BlueEarth Biofuels LLC v. Hawaiian Electric Company Inc et al

Filing 628

ORDER (1) GRANTING DEFENDANTS AND COUNTERCLAIMANTS HAWAIIAN ELECTRIC COMPANY, INC., MAUI ELECTRIC COMPANY, LTD. AND KARL E. STAHLKOPF'S MOTION TO DISMISS FIRST AMENDED COUNTERCLAIM WITHOUT PREJUDICE AND RULE 54(B) MOTION FOR ENTRY OF FINAL JUDGM ENT 621 AND (2) GRANTING DEFENDANT ALOHA PETROLEUM, LTD.'S SIMPLE JOINDER IN AND STATEMENT OF POSITION ON MOTION 626 . Signed by JUDGE DAVID ALAN EZRA on 7/18/2011. (afc)CERTIFICATE OF SERVICEParticipants reg istered 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 will be served by first class mail on July 19, 2011.

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
BLUEEARTH BIOFUELS, LLC,

)
)
Plaintiff,
)
)
vs.
)
)
HAWAIIAN ELECTRIC
)
COMPANY, INC.; MAUI
)
ELECTRIC COMPANY, LTD.;
)
ALOHA PETROLEUM, LTD.; AND )
KARL E. STAHLKOPF,
)
Individually,
)
)
Defendants.
)
_____________________________ )
)
HAWAIIAN ELECTRIC
)
COMPANY, INC., AND MAUI
)
ELECTRIC COMPANY, LTD.,
)
)
Counterclaim-Plaintiffs, )
)
vs.
)
)
BLUEEARTH BIOFUELS, LLC,
)
AND LANDIS MAEZ, Individually, )
)
Counterclaim)
Defendants.
)
)
_____________________________ )

CIV. NO. 09-00181 DAE-KSC

ORDER: (1) GRANTING DEFENDANTS AND COUNTERCLAIMANTS
HAWAIIAN ELECTRIC COMPANY, INC., MAUI ELECTRIC COMPANY,
LTD., AND KARL E. STAHLKOPF’S MOTION TO DISMISS FIRST
AMENDED COUNTERCLAIM WITHOUT PREJUDICE AND RULE 54(B)
MOTION FOR ENTRY OF FINAL JUDGMENT AND (2) GRANTING
DEFENDANT ALOHA PETROLEUM, LTD.’S SIMPLE JOINDER IN AND
STATEMENT OF POSITION ON MOTION
Pursuant to Local Rule 7.2(d), the Court finds this matter suitable for
disposition without a hearing. After reviewing the Motion as well as the
supporting and opposing memoranda, the Court GRANTS the HECO/MECO
Defendants’ Motion to Dismiss First Amended Counterclaim without Prejudice
and Rule 54(b) Motion for Entry of Final Judgment (“Motion”) and (2) GRANTS
Aloha’s Simple Joinder in and Statement of Position on Motion (“Joinder
Motion”). (Docs. ## 621, 626.)
BACKGROUND
The Court assumes the parties familiarity with this litigation and will
only recite those facts necessary for resolution of the instant Motion.
On November 1, 2010, BlueEarth filed its Third Amended Complaint
(“TAC”). (Doc. # 387.) The Complaint alleged the following eleven causes of
action:
•

First: breach of contract (HECO NDA) against HECO (TAC
¶¶ 44–48);
2

•

Second: breach of contract (MECO NDA) against MECO (Id.
¶¶ 49–53);

•

Third: breach of contract (MOU) against HECO and MECO (Id.
¶¶ 54–59);

•

Fourth: quantum meruit/unjust enrichment against HECO and MECO
(Id. ¶¶ 60–63);

•

Fifth: breach of contract (Aloha NDA and Confidentiality Agreement)
against Aloha (Id. ¶¶ 64-68);

•

Sixth: unfair competition under Haw. Rev. Stat. § 480-2 against
HECO, MECO, Stahlkopf, and Aloha (Id. ¶¶ 69–76);

•

Seventh: tortious interference with existing contracts (all NDAs and
the Confidentiality Agreement) as to all Defendants (Id. ¶¶ 77–84);

•

Eighth: tortious interference with existing contract (MOU) against
Aloha (Id. ¶¶ 85–89);

