Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Soderholm Sales and Leasing, Inc. v. BYD Motors Inc.

United States District Court, D. Hawaii

September 30, 2019

SODERHOLM SALES AND LEASING, INC., Plaintiff,
v.
BYD MOTORS INC., JOHN DOES 1-10, JANE DOES 1-10, DOE CORPORATIONS 1-10, DOE ENTITIES 1-10, Defendants.

          ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT’S MOTION TO DISMISS COUNT V OF THE FIRST AMENDED COMPLAINT PURSUANT TO FED. R. CIV. P. 12(B)(6)

          LESLIE E. KOBAYASHI UNITED STATES DISTRICT JUDGE

         Before the Court is Defendant BYD Motors Inc.’s (“BYD”) Motion to Dismiss Count V of the First Amended Complaint Pursuant to Fed.R.Civ.P. 12(b)(6) (“Motion”), filed on June 21, 2019.[1] [Dkt. no. 22.] Plaintiff Soderholm Sales and Leasing, Inc. (“Soderholm”) filed its memorandum in opposition on July 12, 2019, and BYD filed its reply on July 19, 2019. [Dkt. nos. 24, 26.] This matter came on for hearing on August 2, 2019. On August 30, 2019, an entering order was issued informing the parties of the Court’s rulings on the Motion. [Dkt. no. 30.] The instant Order supersedes that entering order. For the reasons set forth below, the Motion is hereby granted, insofar as Count V is dismissed, and the Motion is hereby denied, insofar as the dismissal is without prejudice.

         BACKGROUND

         Soderholm filed its original Complaint in state court on February 28, 2019, and, on March 29, 2019, BYD removed the action based on diversity jurisdiction. [Notice of Removal (dkt. no. 1) at ¶ 5; id., Exh. 1 at 2-16 (Complaint).]

         Pursuant to the parties’ stipulation, approved by the Court on June 5, 2019, Soderholm filed its First Amended Complaint on June 7, 2016. [Dkt. nos. 19, 20.] According to the First Amended Complaint, BYD manufactures buses and is a licensed manufacturer under Hawaii’s Motor Vehicle Industry Licensing Act (“MVILA”), Haw. Rev. Stat. Chapter 437. [Id. at ¶ 7.] However, Soderholm alleges BYD is not licensed under the MVILA to conduct sales in Hawai`i. See, e.g., id. at ¶ 35. Under the Sales and Service Agreement, effective January 1, 2016, between Soderholm and BYD (“Agreement”), Soderholm was BYD’s authorized Sales and Service Organization for the State of Hawai`i and other Pacific Islands. [Id. at ¶ 8.]

         Soderholm alleges it has: undertaken significant marketing and sales efforts on BYD’s behalf; and spent substantial amounts of time doing pick up, drop off, and repairs of BYD buses, as well as training, when BYD was unable to do so. [Id. at ¶¶ 9-13.] Soderholm alleges BYD has not provided it with adequate sales and service support, and this has caused Soderholm’s established customers to purchase similar buses from BYD’s competitors. [Id. at ¶ 14.] In addition, Soderholm spent substantial amounts of time preparing a bid proposal for BYD tram/trailers to be sold for use at the Honolulu International Airport (“Airport Project”), but BYD later decided not to submit a bid through Soderholm. [Id. at ¶¶ 15-16.] According to Soderholm, BYD has competed against it by: submitting its own bid for the Airport Project; [id. at ¶ 47;] and dealing directly with customers to whom Soderholm had been trying sell BYD’s buses, [id. at ¶¶ 31-33]. Soderholm alleges these actions violated the licensing provision of the Agreement and the MVILA. [Id. at ¶ 34.] Soderholm also alleges BYD has attempted to terminate the Agreement, in violation of the termination provisions of the Agreement and in violation of the relevant provisions of the MVILA. [Id. at ¶¶ 17-22, 38-41.]

         The First Amended Complaint alleges the following claims: 1) the cancellation of the Agreement violated the MVILA (“Count I”); 2) BYD’s conduct related to its attempt to terminate the Agreement constitutes bad faith, in violation of Haw. Rev. Stat. § 437-28(a)(21)(C) and § 437-58(g) (“Count II”); 3) BYD’s sales efforts that violate the licensing provision of the Agreement also violate the MVILA (“Count III”); 4) a misrepresentation claim based upon BYD’s representation to industry members that BYD has terminated the Agreement (“Count IV”); 5) constructive fraud (“Count V”); 6) a claim for injunctive relief, pursuant to Haw. Rev. Stat. § 437-36 (“Count VI”); and 7) a claim seeking the imposition of a constructive trust (“Count VII”).

         Only Count V is at issue in the instant Motion. BYD argues Count V fails to state a claim upon which relief can be granted and should be dismissed with prejudice.

         DISCUSSION

         At the outset, it is noted that the Fed.R.Civ.P. 9(b) heightened pleading standard applies to constructive fraud claims. Depot, Inc. v. Caring for Montanans, Inc., 915 F.3d 643, 668 (9th Cir. 2019), cert. petition filed (U.S. July 15, 2019). Thus, in order to survive a motion to dismiss, Count V must satisfy the Rule 9(b) standard. See generally Id . at 668 & n.17 (discussing the Rule 9(b) pleading requirements).

         I. Whether Count V Should Be Dismissed

         This district court has stated:

Constructive fraud arises from a breach of duty by one in a confidential or fiduciary relationship. Scholes v. Kawaguchi, –– P.3d --, –––, 2017 WL ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.