United States District Court, D. Hawaii
PACIFIC COMMERCIAL SERVICES, LLC, a Hawaii limited liability company, Plaintiff,
LVI ENVIRONMENTAL SERVICES, INC., nka NORTHSTAR CONTRACTING GROUP, INC., a California corporation; NORTHSTAR RECOVERY SERVICES, INC., a Delaware corporation, Defendants.
(1) GRANTING IN PART AND DENYING IN PART PLAINTIFF'S
AMENDED MOTION FOR PARTIAL SUMMARY JUDGMENT, ECF NO. 80; (2)
DENYING DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT
ON COUNTS I AND II OF COMPLAINT, ECF NO. 46; AND (3) GRANTING
IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR
PARTIAL SUMMARY JUDGMENT ON COUNTS III, IV, AND V OF
COMPLAINT, ECF NO. 90
MICHAEL SEABRIGHT CHIEF UNITED STATES DISTRICT JUDGE.
Pacific Commercial Services, LLC (“PCS”) agreed
to serve as a subcontractor for Defendants LVI Environmental
Services, Inc. (“LVI”) and Northstar Recovery
Services, Inc. (“Northstar Recovery”)
(collectively, “Defendants”) in two separate
projects: (1) the deactivation of the Honolulu Electric
Company (“HECO”) Honolulu Power Plant (the
“HECO Project”); and (2) the demolition and
remediation of the building housing the Battery Energy
Storage System (“BESS”) at the Kahuku Wind Farm
(the “Kahuku Project”). Northstar Recovery and
LVI share the same parent company, Northstar Group Holdings,
brought suit against Defendants alleging claims for breach of
contract and unjust enrichment related to both the HECO
Project and the Kahuku Project. Compl., ECF No. 1-3. LVI then
filed a Counterclaim against PCS, also alleging claims for
breach of contract and unjust enrichment, but only concerning
the HECO Project. Countercl., ECF No. 8-1.
before the court are three motions: (1) PCS's Amended
Motion for Partial Summary Judgment (“PCS's HECO
Motion”), ECF No. 80; (2) Defendants' Motion for
Partial Summary Judgment on Counts I and II of Complaint
(“Defendants' HECO Motion”), ECF No. 46; and
(3) Defendants' Amended Motion for Partial Summary
Judgment on Counts III, IV, and V of Complaint
(“Defendants' Kahuku Motion”), ECF No. 90.
For the reasons that follow, the court: (1) GRANTS in part
and DENIES in part Plaintiff's HECO Motion; (2) DENIES
Defendants' HECO Motion; and (3) GRANTS in part and
DENIES in part Defendants' Kahuku Motion.
The HECO Project
2011, LVI was preparing to bid for the prime contract on the
HECO Project, and solicited PCS to submit a subcontractor
proposal for waste removal services. Chang Decl. ¶ 5,
ECF No. 81-1 (“First Chang Decl.”). LVI had no
prior work history with HECO, but PCS had worked on over one
hundred HECO projects at the time. Ex. 40, ECF No. 81-42;
First Chang Decl. ¶ 6. PCS submitted a subcontractor
proposal to LVI on July 23, 2011. Ex. 2, ECF No. 81-4. LVI
submitted its bid for the HECO Project on July 29, 2011, and
was awarded the prime contract on December 15, 2011. Ex. 35,
ECF No. 81-37; Ex. 36, ECF No. 81-38.
LVI's proposal to HECO, LVI listed PCS as one of four
subcontractors, describing the scope of PCS's work as
“Asbestos, Hazardous, Regulated and Universal Waste
Materials Hauling and Disposal” and “Hazardous
and Regulated Materials Cleaning and Removal.” Ex. 35
at 12, ECF No. 81-37. LVI described the work of the other
three listed subcontractors as (1) “Scaffolding”;
(2) “Painting”; and (3) “Plumbing/Roof
Drains.” Id. PCS began completing the work
outlined in its subcontractor proposal before any purchase
order was completed. First Chang Decl. ¶ 16.
March 23, 2012, LVI employee Chad Maddock
(“Maddock”) emailed a draft purchase order to
PCS's General Manager Jingbo Chang (“Chang”).
Ex. 11, ECF No. 81-13. Later that day, Chang addressed
concerns with the draft purchase order in two reply emails to
Maddock. Ex. 12, ECF No. 81-14; Ex. 13, ECF No. 81-15. In
particular, Chang was concerned with “Line Item
4” of the purchase order, which stated that the
transportation and disposal of “Hazardous Solids”
would cost $700 per ton. Ex. 12, ECF No. 81-14; Ex. 11 at 4,
ECF No. 81-13. That price assumed that PCS would be handling
“bulk solid at large volume to Chem Waste.” Ex.
12, ECF No. 81-14. But because the waste stream was
“mixed with asbestos and liquid too at small quantity,
” PCS would need to send it to “Clean
Harbors” instead of “Chem Waste, ”
resulting in “a much higher price.” Id.
April 4, 2012, Maddock sent Chang another email, listing
seven proposals aimed at resolving Chang's concerns. Ex.
14, ECF No. 81-16. In response to Chang's comments on
line item 4, Maddock said: “Leave line item 4 as is
with the understanding that this pricing is for volume loads
in container amounts. Smaller volume will require appropriate
adjustment. Additionally, if characterization changes due to
contents of material, there could be price
adjustments.” Id. That same day, Chang replied
to Maddock and said: “We accept what you proposed
below. Please revise it and send it to me for
signature.” Ex. 15, ECF No. 81-17.
