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Adon Construction Inc. v. Renesola America Inc.

United States District Court, D. Hawaii

April 4, 2017



          Derrick K. Watson United States District Judge.


         Defendant Kivalu Ramanlal seeks dismissal of the sole claim asserted against him by Plaintiffs Adon Construction Inc. (“Adon”) and Green Vision LLC for “breach of duty to mitigate damages.” Because the Court previously ruled that under settled state law, Plaintiffs cannot state a claim against Ramanlal for “breach of duty to mitigate damages, ” Ramanlal's Motion To Dismiss This Action As To Him, With Prejudice is GRANTED.[1]


         I. Prior Rulings In This Matter

         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. 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.

         Plaintiffs contracted to install 80 Renesola PV panels on Ramanlal's residence in 2013 at a cost of $76, 128.00 (“Ramanlal Project”). 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, 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, but assert a single cause of action against Ramanlal for “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.[2]Complaint ¶ 180.

         Renesola removed the case on October 20, 2016, without the consent of Ramanlal, on the basis of diversity jurisdiction. See Notice of Removal ¶ 25. On December 2, 2016, Plaintiffs filed a Motion to Remand, asserting that the Court lacks diversity jurisdiction because Plaintiffs and Ramanlal are citizens of the same state. Dkt. No. 16. In a January 6, 2017 Findings and Recommendation to Deny the Motion to Remand (“F&R”), the Magistrate Judge found that Ramanlal was fraudulently joined because Plaintiffs failed to state a valid claim that was “obvious under settled Hawaii law, ” and hence, his presence as a Hawaii resident may be ignored for purposes of establishing diversity jurisdiction. See F&R at 2-4, 7-9, Dkt. No. 27.

         In its March 6, 2017 Order adopting the F&R, the Court concluded as follows with respect to the validity of Plaintiffs' lone claim against Ramanlal:

Plaintiffs' single cause of action against Ramanlal for “breach of duty to mitigate damages” fails to state a stand-alone claim for relief. Moreover, this failure is obvious according to the settled rules of Hawaii. See Morris, 236 F.3d at 1067, and McCabe, 811 F.2d at 1339. “Breach of duty to mitigate damages, ” or “failure to mitigate damages, ” is a well-established affirmative defense, not a viable independent cause of action in the manner pled by Plaintiffs here. See, e.g., Tabieros v. Clark Equip. Co., 85 Haw. 336, 373, 944 P.2d 1279, 1316 (1997) (“[I]n contract or in tort, the plaintiff has a duty to make every reasonable effort to mitigate his [or her] damages. The burden, however, is upon the defendant to prove that mitigation is possible, and that the injured party has failed to take reasonable steps to mitigate his [or her] damages.”) (quoting Malani v. Clapp, 56 Haw. 507, 517, 542 P.2d 1265, 1271 (1975) (alterations in Tabieros)); Hawaii Broad. Co. v. Hawaii Radio, Inc., 82 Haw. 106, 112-13, 919 P.2d 1018, 1024-25 (Ct. App. 1996) (Discussing requirement that affirmative defense of “failure to mitigate damages” be pled in answer pursuant to Rule 8 where “[t]he primary purpose of requiring affirmative defenses to be pleaded is to give notice to the parties of such defenses.”).

3/6/17 Order at 14-15, Dkt. No. 31. Following the Court's March 6, 2017 Order, Plaintiffs filed their opposition to the instant Motion on March 17, 2017, and continue to advance the viability of their claim for breach of duty to mitigate damages, notwithstanding the Court's ruling to the contrary. See Pls.' Mem. in Opp'n, Dkt. No 34.

         II. Ramanlal's Motion Is Granted

         Ramanlal seeks dismissal with prejudice of the claim asserted against him. Federal Rule of Civil Procedure 12(b)(6) authorizes the Court to dismiss a complaint that fails “to state a claim upon which relief can be granted.” 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). As clearly stated in the ...

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