Kersh v. Manulife Financial Corporation et al

Filing 97

ORDER Affirming Magistrate Judge Barry M. Kurren's October 6, 2011 Findings And Recommendation That Defendants' Motion For Attorneys' Fees Be Granted In Part And Denied In Part re 95 . Signed by JUDGE J. MICHAEL SEABRIGHT on 11/21/11 . (gls, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
DAVID KERSH,

)
)
Plaintiff,
)
)
vs.
)
)
MANULIFE FINANCIAL
)
CORPORATION, a foreign corporation, )
JOHN HANCOCK FINANCIAL
)
SERVICES, INC. aka JOHN
)
HANCOCK LIFE INSURANCE
)
COMPANY (USA), a foreign
)
corporation, and NORTH AMERICAN )
LIFE ASSURANCE CO., a foreign
)
corporation, JOINTLY AND
)
SEVERALLY,
)
)
Defendants.
)
________________________________ )

CIVIL NO. 09-00049 JMS/BMK
ORDER AFFIRMING
MAGISTRATE JUDGE BARRY M.
KURREN’S OCTOBER 6, 2011
FINDINGS AND
RECOMMENDATION THAT
DEFENDANTS’ MOTION FOR
ATTORNEYS’ FEES BE GRANTED
IN PART AND DENIED IN PART

ORDER AFFIRMING MAGISTRATE JUDGE BARRY M. KURREN’S
OCTOBER 6, 2011 FINDINGS AND RECOMMENDATION THAT
DEFENDANTS’ MOTION FOR ATTORNEYS’ FEES BE GRANTED IN
PART AND DENIED IN PART
I. BACKGROUND
On February 4, 2009, Plaintiff David Kersh (“Plaintiff”) filed this
action against Defendants Manulife Financial Corporation (“Manulife”), John
Hancock Financial Services, Inc. aka John Hancock Life Insurance Company
(USA) (“John Hancock”), and North American Life Assurance Co. (“NALA”),

(collectively, “Defendants”), asserting state law claims based on Defendants’
alleged failure to recognize that Plaintiff held a fully-paid insurance policy that he
purchased on March 20, 1978. Plaintiff asserted that he purchased a universal life
insurance policy requiring him to make certain payments within the first seven
years of the policy, and that the policy is paid in full. In comparison, Defendants
asserted that Plaintiff purchased a whole life insurance policy requiring annual
payments and that the policy lapsed in 1984 after Plaintiff stopped making
payments.
Plaintiff alleged five claims: (1) Breach of Contract (Count I);
(2) Unfair Business Practices -- Hawaii Revised Statutes (“HRS”) § 480-2 (Count
II); (3) Recklessness (Count III); (4) Misrepresentation (Count IV); and
(5) Intentional Infliction of Emotional Distress (“IIED”) (Count V). On May 31,
2011, the court granted Defendants’ Motion for Summary Judgment, finding that
Plaintiff’s claims were barred by the statute of limitations.
Defendants subsequently filed a Motion for Attorneys’ Fees
requesting $119,274.30 on the basis that: (1) HRS § 607-14 allows for Defendants
to recover fees on Plaintiff’s breach of contract claim; (2) Plaintiff’s remaining
claims are frivolous such that Defendants are entitled to all of their fees pursuant to
HRS § 607-14.5(a); and, alternatively, (3) the gravamen of Plaintiff’s claims are
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breach of contract such that Defendants are entitled to all of their fees pursuant to
HRS § 607-14. On October 6, 2011, U.S. Magistrate Judge Barry M. Kurren
entered his Findings and Recommendation that Defendants’ Motion for Attorneys’
Fees Be Granted in Part and Denied in Part (the “October 6, 2011 F&R”). The
October 6, 2011 F&R found that Defendants are entitled to fees on the breach of
contract claim pursuant to HRS § 607-14, yet rejected Defendants’ other
arguments. As to Defendants’ argument under HRS § 607-14.5, the October 6,
2011 F&R explained that fees are warranted only where there is an express finding
of frivolousness, which was not made in this case. The October 6, 2011 F&R
therefore calculated that Defendants were entitled to $50,000 in fees.
Defendants now make a limited Objection to the October 6, 2011
F&R, arguing that Plaintiff’s non-contract claims were frivolous such that
Defendants are entitled to their entire fee request pursuant to HRS § 607-14.5.
Plaintiff did not file a Response. Based upon a de novo review,1 the court
OVERRULES Defendants’ Objection and ADOPTS the October 6, 2011 F&R.
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///

