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Lumford v. Ota

Intermediate Court of Appeals of Hawaii

November 30, 2018

TARA AOYAGI LUMFORD, Plaintiff-Appellant/Cross-Appellee,
GLENN YOSHIO OTA, also known as GLENN OTA, individually and as Personal Representative of the Estate of JANIS YUKIE OTA, deceased, Defendant-Appellee/Cross-Appellant, and JOHN DOES 1 THROUGH 10,' Defendants


          Charles H. Brower, and Michael P. Healy, and Walter R. Schoettle, for Plaintiff-Appellant/ Cross-Appellee.

          Mark M. Murakami, E. Kumau Pineda-Akiona, (Damon Key Leong Kupchak Hastert), for Defendant-Appellee/ Cross-Appellant.



         Plaintiff/Appellant/Cross-Appellee Tara Aoyagi Lumford (Lumford) appeals from the Final Judgment (Judgment) entered on April 19, 2016, by the Circuit Court of the First Circuit (Circuit Court), [1] in favor of Defendant/Appellee/Cross-Appellant Glenn Yoshio Ota (Ota), both individually and as personal representative of the Estate of Janis Yukie Ota (Janis). Lumford also challenges the Circuit Court's Order Granting Defendant Glenn Yoshio Ota's Motion to Dismiss Plaintiff Tara Aoyagi Lumford's First Amended Complaint, filed October 6, 2015 (Order Dismissing Amended Complaint). On cross-appeal, Ota challenges the Circuit Court's Order Granting in Part and Denying in Part Defendant's Motion for Attorneys' Fees and Costs, filed on March 8, 2016 (Attorneys' Fees Order).

         In short, the Circuit Court concluded, as a matter of law, that no claim for unjust enrichment may be sustained by Lumford against Ota because Lumford did not allege that she (rather than a third party) bestowed a benefit upon Ota that he wrongfully retained. As set forth below, we hold that the Circuit Court erred and that, in limited circumstances, a claim for unjust enrichment may be stated by allegations that a third-party has conferred a benefit upon a defendant to which the plaintiff claims he or she has a superior legal or equitable right. The requirements for such a claim may be satisfied by proof of a clear legal entitlement. Other equitable circumstances might suffice, but in all cases, the plaintiff must identify a right in the disputed assets that is both recognized and accorded priority over the interest of the defendant. It is insufficient to allege that the defendant has received a windfall, that the claimant has been ill-treated, and that the third party's payment or other transfer to the defendant (or the defendant's retention of payment or transferred assets as against the claimant) violates rules of good faith, basic fairness, or common decency. The Judgment is vacated, and this case is remanded to the Circuit Court.


         On June 10, 2015, Lumford filed a complaint against Ota. An Amended Complaint was filed on October 6, 2015. In the Amended Complaint, Lumford alleged that in July of 2008, her aunt Cindy Aoyagi (Aoyagi) owned a single-family residence in Waipahu, Hawai'i (Waipahu Property). Aoyagi learned that she was suffering from cancer and decided to make provisions to dispose of her property in case of her death. Lumford alleged in the Amended Complaint that Aoyagi wanted to leave the Waipahu Property to Lumford, but Aoyagi believed Lumford was not yet mature enough to manage it by herself.

         The Amended Complaint further alleged that Aoyagi decided to convey the Waipahu Property to Ota in fee simple absolute, retaining a life estate for herself, in reliance on Ota's promise to hold the Waipahu Property for the use and benefit of Aoyagi during her lifetime and, thereafter, for the use and benefit of Lumford's parents during their lifetimes, and thereafter, for the use and benefit of Lumford until such time as Lumford attained the maturity to manage the Waipahu Property herself, whereupon Ota would convey the Waipahu Property to Lumford. In addition, Lumford alleged that a confidential relationship existed between Ota and Aoyagi at the time of the conveyance and that the conveyance was based on and arose out of that confidential relationship. The deed recording this conveyance was recorded in the Bureau of Conveyances.

         Aoyagi died in May of 2009, and the following July, Ota conveyed the Waipahu Property to himself and his wife Janis as tenants by the entirety; the deed was recorded in the Bureau of Conveyances. In December of 2013, Ota and Janis mortgaged the Waipahu'Property in the amount of $100, 000. Janis later died, and in September of 2014, Ota conveyed the Waipahu Property to a third-party for a payment of $540, 000. In November of 2014, Ota was appointed as personal representative of Janis's estate. Lumford alleged that between May 31, 2009, and September 19, 2014, Ota and/or Janis received rental and other income from the Waipahu Property for which they have not accounted and which they have retained for their own use and benefit. Lumford's parents are also now deceased.

