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Zyda v. Four Seasons Hotels

United States District Court, D. Hawaii

March 28, 2017

CHRISTOPHER ZYDA, On Behalf of Himself and All Others Similarly Situated, Plaintiffs,


          Leslie E. Kobayashi United States District Judge

         On November 14, 2016, Plaintiff Christopher Zyda, on behalf of himself and all others similarly situated (“Zyda” and collectively “Plaintiffs”), filed a Motion for Remand (“Motion”). [Dkt. no. 11.] Defendants Four Seasons Hotels Ltd., Four Seasons Holdings, Inc., Hualalai Investors, LLC, Hualalai Residential, LLC, and Hualalai Rental Management, LLC (collectively “Four Seasons” or “Defendants”) filed their memorandum in opposition on December 6, 2016, and Plaintiffs filed their reply on December 13, 2016. [Dkt. nos. 24, 25.] The Court finds this matter 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 Motion, supporting and opposing memoranda, and the relevant legal authority, Plaintiffs' Motion is HEREBY DENIED for the reasons set forth below.


         On October 2, 2015, Plaintiffs filed their Class Action Complaint for Damages Declaratory and Injunctive Relief in the Circuit Court of the Third Circuit, State of Hawai`i (“Complaint”). [Notice of Removal, filed 11/1/16 (dkt. no. 1), Decl. of William Meheula (“Meheula Decl.”), Exh. 1 (Complaint).] On October 14, 2015, Plaintiffs filed their First Amended Class Action Complaint for Damages Declaratory and Injunctive Relief (“Amended Complaint”). [Id., Exh. 2 (Amended Complaint).]

         Defendants own or manage the Hualalai Resort and Hualalai Club on Hawai`i Island in the State of Hawai`i. [Amended Complaint at ¶¶ 5-6.] Plaintiffs, property owners within the Hualalai Resort, allege that Defendants made various promises regarding membership to the Hualalai Club to induce home purchases, but that, after they had committed substantial resources, “Defendants failed to maintain and provide adequate facilities to handle the growing population and increased usage of the resort.” [Id. at ¶¶ 10-11.] Instead, Defendants, inter alia: continued to build homes; increased the fees for unaccompanied guests at the Hualalai Club, which has affected property values; and continue to operate the Hualalai Resort and Hualalai Club “in secrecy, and fail and refuse to act openly and in good faith” with regard Plaintiffs' rights. [Id. at ¶¶ 12-14.]

         Plaintiffs bring state law claims for: violation of the Condominium Property Act, Haw. Rev. Stat. § 514B (“Count I”); [id. at ¶¶ 24-29;] violation of the Uniform Land Sales Practices Act, Haw. Rev. Stat. § 484 (Count II”); [id. at ¶¶ 30-36;] unfair methods of competition, in violation of Haw. Rev. Stat. § 480-2 (“Count III”); [id. at ¶¶ 37-40;] promissory estoppel/detrimental reliance (“Count IV”); [id. at ¶¶ 41-44;] violation of the duty of good faith and fair dealing (“Count V”); [id. at ¶¶ 45-47;] negligent misrepresentation (“Count VI”); [id. at ¶¶ 48-54;] estoppel (“Count VII”); [id. at ¶¶ 55-58;] unjust enrichment (“Count VIII”); [id. at ¶¶ 59-61;] organized crime, pursuant to Haw. Rev. Stat. Chapter 842 (“Count IX”); [id. at ¶¶ 62-65;] and breach of fiduciary and other common law duties (“Count X”) [id. at ¶¶ 66-68]. Plaintiffs seek: “[g]eneral, special, triple, and consequential damages”; attorneys' fees; prejudgment interest; punitive damages; injunctive and declaratory relief; a forensic audit; disgorgement; rescission; a democratically elected board of homeowners to govern the Hualalai Club and Hualalai Community Association; “regular financial transparency and disclosure requirements”; elimination of guest fees; elimination of definition of “family members” as it relates to admission to the Hualalai Resort and Hualalai Club; no new home sales until current homeowners agree they have constructed enough facilities; “the replacement of the existing Hualalai Resort management team”; and any other relief the Court “deem[s] just and proper.” [Id., Prayer for Relief ¶¶ 1-15.] On October 13, 2016, the state court granted class certification in the instant matter (“Class Certification Order”).[1] [Meheula Decl., Exh. 3 (Class Certification Order).] On November 1, 2016, Defendants removed the case to this Court pursuant to the Class Action Fairness Act (“CAFA”), 28 U.S.C. § 1332(d)(2)(A). [Notice of Removal at ¶¶ 16-20.]


In 2005, Congress passed CAFA to permit defendants to remove class actions to federal court if they meet three requirements: there must be minimal diversity of citizenship between the parties; the proposed class must have at least 100 members; and the aggregated amount in controversy must equal or exceed the sum or value of $5 million. 28 U.S.C. § 1332(d); Class Action Fairness Act of 2005, Pub. L. No. 109-2, § 4, 119 Stat. 4, 12 (2005).

