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Yoshimura v. Kaneshiro

United States District Court, D. Hawaii

May 15, 2019

TRACY T. YOSHIMURA, ET AL., Plaintiffs,
v.
KEITH M. KANESHIRO, ETC., ET AL., Defendants.

         ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT CITY & COUNTY OF HONOLULU'S MOTION FOR SUMMARY JUDGMENT AND GRANTING IN PART AND DENYING IN PART DEFENDANT KATHERINE KEALOHA'S AND DEFENDANT KEITH M. KANESHIRO'S JOINDERS

          Leslie E. Kobayashi United States District Judge

         Before the Court is Defendant City & County of Honolulu's (“the City”) Motion for Summary Judgment (“Motion”), filed on December 13, 2018. [Dkt. no. 58.] Plaintiffs Tracy T. Yoshimura (“Yoshimura”), Eugene M. Simeona, Jr. (“G. Simeona”), Michael D. Miller, Jr. (“Miller”), Gary R. Danley, Jr. (“Danley”), Quentin D.R. Canencia (“Canencia”), Desiree U. Haina (“Haina”), Michael A. Madali, Jr. (“Madali”), and Clayton Simeona (“C. Simeona” and collectively “Plaintiffs”) filed their memorandum in opposition on February 8, 2019, and the City filed its reply on February 15, 2019. [Dkt. nos. 76, 82.[1]] On January 9, 2019, Defendant Katherine Kealoha, individually and in her capacity as Deputy Prosecuting Attorney (“Kealoha”), filed her joinder of simple agreement, and on February 4, 2019, Defendant Keith M. Kaneshiro, in his individual capacity (“Kaneshiro”), filed his joinder of simple agreement (collectively “the Joinders”). [Dkt. nos. 66, 74.] These matters came on for hearing on February 26, 2019.

         On March 6, 2019, Plaintiffs filed their motion for leave to file supplemental briefs on the City's Motion, which this Court granted on March 20, 2019. [Dkt. nos. 97 (motion for leave), 109 (EO: Court Order Granting Pltfs.' Motion for Leave to File Suppl. Briefs).] On April 3, 2019, Plaintiffs filed their supplemental brief in opposition to the Motion, and on April 10, 2019, the City filed its reply memorandum to Plaintiffs' supplemental brief. [Dkt. nos. 112, 117.] The City's Motion is hereby granted in part and denied in part for the reasons set forth below. Specifically, summary judgment is granted in favor of the City as to: 1) G. Simeona, Danley, Canencia, Haina, Madali, C. Simeona, and Miller's claim for negligent hiring against Kaneshiro and the City in Count XI of the Second Amended Complaint; and 2) the City's arguments regarding issue preclusion, insofar as Plaintiffs are barred from asserting that the PDS terminals are not gambling devices.

         BACKGROUND

         A summary of the procedural background has been set forth in this Court's April 29, 2019 Order (“4/29/19 Order”) denying the City's motion to disqualify Keith Kiuchi, Esq. [Dkt. no. 119.[2]] The Court hereby incorporates the relevant background summary from the 4/29/19 Order in the instant order. Because the City's Motion seeks summary judgment based on the allegations and events in the prior litigation known as PJY Enterprises LLC, et al. v. Kaneshiro, et al., CV 12-00577 LEK-RLP (“PJY Lawsuit” and “CV 12-00577”), the Court addresses the lawsuits in chronological order.

         I. The PJY Lawsuit

         This Court summarized the relevant background of the PJY Lawsuit and underlying criminal investigation in its April 30, 2014 Order Granting Defendants' Motion for Summary Judgment (“PJY Summary Judgment Order”). [CV 12-00577, dkt. no. 164.[3]] On September 27, 2012, Kaneshiro and the Honolulu Police Department (“HPD”) seized seventy-seven Products Direct Sweepstakes (“PDS”) terminals from game arcades operated by Lucky G Enterprises, Inc. (“Lucky G”), S L & G Investments, LLC (“S L & G”), WZ Waikiki Partners, LLC (“WZ Waikiki”), and PMG Entertainments, LLC (“PMG”) on the grounds that the PDS terminals were gambling machines. There were additional seizures made on December 13, 2012 and February 14, 2013 from the game arcades operated by Mike, Inc. (“Mike”), GS Entertainment, Inc. (“GS”), and Aloha Arcade, Inc. (“Aloha”). PJY Summary Judgment Order, 2014 WL 12694456, at *2. During the February 14, 2013 seizure, HPD officers arrested employees of Mike, GS, and Aloha without first obtaining an arrest warrant. Those arrested included C. Simeona, Madali, Canencia, Haina, and Danley. Id. When G. Simeona attempted to bail out the arrested employees at the police station, he too was arrested. Id.