•

Ninth: misappropriation of trade secrets against all Defendants in
violation of Haw. Rev. Stat. § 482B-2 (Id. ¶¶ 90–93);

•

Tenth: conversion against all Defendants (Id. ¶¶ 94–95);

•

Eleventh: breach of fiduciary duty against HECO and MECO (Id.
¶¶ 96–101).
3

As a result of three Orders dated November 15, 2010, February 8, 2011, and May
25, 2011, there are no surviving Counts of the TAC. (See Docs. ## 389, 484, 617.)
On December 22, 2010, the HECO/MECO Defendants filed their First
Amended Counterclaim (“FACC”). (“FACC,” Doc. # 411.) The HECO/MECO
Defendants allege the following causes of action:
•

First: breach of contract (BEMB Agreements) by HECO as UBC’s
assignee against BlueEarth (Id. ¶¶ 29–36);

•

Second: breach of fiduciary duty by HECO as UBC’s assignee against
BlueEarth and Maez (Id. ¶¶ 37–43);

•

Third: breach of fiduciary duty by HECO and MECO against
BlueEarth (Id. ¶¶ 44–49);

•

Fourth: breach of contract (the NDAs) by HECO and MECO against
BlueEarth (Id. ¶¶ 50–55);

•

Fifth: tortious interference with contracts (the BEMB Agreement and
NDAs) by HECO, for itself and as UBC’s assignee, and MECO, all
against Maez (Id. ¶¶ 56–61).

By Order dated May 25, 2011 (“May Order”), each of these Counts were dismissed
without prejudice. (See “May Order,” Doc. # 617.) Indeed, the Court specifically
found that “equity dictates the HECO/MECO Defendants be afforded at least
4

another opportunity to amend the FACC given that BlueEarth has amended their
Complaint three times.” (Id. at 43.) The Court continued, “The HECO/MECO
Defendants, if they elect to do so, shall file an amended counterclaim on or before
thirty days from the filing of this Order.” (Id.)
On November 15, 2011, Aloha filed its Counterclaim. (See “CC,”
Doc. # 396.) Aloha alleges the following causes of action:
•

First: intentional and negligent misrepresentation or omission (Id.
¶¶ 61–69);

•

Second: breach of contract (Id. ¶¶ 70–75);

•

Third: defamation (Id. ¶¶ 76–83);

•

Fourth: tortious interference with prospective business advantage (Id.
¶¶ 84–92).

Aloha’s Counterclaim is still a live pleading.
On June 16, 2011, the HECO/MECO Defendants filed the instant
Motion seeking voluntary dismissal of the FACC without prejudice pursuant to
Federal Rule of Civil Procedure (“Rule”) 41(a)(2) and for entry of final judgment
pursuant to Rule 54(b). (“Mot.,” Doc. # 621.) On July 7, 2011, BlueEarth filed an
Opposition. (“Opp’n,” Doc. # 625.) The same day, Aloha filed its Joinder Motion.

5

(“Joinder Mot.,” Doc. # 626.) On July 13, 2011, the HECO/MECO Defendants
filed their Reply. (“Reply,” Doc. # 627.)
DISCUSSION
I.

Voluntary Dismissal and Legal Prejudice
Rule 41(a)(2) allows a movant, pursuant to court order, and subject to

any terms and conditions the court deems proper, to dismiss an action without
prejudice at any time. Westlands Water Dist. v. United States, 100 F.3d 94, 96
(9th Cir. 1996) (citing Fed. R. Civ. P. 41(a)(2); Stevedoring Servs. of Am. v.
Armilla Int’l B.V., 889 F.2d 919, 921 (9th Cir. 1989)).
Rule 41(a)(2) motions for voluntary dismissal should be liberally
granted, provided that no party will suffer legal prejudice. Stevedoring, 889 F.2d
at 921; see also Smith v. Lenches, 263 F.3d 972, 975 (9th Cir. 2001) (citations
omitted) (“A district court should grant a motion for voluntary dismissal under
Rule 41(a)(2) unless a defendant can show that it will suffer some plain legal
prejudice as a result of the dismissal.”). In the Ninth Circuit, the decision to grant
a voluntary dismissal under Rule 41(a)(2) is addressed to the district court’s sound
discretion and “will not be disturbed unless the court has abused its discretion.”
Westlands Water Dist., 100 F.3d at 96 (citations omitted).

