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Andrade v. Gaurino

United States District Court, D. Hawaii

September 16, 2019

MILLICENT ANDRADE, ET AL., Plaintiffs,
v.
ABNER GAURINO, ET AL., Defendants.

          FINDINGS AND RECOMMENDATION TO GRANT IN PART AND DENY IN PART THE GAURINO DEFENDANTS' MOTION FOR ATTORNEY FEES

          Wes Reber Porter, United States Magistrate Judge.

         Before the Court is Defendants Abner, Aurora, and Abigail Gaurino's (the Gaurino Defendants) Motion for Attorney Fees, filed on July 22, 2019 (Motion). See ECF No. 488. The Gaurino Defendants requests an award of attorneys' fees against Plaintiffs. See id. The Guarino Defendants filed a Statement of Consultation on August 7, 2019. See ECF No. 507. Plaintiffs did not file an opposition or other response to the Motion.

         After careful consideration of the Motion, the record in this action, and the relevant legal authority, the Court FINDS AND RECOMMENDS that the Gaurino Defendants' Motion be GRANTED IN PART AND DENIED IN PART.[1]

         BACKGROUND

         Because the parties and the Court are familiar with the history of this case, the Court includes only those facts relevant to the present Motion.

         Plaintiffs in this case are Atooi Aloha, LLC, Craig Stanley, the Edmon Keller and Cleavette Mae Stanley Family Trust (the Trust), and Millicent Andrade. See ECF No. 478 at 2. Plaintiffs filed the initial Complaint on June 26, 2016, and the First Amended Complaint on May 8, 2017. See ECF Nos. 1, 30. Plaintiffs asserted claims for violations of federal securities law, common law fraud, fraudulent transfer, real estate fraud, constructive trust, and quiet title against the Gaurino Defendants and Defendant Owan related to a multi-level marketing endeavor. Id.[2]

         On July 8, 2019, the day that the jury trial was set to begin, the Court held a status conference with Plaintiffs and Defendants present. See ECF No. 476. Plaintiffs' counsel moved to withdraw, and the Court moved to closed proceedings to address the request. See id. During those proceedings, Plaintiff Stanley left the courtroom following an outburst and absented himself from the proceedings. See id. The Court noted Plaintiffs' lack of objection to counsel's motion to withdraw, granted the motion, and instructed Plaintiff Andrade that she would proceed pro se. See id. The Court then dismissed with prejudice Plaintiff Atooi Aloha, LLC's claims pursuant to Local Rule 83.11 of the Local Rules of Practice for the United States District Court for the District of Hawaii (Local Rules), which provides that business entities cannot appear without counsel. See ECF No. 478 at 6. The Court took two recesses to allow an opportunity for Plaintiff Stanley to return to the courthouse. Id. at 7-8. Plaintiff Stanley did not return to court. See id. The district court dismissed with prejudice all of Plaintiffs' claims. See ECF No. 476.

         On July 15, 2019, the district court issued its written order dismissing with prejudice the claims of Plaintiff Stanley and the Trust (the Stanley Plaintiffs). See ECF No. 478. The district court found that “Plaintiff Stanley's refusal to attend trial, failure to comply with Court deadlines and orders, and failure to prosecute prevented the timely progression and resolution of this case.” Id. at 9. The district court also found that Plaintiff Stanley “interfered with Defendants' ability to proceed to trial by repeatedly failing to adhere to the trial schedule, frightening the parties and their lawyers, and refusing to appear.” Id. at 10.

         On July 16, 2019, the district court issued its written order granting Plaintiff Andrade's motion to dismiss the First Amended Complaint “subject to certain conditions.” See ECF No. 480. Specifically, the district court held that the dismissal was subject to the condition that Defendants were entitled “to their reasonable attorneys' fees and costs.” Id. at 10. The district court noted that Defendants had “prepared the defense of this case for over five years” and “conducted extensive discovery and endured Plaintiff's pattern of delay tactics and gamesmanship.” Id. The district court also noted that several Defendants travelled to Hawaii for trial and one of defense counsel had interrupted his retirement for trial. Id.

         Judgment was entered by the Clerk on July 19, 2019. See ECF No. 484. The present Motion followed. See ECF No. 488.

         DISCUSSION

         In the present Motion, the Gaurino Defendants seek an award of attorneys' fees against both Plaintiff Andrade and the Stanley Plaintiffs in the amount of $140, 039.21. See ECF No. 488-1.

         I. Entitlement to Attorneys' Fees

         The Court must first address whether the Gaurino Defendants are entitled to an award of attorneys' fees. In their Motion, the Gaurino Defendants make three arguments in support of their request for fees. First, the Gaurino Defendants argue that they are entitled to an award of attorneys' fees based on the district court's order dismissing Plaintiff Andrade's claims. See ECF No. 488-1 at 1-2. Second, the Gaurino Defendants argue that they are entitled to an award of attorneys' fees under the bad faith exception to the American Rule, which generally requires each party to pay its own attorneys' fees. See id. at 2-8. Third, the Gaurino Defendants argue that they are entitled to an award of attorneys' fees pursuant to the Hawaii Revised Statutes Section 607-14. See id. at 9-10. The Court addresses these three arguments below.

         A. The Gaurino Defendants Are Entitled to An Award of Attorneys' Fees and Costs Against Plaintiff Andrade Pursuant to the District Court's Dismissal Order

         On July 16, 2019, the district court issued its written order granting Plaintiff Andrade's motion to dismiss the First Amended Complaint “subject to certain conditions.” ECF No. 480 at 1. Specifically, the district court held that the dismissal was subject “to a condition entitling Defendants to their reasonable attorneys' fees and costs.” Id. at 10. The district court noted that Defendants had “prepared the defense of this case for over five years” and “conducted extensive discovery and endured Plaintiff's pattern of delay tactics and gamesmanship.” Id. The district court also noted that several Defendants travelled to Hawaii for trial and one of defense counsel had interrupted his retirement for trial. See id. Based on the district court's order, the Gaurino Defendants are entitled to an award of her reasonable attorneys' fees and costs against Plaintiff Andrade. See Id. Accordingly, the Court RECOMMENDS that the district court GRANT the Gaurino Defendants' request that the Court award attorneys' fees against Plaintiff Andrade based on the district court's order granting Plaintiff Andrade's motion to dismiss.

         B. The Gaurino Defendants Are Not Entitled to An Award of Attorneys' Fees and Costs Against Plaintiffs Under the ...


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