April 23, 2012, LVI employee Damariz Quezada
(“Quezada”) sent a revised purchase order (the
“Subcontract”) to Chang, requesting that he sign
and return it. Ex. 16, ECF No. 81-18. Line item 4 of the
Subcontract still priced hazardous solids at $700 per ton,
but added the following language: “Smaller volume will
require appropriate adjustment. Additionally, if
characterization changes due to contents of material, there
could be price adjustments.” Id. at 4. Chang
did not sign the Subcontract. But PCS continued to
prepare Waste Manifest Forms for the HECO Project and handle
the transportation and disposal of waste. First Chang Decl.
¶¶ 25-26. And in total, LVI paid PCS $526, 376.04
for its services on the HECO Project. Id. ¶ 38;
Ex. 32, ECF No. 81-34.
early 2013, LVI began to use other firms for the HECO
Project's waste transportation and disposal services. PCS
only learned of this when it received copies of Waste
Manifest Forms that it had prepared for LVI, but PCS's
name was crossed out and replaced in writing with the name of
another firm. First Chang Decl. ¶ 34; Ex. 28, ECF No.
81-30. The forms have dates ranging from January 2013 to
March 2013. Ex. 28, ECF No. 81-30. On February 5, 2013,
Michael Moore (“Moore”), President of LVI,
emailed Chang to notify him that LVI “went direct to
[another waste disposal firm] and struck a deal for disposal,
” but that LVI “definitely want[s] to use [PCS]
for the remaining haz removal/disposal if [PCS is]
willing.” Ex. 29, ECF No. 81-31.
August 14, 2013, Moore emailed Chang alleging that two of
PCS's invoices -- Invoice 7864-01 and Invoice 7864-05 --
incorrectly billed LVI at a rate of $700 per drum
instead of $700 per ton. Ex. 23, ECF No. 81-25.
Chang disagreed, stating that the price adjustment was
correctly calculated pursuant to line item 4. Id.
Moore mailed Chang a letter dated August 28, 2013, noting
that the (allegedly) incorrectly billed activity occurred on
July 17, 2012, and April 9, 2013, and resulted in a total
overbilling of $25, 200. Ex. 24, ECF No. 81-26.
time did LVI send written notice to PCS terminating PCS's
involvement in the HECO Project.
The Kahuku Project
hired Plaintiff to provide waste removal and transportation
services for the Kahuku Project. Second Chang Decl. ¶ 3,
ECF No. 98-1. Plaintiff's work on the Kahuku Project
occurred in two phases: environmental control and evidence
investigation (“Phase 1”) and demolition and
disposal of the BESS building (“Phase 2”).
Id. ¶ 8.
performed work in Phase 1 pursuant to three purchase orders
that Defendants issued to Plaintiff. Id. ¶ 9;
Exs. 1-3, ECF No. 98. Although Plaintiff performed the
services within the scope of the purchase orders, Defendants
have refused to pay eleven invoices covering that work.
Second Chang Decl. ¶ 11. Separately, Plaintiff performed
work outside of the scope of the purchase orders, and
Defendants have refused to pay three invoices covering that
work. Id. ¶ 12; Exs. 15-17, ECF No. 98.
Collectively, Defendants have refused to pay invoices
totaling $66, 518.31 for these services (the “Phase 1
purchase orders each contain the following
Upon written approval by Contractor and the Owner,
Subcontractor's invoice shall be paid, in the net amount
of its request, if and only if, Contractor receives payment
from the Owner for said invoice. Contractor's receipt of
payment from Owner for Subcontractor's invoice is an
express condition precedent to Contractor's obligation to
make payment to Subcontractor. If Contractor does not receive
payment from the Owner for said invoice, notwithstanding
whether same was approved, the Contractor shall have no
further obligation to pay Subcontractor. If Contractor has
withheld retention, same shall be paid to the Subcontractor
after approval and acceptance of the entire project by the
Owner. Subcontractor's [sic] acknowledges its payment is
contingent upon the Owner paying the Contractor.
Ex. 1 at 3, ECF No. 98-3. Defendants claim that they did not
pay Plaintiff for the Phase 1 Work because Xtreme Power --
the “Owner” -- did not pay Defendants. Bruce
Decl. ¶¶ 8-9, ECF No. 91-1.
Recovery and PCS entered into a subcontract for hauling and
disposing of materials from the BESS building (the
“Phase 2 Work”) in September 2012, but Northstar
Recovery was never awarded the prime contract for demolition
of the BESS building and PCS never performed any of the Phase
2 Work. Id. ¶¶ 3-4; Second
Chang Decl. ¶¶ 15-16. The prime contract was
awarded to GZA GeoEnvironmental, Inc. (“GZA”),
which subcontracted part of the work to NCM Contracting
Group, LP (“NCM Contracting”) in January 2013.
Bruce Decl. ¶¶ 5-6. At that time, NCM Contracting
was a competitor to Defendants. Id. ¶ 6. Later,
in April 2014, Defendants' affiliate acquired NCM
Contracting. Answer ¶ 40, ECF No. 103. Defendants did
not receive money or benefit from the BESS building contract.
Bruce Decl. ¶ 7.
April 19, 2016, PCS filed its Complaint in the Circuit Court
of the First Circuit, State of Hawaii, and on May 18, 2016,
Defendants filed a Notice of Removal. ECF No. 1-3; ECF No. 1.
Defendants filed a Counterclaim on May 26, 2016, and PCS