Young v. County of Hawaii et al
Filing
56
ORDER ADOPTING THE MAGISTRATE JUDGE'S FINDINGS AND RECOMMENDATIONS AS MODIFIED, LIFTING THE STAY, AND RECOMMITTING DEFENDANT OSTENDORP'S MOTION TO DISQUALIFY PLAINTIFF'S COUNSELS TO THE MAGISTRATE JUDGE for 45 , 49 , 47 , 48 . Sig ned by JUDGE ALAN C KAY on 06/19/2012. (eps) -- The Court adopts the Magistrate Judge's F&R as modified by this Order. Defendant Ostendorp's Motion to Stay is moot. The Court directs the Clerk of Court to lift the stay in th is case. The Court recommits Ostendorp's Motion to Disqualify Plaintiff's Counsel to the Magistrate Judge 24 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
WARNE KEAHI YOUNG,
Plaintiff,
vs.
COUNTY OF HAWAII, a municipal
corporation; HAWAII ISLAND
HUMANE SOCIETY S.P.C.A., a
non-profit corporation; DONNA
WHITAKER, Individually and in
her official capacity as
Executive Director of the
Hawaii Island Humane Society
S.P.C.A.; STARR K. YAMADA,
Individually and in her
official capacity as Humane
Officer; MICHAEL G.M.
OSTENDORP; CARROL COX;
DARLEEN R.S. DELA CRUZ;
ROBERTA KAWENA YOUNG; DOE
DEFENDANTS 1-50,
Defendants.
_____________________________
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
CIVIL NO. 11–00580 ACK-RLP
ORDER ADOPTING THE MAGISTRATE JUDGE’S FINDINGS AND
RECOMMENDATIONS AS MODIFIED, LIFTING THE STAY, AND RECOMMITTING
DEFENDANT OSTENDORP’S MOTION TO DISQUALIFY PLAINTIFF’S COUNSELS
TO THE MAGISTRATE JUDGE
PROCEDURAL BACKGROUND
This cases arises out of the alleged illegal seizure
and killing of Plaintiff Warne Keahi Young’s (“Plaintiff”)
seventeen dogs by Defendant Hawaii Island Humane Society S.P.C.A.
(“HIHS”) and its agents in late 2009.
The Magistrate Judge’s
Findings and Recommendation and Order at issue arise out of
Defendant Michael G.M. Ostendorp’s (“Ostendorp”) alleged legal
representation of Plaintiff and a retainer agreement between
Ostendorp and Plaintiff’s mother, Roberta Kawena Young
(“Defendant Kawena Young”), that included a dispute resolution
clause.
On September 23, 2011, Plaintiff filed suit against
County of Hawaii; HIHS; Donna Whitaker, executive director of
HIHS; Starr K. Yamada, Humane Officer; Ostendorp; Carrol Cox;
Darleen R.S. Dela Cruz; Roberta Kawena Young; and Doe Defendants
1-50 (collectively, “Defendants”).
See Doc. No. 1.
9, 2012, Plaintiff filed a First Amended Complaint.
8.
On January
See Doc. No.
Plaintiff filed a Second Amended Complaint (“Sec. Am.
Compl.”) on March 30, 2012.
Doc. No. 44.
Plaintiff’s Second Amended Complaint alleges the
following twenty claims: violations of 42 U.S.C. § 1983 (Counts
I, II, and III); violations of equal protection (Count IV);
negligence (Count V); negligent training and/or supervision
(Count VI); vicarious liability of County of Hawaii (Count VII);
vicarious liability of HIHS (Count VIII); breach of contract
(Count IX); legal malpractice (Count X); breach of fiduciary duty
(Count XI); failure to disclose conflict of interest (Count XII);
fraud and misrepresentation (Count XIII); undue influence (Count
XIV); civil conspiracy (Count XV); negligent and/or intentional
infliction of severe emotional distress (Count XVI); fraud (Count
XVII); negligence/gross negligence (Count XVIII); conversion
2
(Count XIX); and trespass (Count XX).1/
Sec. Am. Compl. ¶¶ 92-
174.
On February 17, 2012, Ostendorp filed a motion to
compel mediation and/or arbitration (“Ostendorp’s Motion to
Compel”), to stay current proceedings (“Ostendorp’s Motion to
Stay”), and a motion to disqualify Plaintiff’s counsels
(“Ostendorp’s Motion to Disqualify”), along with a supporting
memorandum.2/3/
Doc. No. 24.