6

Thus, when ruling upon a Rule 41(a)(2) motion to dismiss without
prejudice, the district court must first determine whether the opposing party will
suffer resultant legal prejudice. Hyde & Drath v. Baker, 24 F.3d 1162, 1169 (9th
Cir. 1994); Hamilton v. Firestone Tire & Rubber Co., 679 F.2d 143, 145 (9th Cir.
1982). “Plain legal prejudice . . . does not result simply when [the opposing party]
faces the prospect of a second lawsuit or when [the movant] merely gains some
tactical advantage.” Hamilton, 679 F.2d at 145 (citing Durham v. Fla. E. Coast Ry.
Co., 385 F.2d 366, 368 (5th Cir. 1967)). Plain legal prejudice “is just
that—prejudice to some legal interest, some legal claim, some legal argument.”
Westlands Water Dist., 100 F.3d at 97. In other words, legal prejudice is shown
“where actual legal rights are threatened or where monetary or other burdens
appear to be extreme or unreasonable.” Id.; see also id. (“[I]n determining what
will amount to legal prejudice, courts have examined whether a dismissal without
prejudice would result in the loss of a federal forum, or the right to a jury trial, or a
statute-of-limitations defense.”); Hyde & Drath, 24 F.3d at 1169 (concluding that
the district court properly identified legal prejudice when the dismissal of a party
would have rendered the remaining parties unable to conduct sufficient discovery
to untangle complex fraud claims and adequately defend themselves against
charges of fraud). District courts within the Ninth Circuit have applied the
7

following four-factor test in determining whether there is legal prejudice: (1) the
opposing party’s effort and expense involved in preparing for trial; (2) excessive
delay and lack of diligence on the part of the movant in prosecuting the action; (3)
insufficient explanation of the need to take a dismissal; and (4) the fact that
summary judgment has been filed by the opposing party. United States v. Berg,
190 F.R.D. 539, 543 (E.D. Cal. 1999)
“Uncertainty because a dispute remains unresolved” or because of
“the threat of future litigation” does not result in plain legal prejudice. Smith, 263
F.3d at 976. Neither does “[p]lain legal prejudice . . . result merely because the
defendant will be inconvenienced by having to defend in another forum or where
[the moving party] would gain a tactical advantage by that dismissal.” Id.
Furthermore, “the expense incurred in defending against a lawsuit does not amount
to legal prejudice.” Westlands, 100 F.3d at 97.
The district court must further determine what conditions, if any, to
place upon the dismissal. To alleviate the prejudice resulting from dismissal,
courts may impose costs and attorney’s fees upon the moving party. Id. However,
the imposition of costs and fees is not a prerequisite to grant of a voluntary
dismissal. Stevedoring, 889 F.2d at 921.

8

The Court does not believe that by granting the instant Motion,
BlueEarth will suffer prejudice. As a preliminary matter, the Court notes that
nowhere in its entire Opposition does BlueEarth argue legal prejudice would result
from a voluntary dismissal of the FACC. Instead, BlueEarth argues that the
HECO/MECO Defendants’ failure to amend their pleading within the thirty days
provided by this Court should result the FACC’s dismissal with prejudice.1
Without a claim that it would suffer legal prejudice, the Court cannot conclude
BlueEarth will be prejudiced by granting the instant Motion.2
Moreover, an independent review of the record demonstrates clearly
that BlueEarth will suffer no legal prejudice resulting from a voluntary dismissal.
First, the record demonstrates that BlueEarth has made no effort preparing for trial
on the FACC as it filed its Motion to Dismiss the FACC simultaneously with its
Answer, and the Motion to Dismiss was granted. (See Docs. ## 424, 425.)

1

This argument will be discussed infra.

