United States District Court, D. Hawaii
MICHAEL DAVID BRUSER, TRUSTEES UNDER THAT CERTAIN UNRECORDED REVOCABLE LIVING TRUST AGREEMENT DATED JULY 11, 1988, AS AMENDED, DOING BUSINESS AS DISCOVERY BAY CENTER; 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,
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,
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 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,
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.
AMENDED ORDER (1) GRANTING DEFENDANT/COUNTERCLAIM
PLAINTIFF BANK OF HAWAII'S MOTION FOR APPOINTMENT OF
TEMPORARY RECEIVER AND (2) GRANTING IN PART AND DENYING IN
PART INTERVENOR DEFENDANT/COUNTERCLAIM PLAINTIFF ASSOCIATION
OF APARTMENT OWNERS OF DISCOVERY BAY'S SUBSTANTIVE
E. KOBAYASHI, UNITED STATES DISTRICT JUDGE
31, 2018, Defendant/Counterclaim Plaintiff Bank of Hawaii, as
Trustee (“BOH”), filed its Motion for Appointment
of a Temporary Receiver (“Motion”). [Dkt. no.
221.] Intervenor Defendant/Counterclaim Plaintiff Association
of Apartment Owners of Discovery Bay (“AOAO”)
filed a substantive joinder in the Motion on August 7, 2018
(“Joinder”). [Dkt. no. 223.] On August 28, 2018,
BOH filed its supplemental memorandum in support of the
Motion (“Supplemental Memorandum”), and
Plaintiffs/Counterclaim Defendants Michael David Bruser and
Lynn Bruser (“the Brusers”) filed their
memorandum in opposition to the Motion. [Dkt. nos. 227, 228.]
On September 4, 2018, AOAO filed a supplemental memorandum
regarding the Motion and the Joinder,  and BOH filed its
reply memorandum. [Dkt. nos. 229, 230.] The Court finds these
matters suitable for disposition without a hearing pursuant
to Rule LR7.2(d) of the Local Rules of Practice of the United
States District Court for the District of Hawaii
(“Local Rules”). BOH's Motion is hereby
granted, and AOAO's Joinder is hereby granted in part and
denied in part, for the reasons set forth below.
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 FOF/COL”). [Dkt. no.
The Court will include only those facts relevant to the
instant matter. This case arose out of a contract dispute
regarding liability for payment of trustee's fees
(“Trustee Fee” or “Fee”). On August
29, 2014, the Brusers filed their Complaint for Declaratory
Judgment (“Complaint”) against BOH. [Dkt. no. 1.]
BOH filed its counterclaims against the Brusers on January
28, 2015 (“BOH Counterclaim”). [Dkt. no. 34.]
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.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.
Complaint sought declaratory judgment that the Brusers were,
inter alia: not liable for the payment of the 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).] They also sought additional relief
such as an accounting, and reasonable attorneys' fees and
costs. [Id. at ¶¶ E-F.]
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
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.
April 16, 2015, BOH filed its motion for partial summary
judgment as to its first counterclaim against the Brusers.
[Dkt. no. 50.] This Court granted BOH's motion, stating
“the plain language of the CCD requires payment of fees
under the Trust Agreement, which includes the Trustee
Fee.” Bruser v. Bank of Hawaii, Civil No.
14-00387 LEK-KSC, 2015 WL 4469850, at *4 (D. Hawai'i July
21, 2015). The Court declined to address the amount of the
Trustee Fee, or any matters of interpretation of the Trust
Agreement. Id. at *4 n.15.
Court held a bench trial on February 2, 2016 on the remaining
claims. [Minutes, filed 2/2/16 (dkt. no. 177).]