Defendants Cox, an investigator
employed by Ostendorp, and Cruz, a notary public hired by
Ostendorp, filed joinders in Ostendorp’s Motions.
Doc. Nos. 30-
1/
The claims asserted against Ostendorp are violation of 42
U.S.C. § 1983, negligence, breach of contract, legal malpractice,
breach of duty, failure to disclose conflict of interest, fraud
and misrepresentation, undue influence, civil conspiracy,
negligence/or intentional infliction of severe emotional
distress, fraud, and trespass. See Sec. Am. Compl. ¶¶ 92-174.
2/
Also attached to the motion were a Declaration by
Ostendorp and Exhibits A-H. See Doc. No. 24. The exhibits are
the retainer agreement at issue (Ex. A.), a letter dated February
2, 2012, from Ostendorp to Plaintiff’s attorneys (Ex. B), a
letter in response from Plaintiff’s attorneys to Ostendorp dated
February 7, 2012 (Ex. C.), Plaintiff’s letter dated October 29,
2009 to the Office of Disciplinary Counsel (Ex. D.), a search
warrant for Plaintiff’s residence (Ex. E), a general power of
attorney in which Plaintiff appoints his mother as his attorneyin-fact (Ex. F.), a docket entry reflecting Plaintiff’s motion
for reconsideration in a state court criminal case (Ex. G.), and
a docket entry reflecting Plaintiff’s change of plea in that same
criminal case (Ex. H.).
3/
Although Ostendorp only filed one document in which he
moved for his three requests, the Court will refer to the motions
separately in the text of this Order. The Court will cite to
Ostendorp’s memorandum that covers all three requests as
“Ostendorp’s Mot. Mem.”.
3
31; see Sec. Am. Compl. ¶¶ 7-8.
On March 6, 2012, Plaintiff
filed an opposition to Ostendorp’s Motions (“Pl.’s Opp’n”).4/
Doc. No. 38.
Ostendorp filed a reply (“Ostendorp’s Reply”) on
March 20, 2012.5/6/
Doc. No. 40.
On April 3, 2012, the Magistrate Judge issued a
findings and recommendation to deny Ostendorp’s Motion to Compel
(the “F&R”); and order (1) granting in part and denying in part
Ostendorp’s motion to stay the current proceedings and (2)
denying Ostendorp’s motion to disqualify Plaintiff’s counsels
(the “Magistrate’s Order”).
Doc. No. 45.
On April 17, 2012, Ostendorp filed an objection to the
F&R and the Magistrate’s Order (“Ostendorp’s Obj.”).7/
49.
Doc. No.
The Court finds this matter suitable for disposition without
a hearing pursuant to Local Rule 7.2(d).
FACTUAL BACKGROUND8/
4/
Attached to Plaintiff’s Opposition were declarations by
Plaintiff’s counsels and Exhibits 1 and 2, the retainer agreement
and a letter from the Office of Disciplinary Counsel to Plaintiff
accompanied by Ostendorp’s response to Plaintiff’s claim,
respectively. Doc. No. 38.
5/
Attached to Ostendorp’s Reply was Exhibit I, a series of
e-mails between Ostendorp and Defendant Yamada. Doc. No. 40.
6/
Reply.
Defendants Cox and Cruz filed joinders in Ostendorp’s
Doc. Nos. 41 & 42.
7/
Defendants Cox and Cruz filed joinders in Ostendorp’s
Objection. Doc. Nos. 47 & 48.
8/
The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
4
On September 29, 2009, Defendant HIHS executed a search
warrant at Plaintiff’s residence and seized seventeen of his
dogs.
Sec. Am. Compl. ¶¶ 28-30.
Plaintiff alleges that on
October 1 and 2, 2009, he and his Mother, Defendant Kawena Young,
consulted with Ostendorp and Cox to obtain legal advice for
Plaintiff regarding the HIHS’s entry into Plaintiff’s home and
seizure of his dogs, and potential criminal charges against
Plaintiff.
Id. ¶¶ 31, 34.
Allegedly, on October 2, 2009,
Ostendorp, acting as Plaintiff’s attorney, contacted the Hilo
prosecutor’s office.
Id. ¶ 32.
Ostendorp also allegedly
contacted Plaintiff’s psychologist to discuss Plaintiff’s legal
matters.
Id. ¶ 33.
Plaintiff alleges that Ostendorp and Cox
traveled with him to the Big Island for further consultation and
investigation of his legal difficulties with HIHS.
Id. ¶ 36.
