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Bruser v. Bank of Hawaii

United States District Court, D. Hawaii

April 27, 2017

MICHAEL DAVID BRUSER and LYNN BRUSER, Trustees under that certain unrecorded Revocable Living Trust Agreement dated July 11, 1988, as amended, doing business as Discovery Bay Center, Plaintiffs,
v.
BANK OF HAWAII, a Hawaii corporation, as Trustee, as successor by merger with Hawaiian Trust Company, Limited, a former Hawaii corporation and as successor Trustee under that certain Trust Agreement dated June 6, 1974, Defendant,
v.
JULIE G. HENDERSON, as Trustee of the Julie G. Henderson Irrevocable Trust, and as Trustee of the Jean K. Gowans Irrevocable Trust, and as Trustee of the Louis L. Gowans, Jr. Irrevocable Trust; RICHARD L. GOWANS, as Trustee of the Richard L. Gowans Irrevocable Trust; KEVIN I. YOKOHAMA; ASSOCIATION OF APARTMENT OWNERS OF DISCOVERY BAY; SUSAN SHEETZ; and PATRICIA SHEETZ BOW, Intervening Defendants. BANK OF HAWAII, a Hawaii corporation, as Trustee, as successor by merger with Hawaiian Trust Company, Limited, a former Hawaii corporation and as successor Trustee under that certain Trust Agreement dated June 6, 1974. Counterclaim Plaintiff,
v.
MICHAEL DAVID BRUSER and LYNN BRUSER, Trustees under that certain unrecorded Revocable Living Trust Agreement dated July 11, 1988, as amended, doing business as Discovery Bay Center, Counterclaim Defendants.

          ORDER DENYING BANK OF HAWAII AND THE ASSOCIATION OF APARTMENT OWNERS OF DISCOVERY BAY'S OBJECTIONS TO THE FINDINGS AND RECOMMENDATION TO (1) GRANT IN PART AND DENY IN PART BANK OF HAWAII'S MOTION FOR ATTORNEYS' FEES AND COSTS; AND (2) GRANT IN PART AND DENY IN PART ASSOCIATION OF APARTMENT OWNERS OF DISCOVERY BAY'S MOTION FOR ATTORNEYS' FEES AND COSTS

          Leslie E. Kobayashi United States District Judge

         On October 31, 2016, the magistrate judge filed his Findings and Recommendation to (1) Grant in Part and Deny in Part Bank of Hawaii's Motion for Attorneys' Fees and Costs; and (2) Grant in Part and Deny in Part Association of Apartment Owners of Discovery Bay's Motion for Attorneys' Fees and Costs (“F&R”). [Dkt. no. 212.] On November 14, 2016, Intervenor Defendant/Counterclaim Plaintiff Association of Apartment Owners of Discovery Bay (“AOAO”) filed its objections to the F&R (“AOAO's Objections”). [Dkt. no. 213.] The same day, Defendant/Counterclaim Plaintiff Bank of Hawai`i, as Trustee (“BOH”), filed its objections to the F&R (“BOH's Objections”). [Dkt. no. 214.] On November 28, 2016, Plaintiffs/Counterclaim Defendants Michael David Bruser and Lynn Bruser (“the Brusers”) filed a combined memorandum in opposition to AOAO's Objections and BOH's Objections (“Brusers' Memorandum”). [Dkt. no. 215.] AOAO and BOH filed their respective replies on November 29, 2016. [Dkt. nos. 216, 217.] Finally, on November 29, 2016, the Brusers filed a supplemental response to the replies (“Brusers' Supplemental Memorandum”). [Dkt. no. 218.] The Court finds these matters suitable for disposition without a hearing pursuant to Rule LR7.2(e) 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 objections, supporting and opposing memoranda, and the relevant legal authority, AOAO's Objections and BOH's Objections are HEREBY DENIED and the F&R is HEREBY ADOPTED, for the reasons set forth below.

         BACKGROUND

         A detailed history of this case is set forth in this Court's June 28, 2016 Findings of Fact and Conclusions of Law and Order (“6/28/16 Order”). [Dkt. no. 192.[1] The Court will include only those facts relevant to the instant matter. This case arose out of a dispute regarding liability for payment of trustee fees. On August 29, 2014, the Brusers filed their Complaint for Declaratory Judgment against BOH (“Complaint”). [Dkt. no. 1.] BOH filed its counterclaims against the Brusers on January 28, 2015 (“BOH Counterclaim”). [Dkt. no. 34.]

         While the Brusers' Complaint was filed against a single defendant (that is, BOH), several parties sought permission to intervene as defendants and, upon being granted intervention, they filed their own respective counterclaims, including AOAO.[2]See Order Granting Proposed Intervenor Association of Apartment Owners of Discovery Bay's Motion to Intervene Filed December 30, 2014, filed 3/27/15 (dkt. no. 45).

         The Complaint sought declaratory judgment that the Brusers were, inter alia: not liable for the payment of the trustee fees (“Trustee Fee”) under the Trust Agreement dated June 6, 1974 (“Trust Agreement”); or, in the alternative, only liable for the actual percentage of their undivided interest or only reasonable fees as determined at trial. [Complaint at ¶¶ 23(a)-(b).] In addition, they sought additional relief such as an accounting, and reasonable attorneys' fees and costs. [Id. at ¶¶ E-F.]

         The BOH Counterclaim had five claims: (1) a claim for a declaratory judgment that, pursuant to the Condominium Conveyance Document, dated December 1, 1976 (“CCD”), the Brusers were obligated to pay the Trustee Fee as determined under the Trust Agreement; (2) breach of contract under the CCD; (3) breach of contract under the Trust Agreement; (4) breach of the covenant of good faith and fair dealing; and (5) recovery of attorneys' fees and costs incurred as a result of enforcing the CCD pursuant to the terms of the Trust Agreement.