2

The only glint of a legal prejudice argument raised by BlueEarth is in the
first page of its Opposition where it argues that this Motion is nothing more than an
attempt at preventing BlueEarth from obtaining attorneys fees while
simultaneously an attempt to “intimidate BlueEarth from seeking appellate review
by threatening an award of attorney’s fees . . . .” (Opp’n at 1.) In other words,
BlueEarth complains that the HECO/MECO Defendants seek tactical advantages
by filing this Motion. As the Court has made clear, “Plain legal prejudice . . . does
not result simply when . . . [the movant] merely gains some tactical advantage.”
Hamilton, 679 F.2d at 145.
9

Second, the record reflects that the HECO/MECO Defendants diligently sought
voluntary dismissal. The instant Motion was filed within the thirty-day window in
which this Court granted leave to amend the FACC. (See May Order; Mot.)
Third, the HECO/MECO Defendants have stated on the record that this motion is
brought to preserve judicial and litigant resources. (Mot. at 7.) Indeed, the
HECO/MECO Defendants have made clear that they will only revive the FACC if
BlueEarth were successful on appeal. (Id. n.2.) Finally, BlueEarth has not sought
summary judgment on the FACC because its Motion to Dismiss was granted.
Accordingly, the HECO/MECO Defendants have satisfied each of the four factors
laid out in Berg. See 190 F.R.D. at 543. Coupled with BlueEarth’s failure to
proffer any argument as to why it would suffer prejudice if the Court granted the
instant Motion, the Court concludes that by granting the instant Motion BlueEarth
will not suffer legal prejudice.3
II.

FACC and Dismissal without Prejudice
As discussed, in Opposition to the instant Motion BlueEarth focuses

on the Court’s May Order which granted the HECO/MECO Defendants thirty days
to amend their FACC. BlueEarth notes that the thirty-day window closed on June
3

The Court also notes that with Aloha’s Joinder Motion, there can be no
doubt that no party will suffer legal prejudice as Aloha is the only other participant
in the litigation. See Stevedoring, 889 F.2d at 921.
10

24, 2011. According to BlueEarth, the FACC “was dismissed with prejudice
pursuant to the Order—and Ninth Circuit precedent—on June 24, 2011.” (Opp’n
at 3.) For this reason, according to BlueEarth, the Court should deny the Motion.
The Court is not persuaded.
BlueEarth relies upon Edwards v. Marin Park, Inc., 356 F.3d 1058
(9th Cir. 2004), to argue that the FACC was effectively dismissed with prejudice
on June 24, 2011. The case, however, is inapposite. Edwards involved an
involuntary dismissal by the court as a sanction pursuant to Rule 41(b) against the
plaintiff for failure to follow the court’s instructions. Id. at 1063. The
HECO/MECO Defendants here are seeking a voluntary dismissal pursuant to Rule
41(a). Moreover, the Court here did not warn the HECO/MECO Defendants that a
failure to amend would lead to dismissal with prejudice as in Edwards. Id. at 43.
Simply stated, the Court has not here dismissed the FACC with prejudice, nor
stated that the FACC would be so dismissed absent the HECO/MECO Defendants
taking some action.
Also weighing in the HECO/MECO Defendants’ favor, they filed the
instant Motion within the thirty-day window ordered by the Court. (See Mot.
(filed on June 16, 2011).) The HECO/MECO Defendants were plainly aware of
the deadline and sought appropriate relief in a timely fashion. The Court will not
11

here castigate the HECO/MECO Defendants by dismissing the FACC with
prejudice for acting in an appropriate manner.
Finally, the Court notes that the Federal Rules of Civil Procedure
grant the Court broad discretion with respect to deadlines. Pursuant to Rule 6(b),
the Court may extend deadlines irrespective of whether a motion is filed before or
after a deadline has passed. Fed. R. Civ. P. 6(b). Moreover, a district court has
control to “efficiently and economically control its docket” as it sees fit. See
Landis v. North American Co, 299 U.S. 248, 255 (1936); see also Leyva v.
Certified Grocers of California, Ltd., 593 F.2d 857, 863–64 (9th Cir. 1979)
(finding a court may proceed in a manner that is “efficient for its own docket and
the fairest course for the parties . . .”). For all the reasons stated above, the Court
does not at this time believe that the HECO/MECO Defendants’ conduct warrants
dismissal of the FACC with prejudice, irrespective of the May Order.
Accordingly, the HECO/MECO Defendants are entitled to voluntary
dismissal without prejudice of the FACC.
III.