On October 7, 2009, Ostendorp and Defendant Kawena
Young entered into a retainer agreement (“the retainer
agreement”).
Ostendorp’s Mot. Ex. A, at 1.
The retainer
agreement stated that Ostendorp would be “representing [Defendant
Kawena Young] in protecting [her] financial assets, reducing
[her] financial liabilities and to help to keep Warne Keahi Young
out of jail.”
Id.
The agreement contained the following
alternative dispute resolution provision:
findings of fact that the parties may rely on in future
proceedings.
5
As we have discussed, if you ever have any
questions regarding this representation, we
encourage you to ask them promptly and we are
confident that appropriate answers can be
provided to satisfy your inquiry. If that
does not occur, and you believe that such a
problem needs formal resolution, the
following discussion is how we will resolve
such a problem.
First, we will jointly undertake mediation.
Unless we agree to the contrary, the Dispute
Prevention & Resolution office in Honolulu
will choose the mediator. We will jointly in
good faith participate in at least one
mediation session, scheduled by the mediator,
prior to taking any further action.
Second, if mediation does not resolve the
problem, then with the exception of
injunctive or other equitable action, all
disputes must be submitted to binding
arbitration. As was true for mediation, the
arbitration shall be conducted under thenexisting rules of Dispute Prevention &
Resolution office in Honolulu.
Id. at 3.
The bottom of the retainer agreement contains
Ostendorp’s signature, the statement that “Roberta Kawena Young
hereby engages the Law Office of Michael G.M. Ostendorp as his
[sic] legal counsel and otherwise agrees to honor the terms
hereof,” and Defendant Kawena Young’s signature, respectively.
Id.
On October 7, 2009, Ostendorp allegedly drafted a broad
power of attorney dated September 12, 2009, that contained
Plaintiff’s forged signature and designated Defendant Kawena
Young as his attorney-in-fact.
Sec. Am. Compl. ¶¶ 64-66.
6
Plaintiff alleges that Defendant Kawena Young used the power of
attorney to complete an HIHS animal surrender policy form, which
Ostendorp then submitted to HIHS.
Id. ¶¶ 66-68.
HIHS allegedly killed Plaintiff’s dogs.
Thereafter,
Id. ¶ 69.
Plaintiff alleges that on October 8, 10, and 12, 2009,
he and Defendant Kawena Young met with Ostendorp to discuss
Plaintiff’s legal matters.
Id. ¶¶ 44, 46-47.
On October 15,
2009, Defendant Kawena Young terminated her attorney-client
relationship with Ostendorp via certified mail.
Id. ¶ 49.
On
October 19, 2009, Ostendorp confirmed this termination via a
letter addressed to Defendant Kawena Young.
Id. ¶ 50.
Ostendorp
attached a billing statement addressed to “Roberta K. Young/Warne
K. Young (10/1/09-10/15/09)” to the letter.
Id.
On October 29, 2009, Plaintiff filed a complaint
against Defendants Ostendorp and Cox with the Office of
Disciplinary Counsel.
Ostendorp’s Mot. Ex. C.
Ostendorp filed a
response on November 18, 2009, in which he stated that “Keahi
Young was never my client.”
Pl.’s Opp’n Ex. 2.
Ostendorp stated
that Plaintiff had his own attorney of record and that his “role
in keeping [Defendant Kawena Young’s] son out of jail did not
include representing Keahi.”
Id.
He further stated that his
negotiations with HIHS were on behalf of Defendant Kawena Young
and were to “address the issues of her property and the dogs.”
Id.
Ostendorp stated that Plaintiff’s allegations were
7
“ridiculous, especially in light of the fact that I was never his
attorney.”
Id.
In Ostendorp’s response to Plaintiff’s First Amended
Complaint, Ostendorp admitted that there was “a contractual
relationship” between him and Plaintiff.
See Ostendorp Dec. ¶ 1.
In his answer to the Second Amended Complaint, however, Ostendorp
stated he was “without sufficient information or knowledge to
form a belief as to the truth or falsity” of Plaintiff’s
statement that Plaintiff and Ostendorp were in a contractual
relationship.
¶ 131.
Compare Doc. No. 50, ¶ 1, with Sec. Am. Compl.
Defendant Ostendorp now seeks to compel Plaintiff to
mediate and/or arbitrate his claims pursuant to the retainer
agreement between Defendant Kawena Young and Ostendorp.
In the F&R, the Magistrate Judge exercised his
discretion to consider Plaintiff’s Opposition, which was filed
one day late.