1

Pursuant to Local Rule 7.2(d), the court determines Defendants’ Objection without a

hearing.
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II. STANDARD OF REVIEW
When a party objects to a magistrate judge’s findings or
recommendations, the district court must review de novo those portions to which
the objections are made and “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28 U.S.C.
§ 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United
States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he
district judge must review the magistrate judge’s findings and recommendations de
novo if objection is made, but not otherwise.”).
Under a de novo standard, this court reviews “the matter anew, the
same as if it had not been heard before, and as if no decision previously had been
rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United
States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not
hold a de novo hearing; however, it is the court’s obligation to arrive at its own
independent conclusion about those portions of the magistrate judge’s findings or
recommendation to which a party objects. United States v. Remsing, 874 F.2d 614,
616 (9th Cir. 1989).
///
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III. ANALYSIS
Defendants argue that Plaintiff’s claims are frivolous such that they
are entitled to fees pursuant to HRS § 607-14.5. Section 607-14.5 provides:
(a) In any civil action in this State where a party seeks
money damages or injunctive relief, or both, against
another party, and the case is subsequently decided, the
court may, as it deems just, assess against either party,
whether or not the party was a prevailing party, and enter
as part of its order, for which execution may issue, a
reasonable sum for attorneys’ fees and costs, in an
amount to be determined by the court upon a specific
finding that all or a portion of the party’s claim or
defense was frivolous as provided in subsection (b).
(b) In determining the award of attorneys’ fees and costs
and the amounts to be awarded, the court must find in
writing that all or a portion of the claims or defenses
made by the party are frivolous and are not reasonably
supported by the facts and the law in the civil action. . . .
As used in HRS § 607-14.5, “frivolous means “manifestly and palpably without
merit.” Canalez v. Bob’s Appliance Serv. Ctr., 89 Haw. 292, 300, 972 P.2d 295,
303 (1999) (quoting Coll v. McCarthy, 72 Haw. 20, 29, 804 P.2d 881, 887 (1991)).
A frivolous claim is one that is “so manifestly and palpably without merit, so as to
indicate bad faith on the pleader’s part such that argument to the court was not
required.” Id. (citing Coll, 72 Haw. at 29, 804 P.2d at 887).
The court cannot say that Plaintiff’s claims were so manifestly
without merit that no argument was required. Although on summary judgment
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Plaintiff ultimately failed to present any evidence supporting that the statute of
limitations should be tolled on his claims, this issue was still the subject of briefing
and argument by the parties. In other words, these claims on their face did not
appear to be brought in bad faith and they were dismissed only after argument
highlighted their inadequacies. Although these claims were not well grounded in
fact,2 they do not meet the standard of frivolousness required pursuant to HRS §
607-14.5 and Canalez.
IV. CONCLUSION
Based on the above, the court OVERRULES Defendants’ Objection,
and AFFIRMS the October 6, 2011 Findings and Recommendation that
Defendants’ Motion for Attorneys’ Fees Be Granted in Part and Denied in Part.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, November 21, 2011.

/s/ J. Michael Seabright
_____________________________
J. Michael Seabright
United States District Judge
Kersh v. Manulife Fin. Corp. et al., Civ. No. 09-00049 JMS/BMK, Order Affirming Magistrate
Judge Barry M. Kurren’s October 6, 2011 Findings and Recommendation That Defendants’
Motion for Attorneys’ Fees Be Granted in Part and Denied in Part

2

Citing caselaw from other states, Defendants argue that a claim is frivolous where it is
“not well grounded in fact” or “warranted by existing law.” Doc. No. 96, Defs.’ Obj. at 3-4.
The court rejects this standard as contrary to Hawaii law interpreting HRS § 607-14.5.
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