         The AOAO Counterclaim contained four claims: (1) a claim for declaratory judgement that the Brusers were obligated to pay the Trustee Fee as determined under the Trust Agreement and/or the CCD; (2) breach of contract under the CCD; (3) breach of contract under the Trust Agreement; and (4) breach of the covenant of good faith and fair dealing.

         On April 16, 2015, BOH filed its Motion for Partial Summary Judgment as to its First Counterclaim Against Plaintiffs/Counterclaim Defendants. [Dkt. no. 50.] On July 21, 2015, this Court issued its Order Granting Defendant/Counterclaim Plaintiff Bank of Hawaii's Motion for Partial Summary Judgment as to its First Counterclaim Against Plaintiffs/Counterclaim Defendants, and Joinder of Intervenor Defendant Association of Apartment Owners of Discovery Bay; and Denying the Other Joinders Thereto (“7/21/15 Order”). [Dkt. no. 88.[3] The 7/21/15 Order stated that “the plain language of the CCD requires payment of fees under the Trust Agreement, which includes the Trustee Fee.” 2015 WL 4469850, at *4.

         On January 20, 2016, the Brusers filed a Notice of Withdrawal of Jury Trial Demand. [Dkt. no. 150.] The same day, Henderson/Gowans, AOAO, Yokoyama, BOH, and Sheetz Bow all filed statements of no opposition. [Dkt. nos. 145-49.] In an Entering Order filed on January 25, 2016, and pursuant to Federal Rules of Civil Procedure 38(d) and 39(a)(1), the Court withdrew the Brusers' jury demand. [Dkt. no. 152.] Finally, in a stipulation filed on February 2, 2016 (“Stipulation”): BOH stipulated to dismiss its third and fourth counterclaims without prejudice; AOAO stipulated to dismiss its second, third, and fourth counterclaims without prejudice; and Henderson/Gowans, Yokoyama, and Sheetz Bow stipulated to dismiss their claims for declaratory relief that the Brusers breached the Trust Agreement without prejudice. [Dkt. no. 179.] The only remaining claims were therefore: BOH's second counterclaim for breach of contract under the CCD; and Henderson/Gowans, AOAO, Yokoyama, and Sheetz Bow's claim for declaratory relief that, by failing to pay the Trustee Fee, the Brusers breached the CCD.

         The Court held a bench trial on February 2, 2016. [Minutes, filed 2/2/16 (dkt. no. 177).] On February 19, 2016, the Court issued its Court's Decision, and instructed BOH to prepare a proposed Findings of Fact and Conclusions of Law (“FOF/COL”). [Dkt. no. 182.] BOH submitted its FOF/COL on March 22, 2016. [Dkt. no. 184.] The 6/28/16 Order followed, and concluded:

(1) The Court finds in favor of BOH on their second counterclaim for breach of contract under the CCD.
(2) The Court finds in favor of the Henderson/Gowans, AOAO, Yokoyama, and Sheetz Bow on their claims for declaratory relief and finds that, under the CCD, the Brusers are liable for the total amount of the unpaid Trustee Fee.
(3) The Court awards $137, 434.50 to BOH, which consists of the difference between what the Brusers owed and what they paid between October 2014 and December 2015, including the applicable [General Excise Tax (“GET”)].
. . . .
(5) Pursuant to the CCD, the Court awards attorneys' fees and costs to BOH. BOH, and any other party that believes it is entitled to attorneys' fees and costs must submit the appropriate motion within fourteen days of entry of judgment. Thereafter, the Court will refer the matter to the magistrate judge for determination of the amount of the award.

2016 WL 3580612, at *7-8. The Clerk's Office entered Judgment on June 28, 2016.[4] [Dkt. no. 193.]

         On July 12, 2016, AOAO filed its Motion for Award of Attorneys' Fees and Costs (“AOAO's Attorneys' Fees Motion”), and BOH also filed its Motion for Award of Attorneys' Fees and Costs (“BOH's Attorneys' Fees Motion” and collectively “Attorneys' Fees Motions”).[5] [Dkt. nos. 194, 195.] The Brusers filed a motion to strike the Attorneys' Fees Motions on August 8, 2016 (“Motion to Strike”), [6] and the magistrate judge denied the Motion to Strike in an Entering Order on August 9, 2016 (“8/9/16 EO”). [Dkt. Nos. 203 (Motion to Strike), 204 (8/9/16 EO).] The 8/9/16 EO granted the Brusers additional time to respond to the Attorneys' Fees Motions. [8/9/16 EO.] The Brusers did not appeal the magistrate judge's order on the Motion to Strike to this Court. However, the Brusers did file two additional motions for extensions of time to respond to the Attorneys' Fees Motions. See dkt. nos. 206-07 (the Brusers' second request for additional time and the magistrate judge's Entering Order granting it), 208-09 (the Brusers' third request for additional time and the magistrate judge's Entering Order granting it). Even after three extensions, the Brusers did not file any response to the Attorneys' Fees Motions.

         STANDARD

         This Court reviews a magistrate judge's findings and recommendations under the following standard:

When a party objects to a magistrate judge's findings or recommendations, the district court must review de novo those portions to which the objections are made and “may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he district judge must review the magistrate judge's findings and recommendations de novo if objection is made, but not otherwise.”).
Under a de novo standard, this Court reviews “the matter anew, the same as if it had not been heard before, and as if no decision previously had been rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not hold a de novo hearing; however, it is the court's obligation to arrive at its own independent conclusion about those portions of the magistrate ...

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