         Shortly after the initial investigation against the Plaintiffs began, but after the September 27, 2012 seizure of the PDS terminals, Plaintiffs PJY Enterprises, LLC (“PJY”), Lucky G, S L & G, WZ Waikiki, WZ Wahiawa Partners, LLC (“WZ Wahiawa”), PMG, GS, Haina, G. Simeona, C. Simeona, Aloha, Danley, Canencia, Mike, and Madali (collectively “PJY Plaintiffs”) filed their Complaint in the PJY Lawsuit.[4] Id. at *1. The action named Kaneshiro, Louis M. Kealoha, Scott Yip (“Yip”), Aaron Young (“Young”), and HPD as defendants (“PJY City Defendants”).[5] Id.

         On June 25, 2013, the PJY Plaintiffs filed their second amended complaint (“PJY Complaint”) to include additional factual allegations related to the December 13, 2012 seizure and the February 14, 2013 seizure of PDS terminals from the game arcades operated by Mike, GS, and Aloha. Id. at *2. This Court noted that the PJY Complaint alleged the following claims:

a claim by PJY, the Winner'z Zone Plaintiffs, and the Lucky Touch Plaintiffs seeking a declaratory judgment that the seizure and retention of the PDS terminals and Kaneshiro's statements violate various rights under the United States Constitution and the Hawai`i State Constitution (“[P]Y] Count I”); a claim by PJY, the Winner'z Zone Plaintiffs, and the Lucky Touch Plaintiffs seeking an injunction requiring the return of the seized PDS terminals, preventing any future seizures of PDS terminals, preventing interference with Plaintiffs' operation and distribution of PDS terminals, and preventing further infringement on Plaintiffs' constitutional rights (“[P]Y] Count II”); a claim by PJY and the Lucky Touch Plaintiffs for damages from the violations described in Count I (“[P]Y] Count III”); a property damage claim by GS and Mike against HPD arising from damage to their personal property, fixtures, and premises during the February 14, 2013 seizure (“[P]Y] Count IV”); and a claim by the individual plaintiffs against Yip and Young pursuant to 42 U.S.C. § 1983 and Article I, §§ 4, 5, and 7 of the Hawai`i Constitution for the violation of the individual plaintiffs' rights during their allegedly unlawful arrests (“[P]Y] Count V”).

Id.

         On May 13, 2014, PJY Count IV was deemed dismissed pursuant to Fed.R.Civ.P. 41(a). [CV 12-00577, EO: Court Order Granting Pltfs.' Motion to: (1) Certify this Court's Order of April 30, 2014 as Final Judgment for Appeal Pursuant to Rule 54(b) of the Fed. R. Civ. P., (2) Stay Further Proceedings Pending Appeal; and (3) Leave to Dismiss Count IV of the Complaint (dkt. no. 183) at 2.] On May 15, 2014, this Court entered judgment in favor of the PJY City Defendants as to PJY Counts I, II, and III. [Id., Judgment in a Civil Case (dkt. no. 185).] On May 22, 2014, the PJY Plaintiffs filed a notice of appeal with regard to the PJY Summary Judgment Order and the May 15, 2014 Judgment, which the Ninth Circuit affirmed on March 9, 2017 in a memorandum disposition. [Id., dkt. nos. 186 (Notice of Appeal), 208 (3/9/17 mem. dispo.).[6]]

         On June 7, 2017, the parties agreed to settle the case during the settlement conference before the magistrate judge; the PJY Plaintiffs were represented by Mr. Kiuchi, and the PJY City Defendants were represented by Deputy Corporation Counsel Ernest Nomura. [Id., Minutes, filed 6/7/17 (dkt. no. 215).] On July 12, 2017, the parties filed their Stipulation to Dismiss with Prejudice Count V of the PJY Complaint (“Dismissal Stipulation”). [Id., dkt. no. 216.]

         It appears that, on or about July 10, 2017 at approximately 12:13 p.m., Mr. Nomura sent the proposed draft settlement agreement to Mr. Kiuchi for his review. [City's Separate Concise Statement of Facts in Supp. of Motion, filed 12/13/18 (dkt. no. 59) (“City CSOF”), Decl. of Ernest Nomura (“Nomura Decl.”), Exh. C at 000006 (emails dated 7/10/17 between Mr. Nomura and Mr. Kiuchi).] Although Mr. Nomura and Mr. Kiuchi exchanged a number of emails from that date up to December 5, 2017, it does not appear that the PJY Plaintiffs ever signed and returned the proposed settlement agreement to the City. [Id. at 000006-12 (various emails between 7/10/17 and 12/5/17 between Mr. Nomura and Mr. Kiuchi on the status of the PJY Plaintiffs' signatures to the settlement agreement); Mem. in Opp., Decl. of Keith M. Kiuchi (“Kiuchi Decl.”), Exh. 10 (email dated 12/5/17 (email dated 12/5/17 between Mr. Nomura and Mr. Kiuchi on the status of the PJY Plaintiffs' signatures to the settlement agreement).[7]]

         II. Second Amended Complaint

         In the instant case, Plaintiffs filed their Second Amended Complaint on November 8, 2018 against Kaneshiro; Kealoha, in her individual capacity; Vernon Branco, in his individual capacity (“Branco”); the City; Jacob Delaplane, in his individual capacity (“Delaplane”); and Tommy Kong, in his individual capacity (“Kong” and collectively “Defendants”). [Second Amended Complaint (dkt. no. 52) at pgs. 3-4.] Plaintiffs allege that, as a result of the seizures of the PDS terminals, on May 1, 2014, a state grand jury indicted Yoshimura, G. Simeona, Miller, Danley, Canencia, Haina, Madali, and C. Simeona (“First Indictment”) for, inter alia, gambling and possession of gambling machines. [Id. at ¶¶ 29, 58.] The First Indictment was later dismissed without prejudice. [Id. at ¶ 41.]

