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Adon Construction Inc. v. Renesola America Inc.

United States District Court, D. Hawaii

May 23, 2019

ADON CONSTRUCTION INC., a Hawai‘i Corporation; GREEN VISION LLC, a Hawai‘i Limited Liability Company, Plaintiffs,


          JILL A. OTAKE, JUDGE

         This action arises out of Defendant Renesola America's (“Defendant”) sale of allegedly defective solar panels to Plaintiffs Adon Construction, Inc. and Green Vision LLC. Plaintiffs assert Hawai‘i state law claims against Defendant.[1]Defendant moves for judgment on the pleadings as to Counts I, III, V, VI, and X and moves for summary judgment on all claims.

         For the reasons stated below, the Court GRANTS IN PART AND DENIES IN PART Defendant's Motion for Judgment on the Pleadings and GRANTS Defendant's Motion for Summary Judgment as to all remaining claims.

         I. BACKGROUND

         A. Undisputed Facts

         Plaintiffs are contractors who install photovoltaic (“PV”) solar panels on residential and commercial properties in Hawai‘i. Pl.'s Concise Statement of Facts (“CSF”), Chen Declaration (“Decl.”) ¶¶ 1-2. Between 2013 and 2014, Plaintiffs purchased PV panels from Defendant, a solar panel supplier, for $2, 588, 217.40. Compl. ¶ 17. A Framework Sales Contract was drafted between the parties in 2014 and 2015, but it was never signed. Id. ¶ 19. Purchase invoices-dated April 17, 2013, and April 25, 2013-provide a warranty for “10 years for product, 10 years for 90% power output and 25 years for 80% power output.” Pl.'s CSF, Ex. S.

         Plaintiffs installed the solar panels on residential and commercial properties. Compl. ¶ 3. In 2015, five of Plaintiffs' customers initiated a civil suit (the “Commercial Litigation”) against Plaintiffs for reasons that are in dispute. Id. at ¶ 30. Plaintiffs entered into a Settlement Agreement with the five commercial customers, providing them a $501, 064.75 discount. Def.'s CSF ¶ 11; Pl.'s CSF ¶ 10. Another customer, Ramanlal, also filed suit against Plaintiffs resulting in a judgment against Plaintiffs for damages and attorney's fees. Pl.'s CSF, Ex. 6 at 5.

         B. Disputed Facts

         Plaintiffs allege that in 2012, Defendant solicited Plaintiffs' business and represented their products as “Tier 1” and free from defects, snail trails, [2] and micro-cracks. Pl.'s CSF ¶ 2. Michael Chen, President of Adon Construction Inc., stated that based on these “Tier 1 representations, ” Plaintiffs offered to purchase new panels in 2012 and 2014. Pl.'s CSF, Chen Decl. ¶ 18.

         Plaintiffs allege that in January 2015, Plaintiffs' customers began complaining about Defendant's solar panels because of snail trails. Compl. ¶ 21. Plaintiffs also allege that Ramanlal and the five commercial litigants brought suit against Plaintiffs, in part, because of the snail trails defect. Id. ¶ 30. Plaintiffs claim that they continue to experience customer complaints and will continue to accrue economic damages for the snail trails defect. Id. ¶¶ 54-54.

         Plaintiffs and Defendant submitted expert reports regarding snail trails and power degradation. Plaintiffs' expert Phil Atoigue opined that micro-cracking, snail trails, and burnouts “occur with manufacturer fault.” Pl.'s CSF ¶ 25. Defendant submitted evidence that micro-cracks can be created during the installation process. Def.'s CSF ¶¶ 6-8. After inspecting the panels in July 2018, Plaintiffs' expert Kevin Medeiros found a 20 to 60 percent decrease in performance “directly attributable to the defects in the panels, microcracking, [sic] burnouts and snail trails in about 90% of these Renesola panels.” Pl.'s CSF, Medeiros Decl. ¶¶ 6-7. Defendant, on the other hand, submitted evidence that Plaintiffs were “not yet experiencing production deficiencies” in 2015, one to two years after purchase of the panels. Def.'s CSF, Ex. 20 at 1.