The 6/28/16 FOF/COL followed and the Clerk's Office
entered Judgment on June 28, 2016, finding (1) in favor of
BOH on its second counterclaim for breach of contract under
the CCD; (2) in favor of the Henderson/Gowans, AOAO,
Yokoyama, and Sheetz Bow on their claims for declaratory
relief and that the Brusers are liable for the total amount
of the unpaid Trustee Fee; (3) awarding $137, 434.50 to BOH
as the difference between what the Brusers owed and what they
paid between October 2014 and December 2015, with general
excise tax (“GET”); (4) awarding attorneys'
fees and costs to BOH. 2016 WL 3580612, at *7-8. The Brusers
filed an appeal on July 28, 2016, which is currently pending
before the Ninth Circuit (“Ninth Circuit
Appeal”). [Dkt. no. 200.]
29, 2018, the Hawai'i Intermediate Court of Appeals
(“ICA”) issued a Memorandum Opinion in In the
Matter of the Trust Agreement dated June 6, 1974, as amended,
No. CAAP-15-0000409 (“Trust Litigation” and
“ICA Opinion”). See 2018 WL 3199232. The ICA
reviewed, inter alia, the Probate Court's ruling to
increase the Trustee Fee in favor of BOH to $9, 850 for a
five-year period beginning October 2014. Id. at *10.
The ICA affirmed the Probate Court's decision, stating
the increase was “authorized and reasonable.”
Id. at *14. The ICA remanded the matter to the
Probate Court for further proceedings. Id. at *21.
Brusers represent they will timely file a petition for writ
of certiorari to have the Hawai`i Supreme Court review the
ICA Opinion (“Hawai`i Supreme Court Appeal”),
[Mem. in Opp. at 8, ] and that the Ninth Circuit Court of
Appeals has heard oral argument on October 12, 2018 on the
appeal of the 6/28/16 FOF/COL. [Id.]
Under federal law, appointing a “receiver is an
extraordinary equitable remedy, ” which should be
applied with caution. Aviation Supply Corp. [v. R.S.B.I.
Aerospace, Inc.], 999 F.2d [314, ] 316 [(8th Cir.
1993)]; 12 [Charles Alan] Wright, [Arthur R.] Miller &
[Richard L.] Marcus [Federal Practice and Procedure] §
2983, at 24 [(2d ed. 1997)]. However, there is “no
precise formula for determining when a receiver may be
appointed.” Aviation Supply Corp., 999 F.2d at 316.
Rather, federal courts consider a variety of factors in
making this determination, including, for example: (1)
“whether [the party] seeking the appointment has a
valid claim”; (2) “whether there is fraudulent
conduct or the probability of fraudulent conduct, ” by
the defendant; (3) whether the property is in imminent danger
of “being lost, concealed, injured, diminished in
value, or squandered”; (4) whether legal remedies are
inadequate; (5) whether the harm to plaintiff by denial of
the appointment would outweigh injury to the party opposing
appointment; (6) “the plaintiff's probable success
in the action and the possibility of irreparable injury to
plaintiff's interest in the property”; and, (7)
“whether [the] plaintiff's interests sought to be
protected will in fact be well-served by receivership.”
[13 James Wm. Moore, et al., ] Moore's [Federal
Practice], § 66.04[b] [(3d ed. 2008)]; New York
Life Ins. Co. [v. Watt West Inv. Corp.], 755 F.Supp.
[287, ] 292 [(E.D. Cal. 1991)] (citing 12 Wright, Miller
& Marcus § 2983).
Can. Life Assur. Co. v. LaPeter,
563 F.3d 837, 844
(9th Cir. 2009) (some alterations in Can. Life). Although
these factors provide the basic framework, the Ninth Circuit
also considers whether a property is of insufficient value to
guarantee payment, and whether the defendant is of
“doubtful financial standing.” See Id.
(citing View Crest Garden Apartments, Inc. v. United
States, 281 F.2d 844, 847 (9th Cir. 1960)).
Notwithstanding the foregoing factors, courts have the
authority to appoint a receiver where, “[e]ven if
inadequacy of the security and insolvency of the debtor did
not appear, consideration of other circumstances [may]
disclose . . . reasons for appointing . . . a
receiver.” Id. (citing View Crest, 281 F.2d at
847). Put differently, the Ninth ...