         Lumford's Amended Complaint asserted two counts, "Count I: Breach of Fiduciary and Confidential Relationship" and "Count II: Alternative Claim for Breach of Fiduciary and Confidential Relationship." Both counts averred that Ota would be unjustly enriched unless equitable relief was granted to Lumford by the court. Accordingly, based on Ota's alleged unjust enrichment, Lumford sought to impose a constructive trust upon the rental and other income and proceeds from the mortgage and sale of the Waipahu Property and sought an accounting from Ota of any income he and/or Janis received from the Waipahu Property.

         Ota filed a Motion to Dismiss Plaintiff's First Amended Complaint on October 6, 2015 (Motion to Dismiss). Ota thereafter argued, inter alia, that Lumford does not have a cognizable unjust enrichment claim because such a claim requires that the plaintiff have directly conferred a benefit upon the defendant. Ota argued that because Lumford alleged that Aoyagi had conferred the benefit (the Waipahu Property) upon Ota, Lumford, as a third party to that conveyance, has no justiable claim for unjust enrichment.

         In addition, Ota attached to a supplemental memorandum in support of the Motion to Dismiss, inter alia, the findings of fact and conclusions of law from June T. Aovagi v. Estate of Cindy Hatsue Aoyagi, et al.. Civil No. 10-1-2560 (Roger's Civil Case), an action purportedly prosecuted by Lumford's father, Roger Aoyagi, and the briefing from the appeal of the judgment in Roger's Civil Case.) See Aovagi v. Aovagi, 2017 WL 253545 (Haw. App. Jan. 20, 2017) (SDO).

         Lumford filed a memorandum in opposition to the Motion to Dismiss, which included a declaration of Lumford in which she averred, inter alia, that she was told by Aoyagi's attorney that Aoyagi "decided to leave [Ota] in charge of the property with the hopes that he would transfer the property to [Lumford] once he felt [Lumford] was ready."

         The Circuit Court agreed with Ota's argument that an unjust enrichment claim requires that a plaintiff have directly conferred a benefit upon the defendant and that dismissal of Lumford's claims on this basis was required. The Circuit Court stated:

[M]y inclination is just based on a 12(b) (6) reading of the First Amended Complaint, and under ["Pavsek v. Sandvold, 127 Hawai'i 390, 279 P.3d 55 (App. 2012)] that the way it's pled, even in the First Amended Complaint, for the reasons set forth by the Defendants, I don't think you can withstand 12(b)(6) under that case on the unjust enrichment, and if there is no unjust enrichment that's legally cognizable, then the other claims, I think I agree with the Defendants that those are remedies and not stand-alone claims.
So that's my inclination, that I don't know that it's - I'm not certain it's necessary for the Court to reach all of the issues, and just under 12(b)(6), my inclination is I'm persuaded just by that.

         After hearing further argument, the Circuit Court stated:

I'm going to incorporate the comments I made in the inclination as part of the basis of the ruling, and based on the arguments made by the movant in their Defendant's Supplemental Memorandum and the Reply, this Court finds that there's no cognizable claim under 12(b)(6) the way this is pled and looking at the elements of unjust enrichment, and the claim of constructive trust is a remedy and not a claim, so that's the Court's interpretation of what the case law stands for as well.
This Court did take judicial notice, and I found that all of the -- the exhibits in the Reply submitted by the Defendants and under Rule 201, as well as in the supplemental memorandum, this Court did take judicial notice of those, and I think it's appropriate under Rule 201.
And also, with regard to the standard of review, I'm disposing of this for failure to state a cognizable claim under 12(b)(6). However, Thomas vs. Sterns, S-T-E-R-N-S, I think that because my take on this case is even if I take judicial notice, I think it still does convert this under Rule 56, so I'm not totally convinced under the citation of
I think the Defendant cited this case saying I could take judicial notice and it would not convert the 12(b)(6) into a Rule 56 motion, but I think it does, so assuming arguendo it does, even under a Rule 56 standard of review, based on the Court's review of the Complaint and the applicable authorities, the movants have demonstrated entitlement to judgment as a matter of law, and I'm dealing with it as a question of ...

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