Jordan v. Nationstar Mortg., LLC, 781 F.3d 1178, 1182 (9th Cir. 2015).

The mechanics and requirements for removal are governed by 28 U.S.C. § 1446. Section 1446(b) “identifies two thirty-day periods for removing a case.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 885 (9th Cir. 2010). “The first thirty-day removal period is triggered if the case stated by the initial pleading is removable on its face.” Id. (internal quotation marks omitted). “The second thirty-day removal period is triggered if the initial pleading does not indicate that the case is removable, and the defendant receives ‘a copy of an amended pleading, motion, order or other paper' from which removability may first be ascertained.” Id. (quoting § 1446(b)).

Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1139 (9th Cir. 2013).

         The Ninth Circuit has also held,

“that the thirty day time period [for removal] . . . starts to run from defendant's receipt of the initial pleading only when the pleading affirmatively reveals on its face the facts necessary for federal court jurisdiction.” Harris v. Bankers Life & Cas. Co., 425 F.3d 689, 691-92 (9th Cir. 2005) (internal quotation marks omitted). We also recently held in Roth v. CHA Hollywood Medical Center, L.P., that the two 30-day periods are not the exclusive periods for removal. 720 F.3d 1121, 1124-25 (9th Cir. 2013). In other words, as long as the complaint or “an amended pleading, motion, order or other paper” does not reveal that the case is removable, the 30-day time period never starts to run and the defendant may remove at any time.

Rea v. Michaels Stores Inc., 742 F.3d 1234, 1237-38 (9th Cir. 2014) (alterations in Rea).


         There is no dispute that minimal diversity exists in the instant matter, and that the proposed class consists of at least one hundred members. Moreover, there is no dispute that the amount in controversy exceeds $5 million. The only issues are when Defendants knew or should have known that Plaintiffs' claims exceeded this jurisdictional threshold, and whether the Notice of Removal was untimely. Plaintiffs argue that the Court must determine “[w]hether Four Seasons could (and did) ascertain that the amount in controversy exceeded CAFA's $5 million dollar threshold more than 30 days before its November 1, 2016, Notice of Removal[.]” [Mem. in Supp. of Motion at 10.] Plaintiffs present four documents or series of documents that they believe alerted Defendants to the amount in controversy in the instant matter, and the Court will address each of these in turn.

         I. Pre-Complaint Information

         First, Plaintiffs argue that Hualalai is “[p]opulated exclusively by multi-millionaires and billionaires” and that, because of the nature of the development itself, “a dispute with even one homeowner . . . would indicate to anyone remotely familiar with the project that the value of claims exceeds five million dollars.” [Id. at 10-11.] Moreover, Plaintiffs argue that they informed Defendants of their belief that certain policies would adversely affect property values before filing the Complaint, and that, given “the value of individual homes at Hualalai, ” the fact that “more than 300 homes are potentially impacted, ” and Plaintiffs “allegation that Four Season's [sic] policies significantly impacted property values” put Defendants “on notice of the potential value of this class action before it even was filed.” [Id. at 11-12 (footnotes omitted).]

         Plaintiffs appear to suggest that because extremely wealthy people live at Hualalai, and because property is very expensive there, Defendants should have assumed that any suit involving Hualalai homeowners would exceed CAFA's amount in controversy requirement. The Ninth Circuit has stated that “defendants need not make extrapolations or engage in guesswork, ” but they must “‘apply a reasonable amount of intelligence in ascertaining removability.'” Kuxhausen, 707 F.3d at 1140 (quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 206 (2d Cir. 2001)). It is clear to the Court that guesswork includes making assumptions about an amount in controversy based simply on the wealth of the individuals involved. Further, Plaintiffs' argument regarding information received by Defendants before the Complaint was even filed is directly contradicted by Ninth Circuit case law. In Carvalho v. Equifax Information Services, LLC, the Ninth Circuit stated that,

[i]t is axiomatic that a case cannot be removed before its inception. If the second paragraph of section 1446(b) were meant to include as “other paper” a document received by the defendant months before receipt of the initial pleading, the requirement that the notice of removal “be filed within thirty days after receipt by the defendant” of the “other paper” would be nonsensical. Moreover, that the second paragraph lists “an amended pleading, motion, order” - all documents which logically cannot predate the initial pleading - before “or other paper” leads us to conclude that “other paper” does not include any document received prior to receipt of the initial pleading. See United States v. Williams, 553 U.S. 285, 294, 128 S.Ct. 1830, 170 L.Ed.2d 650 (2008) (noting that “the commonsense canon of noscitur a sociis . . . counsels that a word is given more precise content by the neighboring words with which it is associated”). Accordingly, we conclude that any document received prior to receipt of the initial pleading cannot trigger the second thirty-day removal period.

629 F.3d 876, 885-86 (9th Cir. 2010) (alterations in Carvalho).

         Neither the wealth of the Plaintiffs nor information provided to Defendants prior to the filing of the Complaint triggered the thirty-day removal period, and ...

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