Judgment on the TAC
Although the Court disposed of the remainder of the TAC in its May

Order, the Court refrained from entering final judgment as both the FACC and
Aloha’s Counterclaim endured. Now the HECO/MECO Defendants, in addition to
12

requesting a voluntary dismissal of the FACC discussed supra, request that this
Court enter judgment in their favor on the TAC pursuant to Rule 54(b).
Rule 54(b) provides:
When an action presents more than one claim for relief—whether as a
claim, counterclaim, crossclaim, or third-party claim—or when
multiple parties are involved, the court may direct entry of a final
judgment as to one or more, but fewer than all, claims or parties only
if the court expressly determines that there is no just reason for delay.
Fed. R. Civ. P. 54(b). The “issuance of a 54(b) order is a fairly routine act that is
reversed only in the rarest of instances.” James v. Price Stern Sloan, Inc., 283 F.3d
1064, 1068 n.6 (9th Cir. 2002). Entry of final judgment under Rule 54(b) is
appropriate where there are multiple claims or parties and at least one claim was
finally adjudicated. Ariz. State Carpenters Pension Trust Fund v. Miller, 938 F.2d
1038, 1039 (9th Cir. 1991). “The word ‘claim’ in Rule 54(b) refers to a set of facts
giving rise to legal rights in the claimant, not to legal theories of recovery based on
those facts. Purdy Mobile Homes, Inc. v. Champion Home Builders Co., 594 F.2d
1313, 1316 (9th Cir. 1979). A decision is “final” if it is “an ultimate disposition of
an individual claim entered in the course of multiple claims action.” CurtissWright Corp. v. Gen. Elec. Corp., 446 U.S. 1, 7 (1980); see also Miller, 938 F.2d at
1039 (“A ruling is final, and therefore appealable if it ends the litigation on the

13

merits and leaves nothing for the court to do but execute judgment as to that party
or claim.” (quotations omitted)).
The Court finds that the HECO/MECO Defendants are entitled to
judgment per Rule 54(b). As a preliminary matter, BlueEarth and Aloha have
explicitly stated that they do not oppose the entry of final judgment in the
HECO/MECO Defendants’ favor with respect to TAC. (See Opp’n at 4 n.2;
Joinder Motion at 2–3.) Further, the three Court orders referenced above disposed
of all of BlueEarth’s claims in the TAC against the HECO/MECO Defendants.
(See Docs. ## 349, 484, 617.) Moreover, as discussed supra, the HECO/MECO
Defendants do not intend to amend their FACC at this time and have instead
sought to have it dismissed without prejudice. Accordingly, the HECO/MECO
Defendants have no pending claims against BlueEarth, and the litigation is
effectively over with respect to the HECO/MECO Defendants. The Court
therefore concludes there is no just reason to delay entry of final judgment on
BlueEarth’s claims in the TAC in favor of the HECO/MECO Defendants.
CONCLUSION
For these reasons, the Court GRANTS the HECO/MECO
Defendants’ Motion to Dismiss First Amended Counterclaim without Prejudice
and Rule 54(b) Motion for Entry of final judgment and (2) GRANTS Aloha’s
14

Simple Joinder in and Statement of Position on Motion. (Docs. ## 621, 626.) The
Clerk of Court is hereby directed to enter final judgment in favor of the
HECO/MECO Defendants with respect to the TAC. The Clerk of Court may not
yet close the case because Aloha’s Counterclaim is still a live pleading and the
Court has not yet entered final judgment in Aloha’s favor with respect to the TAC.
Although Aloha has stated its intention to seek voluntary dismissal of the
Counterclaim as well as an entry of final judgment, (Joinder Motion at 2–3,) it has
not yet done so.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, July 18, 2011.

_____________________________
David Alan Ezra
United States District Judge

BlueEarth Biofuels, LLC v. Hawaiian Electric Company, Inc., et al., Civ. No. 0900181 DAE-KSC; ORDER: (1) GRANTING DEFENDANTS AND
COUNTERCLAIMANTS HAWAIIAN ELECTRIC COMPANY, INC., MAUI
ELECTRIC COMPANY, LTD., AND KARL E. STAHLKOPF’S MOTION TO
DISMISS FIRST AMENDED COUNTERCLAIM WITHOUT PREJUDICE AND
RULE 54(B) MOTION FOR ENTRY OF FINAL JUDGMENT AND (2)
GRANTING DEFENDANT ALOHA PETROLEUM, LTD.’S SIMPLE JOINDER
IN AND STATEMENT OF POSITION ON MOTION
15