         C. Procedural History

         Plaintiffs brought this lawsuit on September 15, 2016, in the Circuit Court of the First Circuit, State of Hawai‘i. ECF No. 1. Plaintiffs allege that Defendant sold Plaintiffs PV modules with snail trails that began to appear on the panels within one year of receiving the modules. Compl. ¶¶ 10, 23.

         Plaintiffs allege ten causes of action:

• Count I: fraudulent, intentional, reckless, or negligent misrepresentation;
• Count II: tortious fraud in the inducement;
• Count III: Unfair or Deceptive Acts and Practices, HRS §480-2;
• Count IV: Deceptive Trade Practices, HRS § 481A;
• Count V: business defamation and disparagement;
• Count VI: unjust enrichment;
• Count VII: detrimental reliance;
• Count VIII: breach of contract;
• Count IX: breach of express warranty; and
• Count X: breach of duty to mitigate damages.

Id. ¶¶ 57-184. Plaintiffs also assert a breach of duty to mitigate the claim against Ramanlal. Id. ¶¶ 176-184. Plaintiffs allege they have suffered $808, 677.55 in damages arising from the customer lawsuits. Id. ¶ 70.

         Defendant removed the case to the U.S. District Court for the District of Hawaii on October 20, 2016, on the grounds that Ramanlal was fraudulently joined to prevent diversity jurisdiction. ECF No. 1. The Court later denied Plaintiffs' motion to remand, ECF No. 31, and granted Ramanlal's motion to dismiss, ECF No. 40. On November 20, 2018, Defendant moved for judgment on the pleadings as to Counts I, III, V, VI, and X and moved for summary judgment on all counts. ECF No. 117; ECF No. 121.


         A. Legal Standards

         i. Rule 12(c)

         Rule 12(c) of the Federal Rules of Civil Procedure (“FRCP”) states, “After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). The standard governing the Rule 12(c) motion for judgment on the pleadings is the same as that governing a Rule 12(b)(6) motion to dismiss. Dworkin v. Hustler Magazine, Inc., 867 F.2d 1188, 1192 (9th Cir. 1989); see also McGlinchy v. Shell Chemical Co., 845 F.2d 802, 810 (9th Cir. 1988). Accordingly, “[a] judgment on the pleadings is properly granted when, taking all allegations in the pleading as true, the moving party is entitled to judgment as a matter of law.” Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co., 132 F.3d 526, 528 (9th Cir. 1997) (citing McGann v. Ernst & Young, 102 F.3d 390, 392 (9th Cir. 1996)).

         As with a motion to dismiss, a claim may survive a motion for judgment on the pleadings if the complaint “contain[s] sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). Facial plausibility exists “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). Although a court must accept as true all allegations contained in the complaint, this obligation does not extend to legal conclusions. Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). “Nor does a complaint suffice if it tenders ‘naked assertion[s]' devoid of ‘further factual enhancement.'” Id. (citing Twombly, 550 U.S. at 557). “[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]'-‘that the pleader is entitled to relief.'” Id. at 679 (citing Fed. Sprewell, 266 F.3dR. Civ. P. 8(a)(2)) (some alterations in original).

         Under Rule 12(b)(6), review is ordinarily limited to the contents of the complaint. Marder v. Lopez, 450 F.3d 445, 448 (9th Cir. 2006); Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). The Court treats a 12(b)(6) motion as a motion for summary judgment if it considers matters outside the pleadings. Anderson v. Angelone, 86 F.3d 932, 934 (9th Cir. 1996).

         ii. Rule 56(a)

         Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(a). “A party seeking summary judgment bears the initial burden of informing the court of the basis for its motion and of identifying those portions of the pleadings and discovery responses that demonstrate the absence of a genuine issue of material fact.” Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)); T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 ...

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