         On January 28, 2016, Danley, Canencia, Haina, Madali, and C. Simeona were indicted (“Second Indictment”) for promoting gambling in the first degree and unlawful ownership or operation of a business. [Id. at ¶ 42.[8]] On February 24, 2016, the state grand jury indicted Yoshimura, G. Simeona, and Miller (“Third Indictment”), for promoting gambling in the first degree and unlawful ownership or operation of a business. [Id. at ¶ 47.] The criminal charges in the Third Indictment were dismissed on October 27, 2017; and, on April 5, 2017, the criminal charges in the Second Indictment were also dismissed. [Id. at ¶¶ 51-52.] Plaintiffs allege that the other owners of the game arcades where PDS terminals were seized on September 27, 2012 were not indicted, and that Branco conducted all of the undercover investigations of the PDS terminals without the assistance of HPD or the Attorney General's office. [Id. at ¶¶ 23-24.]

         The Second Amended Complaint alleges the following claims:

-a 42 U.S.C. § 1983 claim by all Plaintiffs against Kaneshiro, Kealoha, Branco, and the City for retaliatory prosecution, in violation of the First Amendment of the United States Constitution and the corresponding provision of the Hawai`i State Constitution (“Count I”);
-a § 1983 claim by all Plaintiffs against Kaneshiro, Kealoha, Branco, and the City based on allegations of selective enforcement, in violation of the Equal Protection Clause (“Count II”);
-a § 1983 claim by all Plaintiffs against Kaneshiro, Kealoha, Branco, and the City based on an alleged violation of due process (“Count III”);
-a § 1983 claim by Canencia against Kaneshiro, Kong, and the City based on an alleged violation of due process (“Count IV”);
-a state claim by Danley, Canencia, Haina, C. Simeona, and Madali against Kealoha and the City for the initiation of malicious prosecution based on allegations regarding the Second Indictment (“Count V”);
-a state claim by Yoshimura against Kaneshiro, Kealoha, Delaplane, and the City for the initiation of malicious prosecution based on allegations regarding the First Indictment (“Count VI”);
-a state claim by Yoshimura against Kaneshiro, Kealoha, Delaplane, and the City for the initiation of malicious prosecution based on allegations regarding the Third Indictment (“Count VII”);
-a state claim by Danley, Canencia, Haina, C. Simeona, and Madali against Kealoha, Kaneshiro, and the City for maintaining a malicious prosecution based on allegations regarding the Second Indictment (“Count VIII”);
-a state claim by Yoshimura, G. Simeona, and Miller against Kealoha, Kaneshiro, and the City for maintaining a malicious prosecution based on allegations regarding the Third Indictment (“Count IX”);
-a state claim by all Plaintiffs against Kealoha and the City for abuse of process (“Count X”);
-a state claim by all Plaintiffs against Kaneshiro and the City for negligent hiring of Kealoha, Delaplane, Branco, and Kong (“Count XI”); and
-a state claim by all Plaintiffs against Kaneshiro and the City for negligent retention and supervision of Kealoha, Delaplane, and Branco (“Count XII”).

         On November 21, 2018, the City filed its Answer and Counterclaim, asserting a counterclaim for breach of contract based on the PJY Lawsuit settlement agreement and Plaintiffs' failure to perform their obligations under the settlement agreement, i.e., filing the instant lawsuit (“Counterclaim I”); and equitable and/or promissory estoppel based on the PJY Plaintiffs' counsel's representations that all material terms of the settlement agreement had been accepted (“Counterclaim II”). [City's Answer, dkt. no. 55, Counterclaim at pgs. 8-11.]

         III. Motion

         The City argues all of Plaintiffs' claims are barred by the settlement agreement entered into between the PJY Plaintiffs and the City in the PJY Lawsuit; and all of Plaintiffs' claims are barred by the doctrine of claim preclusion. Further, the City asserts that issue preclusion bars Plaintiffs from arguing that any of the Defendants lacked probable cause or that the PDS terminals were not illegal gambling devices. Finally, the City argues it is entitled to summary judgment on its Counterclaims I and II.

         DISCUSSION

         I. The PJY Lawsuit Settlement Agreement and the City's Counterclaims I and II

         The City asserts it is entitled to summary judgment because Plaintiffs have released all of their claims based on the settlement agreement in the PJY Lawsuit, and if so, summary judgment must be granted on the City's counterclaims for breach of contract and promissory and/or equitable estoppel. The Court addresses the City's ...


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