceedings.[2] The bankruptcy court granted the motion and appointed Plaintiff to administer the estate. [Id. at 2, 4.] On January 13, 2016, Plaintiff filed his Complaint, opening an adversary proceeding in the bankruptcy court, Field v. Mirikitani, Adv. Pro. No. 16-90002, to recover the assets that were allegedly the subject of the fraudulent transfer.[3]

         The Complaint asserts the following claims: a fraudulent transfer claim pursuant to Haw. Rev. Stat. § 651C-4(a)(1) and 11 U.S.C. § 544(b) against the Mirikitani Sisters (“Count I”); a fraudulent transfer claim pursuant to Haw. Rev. Stat. §§ 651C-4(a)(2) and 651C-5(a) and 11 U.S.C. § 544(b) against the Mirikitani Sisters (“Count II”); a claim that Marian Mirikitani is liable for the transfers in her individual capacity pursuant to 11 U.S.C. § 550 (“Count III”); a claim against the Mirikitani Sisters for breach of oral trust agreement (“Count IV”); a breach of fiduciary duty claim against the Mirikitani Sisters (“Count V”); a breach of fiduciary duty claim against Defendants (“Count VI”); an unjust enrichment claim against the Mirikitani Sisters (“Count VII”); and a civil conspiracy claim against the Mirikitani Sisters (“Count VIII”).

         Plaintiff seeks the following relief:

-as to Counts I and II, judgment against the Mirikitani Sisters, jointly and severally, avoiding the transfers and awarding Plaintiff either the transferred property or the value thereof, as well as prejudgment interest and punitive damages; -as to Count III, judgment against Marian Mirikitani, in her individual capacity, for the transfers avoided in Counts I and/or II;
-as to Counts IV, V, VI, [4] VII, and VIII, judgment against the Mirikitani Sisters, jointly and severally, for the Debtor's actual damages sustained, as well as punitive damages; and
-as to all counts, reasonable attorneys' fees and costs, and any other appropriate relief.

         On November 4, 2016, Defendants filed two motions for summary judgment, one seeking summary judgment as to Counts IV through VIII, and the other seeking summary judgment as to Counts I through III. [Adv. Pro. No. 16-90002, dkt. nos. 68, 69.[5] Also on November 4, 2016, Plaintiff filed a motion for summary judgment as to Count I. [Id., dkt. no. 76.]

         The bankruptcy judge recommended that this Court grant partial summary judgment in favor of Plaintiff as to the timeliness of Count I, [Recommended Decision at 14, ] and recommended that the summary judgment motions be denied in all other respects.

         STANDARD

         Fed. R. Bankr. P. 9033 governs a bankruptcy court's proposed findings of fact and ...


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