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Ward Management Development Co. LLC v. Nordic PCL Construction, Inc.

United States District Court, D. Hawaii

January 14, 2019

WARD MANAGEMENT DEVELOPMENT COMPANY, LLC, et al., Plaintiffs,
v.
NORDIC PCL CONSTRUCTION, INC., Defendant.

          ORDER OVERRULING OBJECTIONS, ADOPTING OCTOBER 19, 2018 FINDINGS AND RECOMMENDATION, AND DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND BILL OF COSTS WITHOUT PREJUDICE

          J. Michael Seabright, Chief United States District Judge

         I. INTRODUCTION

         Defendant Nordic PCL Construction, Inc. (“Defendant” or “Nordic”) objects under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2) to Magistrate Judge Richard Puglisi's October 19, 2018 Findings and Recommendation to Deny Defendant Nordic PCL Construction, Inc.'s Motion for Attorneys' Fees and Bill of Costs (the “October 19, 2018 F&R”). Based on the following, the objections are OVERRULED and the October 19, 2018 F&R is ADOPTED. Because the action was dismissed without prejudice under Hawaii Revised Statutes (“HRS”) § 672E-13, Defendant is not a “prevailing party.” Defendant's Motion and Bill of Costs are DENIED without prejudice.

         II. BACKGROUND

         On August 6, 2018, this court granted Defendant's Motion to Dismiss, dismissing without prejudice the First Amended Complaint (“FAC”) filed by Plaintiffs Ward Management Development Company, LLC (“Ward Management”); Waiea Management Development Company, LLC (“Waiea”); Victoria Ward, Ltd. (“Victoria Ward”); and 1118 Ala Moana, LLC (“1118 Ala Moana”) (collectively “Plaintiffs”). See ECF No. 81; Ward Mgmt. Dev. Co. v. Nordic PCL Constr. Co., 2018 WL 3733608 (D. Haw. Aug. 6, 2018).

         In dismissing the FAC, the court did not address the merits of the suit (and does not do so here) - the substance, however, concerns alleged claims against Nordic sounding in breach of contract and breach of warranty arising from alleged defects in the recent construction of the 36-story Waiea Tower in the Kaka‘ako district of Honolulu, and related contractual issues with a Construction Management Agreement between Ward Management and Nordic. Rather, much of the litigation in this forum centered around alleged jurisdictional defects: Defendant's arguments that complete diversity of citizenship is lacking because (1) the Association of Unit Owners of 1118 Ala Moana is a required party under Federal Rule of Civil Procedure 19(b) whose presence destroys diversity; and (2) Victoria Ward has Hawaii citizenship (rather than Texas citizenship as alleged in the FAC) where Defendant also has Hawaii citizenship.

         Ultimately, however, the court - applying Sinochem International Co. v. Malaysia International Shipping Corp., 549 U.S. 422 (2007) - “bypassed” even the jurisdictional issues, and dismissed the FAC without prejudice as required by HRS § 672E-13 because Plaintiffs had failed to properly fulfill notice and mediation prerequisites of Hawaii's Contractor Repair Act, HRS ch. 672E, before filing suit. See Ward Mgmt., 2018 WL 373308, at *1. That is, the court did not preclude Plaintiffs from re-filing in this federal forum (and, likewise, did not preclude Defendant from reasserting any other defenses it might want to raise) if mediation was unsuccessful.

Specifically, HRS § 672E-13 provides in pertinent part:
The court . . . shall dismiss, without prejudice, any action failing to meet the requirements of this chapter, unless: . . . .
(3) An applicable statute of limitations on actions would prevent the refiling of an action, in which case the action shall be immediately stayed to provide the claimant with an opportunity to comply with this chapter, but for no longer than six months[.]

         Section 672E-13 thus contemplates that a dismissed action can be re-filed after “the requirements of this chapter” (e.g., mediation) have been met, if the parties are otherwise unable to resolve the dispute under the Contractor Repair Act's provisions, as the Hawaii Legislature envisioned. Indeed, § 672E-13(3) preserves such a right to re-file by requiring a stay if an applicable limitations period would otherwise expire in the meantime (which was not the situation here).

         Accordingly, the court instructed the Clerk of Court to “close the case file, ” and the Clerk entered a corresponding judgment, stating “IT IS ORDERED AND ADJUDGED that the Action is DISMISSED WITHOUT PREJUDICE, and DISMISSED as pursuant to and in accordance with the Court's Order filed August 6, 2018[.]” ECF No. 82.[1]

         On August 20, 2018, Nordic filed a Motion for Attorneys' Fees and a Bill of Costs, seeking an award of $515, 683.04 in attorneys' fees and $2, 439.39 in costs as a “prevailing party” under HRS § 607-14, [2] § 14.6 of the Construction Management Agreement, [3] and Federal Rule of Civil Procedure 54(d)(1).[4] ECF Nos. 83 & 84. After due consideration, Magistrate Judge Richard Puglisi entered the October 19, 2018 F&R, concluding that Nordic is not entitled to fees or costs because this court's August 6, 2018 dismissal did not render it a “prevailing party” for such purposes. ECF No. 92 at 8-9.

         On November 2, 2018, Nordic filed Objections to the October 19th F&R under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2). ECF No. 93. Plaintiffs filed an Opposition on November 30, 2018, ECF No. 96, and a corresponding Reply and Sur-Reply were filed on December 12, 2018 and December 21, 2018 respectively. ECF Nos. 97-2 & 99-2. The court decides the matter without an oral hearing under Local Rule 7.2(e).

         III. STANDARD OF REVIEW

         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.”). That is, “[t]he district judge may accept the portions of the findings and recommendation to which the parties have not objected as long as it is satisfied that there is no clear error on the face of the record.” Naehu v. Read, 2017 WL 1162180, at *3 (D. Haw. Mar. 28, 2017) (citations omitted).

         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 judge's findings or recommendation to which a party objects. United States v. Remsing, 874 F.2d 614, 618 (9th Cir. 1989).

         IV. DISCUSSION

         A. Attorneys' Fees

         1. HRS ...


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