F&R at 8-9.
The Magistrate Judge concluded that
Plaintiff could not be bound by the dispute resolution provision
of the retainer agreement because he was not a signatory.
12.
Id. at
He concluded that Ostendorp had failed to show that any of
the theories upon which a nonsignatory may be compelled to
arbitrate applied.
Id.
Specifically, the Magistrate Judge
rejected Defendant’s equitable estoppel argument based on the
finding that there was no evidence that Plaintiff knowingly
exploited the retainer agreement.
8
Id. at 15.
The Magistrate
Judge declined to consider Ostendorp’s third-party beneficiary
argument based on his determination that Ostendorp first made the
argument in his reply.
Id. at 13 n.7.
The Magistrate Judge
alternatively concluded that Plaintiff’s claims were not within
the scope of the dispute resolution provision.
Id. at 18.
He
explained that the plain language of that provision mandates
mediation and/or arbitration when Defendant Kawena Young believes
that a problem needs formal resolution, which was not broad
enough to include Plaintiff’s claims.
Id. at 19.
The Magistrate Judge granted in part Defendant’s Motion
to Stay, ordering a stay until this Court issues a final decision
regarding Ostendorp’s Motion to Compel.
Id. at 20.
Because a
final order regarding Ostendorp’s request to compel arbitration
had not been rendered, the Magistrate Judge concluded that
Ostendorp’s Motion to Disqualify was premature.
Id. at 21.
LEGAL STANDARD
I.
Review of the Findings & Recommendation
A district court reviews de novo those portions of a
magistrate judge’s findings and recommendation to which an
objection is made and may accept, reject, or modify, in whole or
in part, the findings and recommendation made by the magistrate
judge.
28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); D. Haw.
Local Rule 74.2.
The district court may accept those portions of
the findings and recommendation that are not objected to if it is
satisfied that there is no clear error on the face of the record.
9
Stow v. Murashige, 288 F. Supp. 2d 1122, 1127 (D. Haw. 2003).
The district court may receive further evidence or recommit the
matter to the magistrate judge with instructions.
§ 636(b)(1).
28 U.S.C.
It may also consider the record developed before
the magistrate judge.
D. Haw. Local Rule 74.2.
The district
court must arrive at its own independent conclusions about those
portions of the magistrate judge’s report to which objections are
made, but a de novo hearing is not required.
United States v.
Remsing, 874 F.2d 614, 618 (9th Cir. 1989).
II.
Review of the Order Denying in Part and Granting in Part the
Stay and Denying the Motion to Disqualify
In contrast, the district judge ordinarily considers
the appeal of a magistrate judge’s order determining a
nondispositive pretrial matter under a “clearly erroneous or
contrary to law” standard.
See D. Haw. Local Rule 74.1; see also
28 U.S.C. § 626(b)(1)(A); Fed. R. Civ. P. 72(a).
The Court,
however, may also reconsider sua sponte any matter determined by
a magistrate judge in a nondispositive determination.9/
9/
See D.
There is a split of authority regarding whether a motion
to compel arbitration is a dispositive or nondispositive motion.
See Amisil Holdings Ltd. v. Clairum Capital Mgmt., 622 F. Supp.
2d 825, 827 n.1 (N.D. Cal. 2007) (collecting cases). Although
this district has not made a definitive determination on this
issue, this district has treated such motions as dispositive.
See Hawaiian Telecom Comm’ns, Inc. v. Tata Am. Int’l Corp, Civ.
No. 10-00112 HG-LEK, 2010 WL 2594495 (D. Haw. June 24, 2010).
The Magistrate Judge recognized this local practice and issued a
findings and recommendation rather than an order on the Motion to
Compel. Thus, the Court will review the F&R de novo. In any
event, even if it were a nondispositive motion, the Court
exercises its discretion to review the Magistrate Judge’s
conclusions de novo.
10
Haw. Local Rule 74.1.
The Court finds that a hearing in this matter is
neither necessary nor appropriate.
See D. Haw. Local
Rule 7.2(d).
DISCUSSION
Ostendorp contends that the Magistrate Judge committed
several errors.
Ostendorp first objects to the Magistrate
Judge’s consideration of Plaintiff’s Opposition because it was
filed one-day late. Ostendorp’s Obj. 23-24.
Second, Ostendorp asserts the Magistrate Judge erred by
relying on an alleged oral contract between Plaintiff and
Ostendorp to find that Ostendorp’s equitable estoppel argument
failed. Id. at 7.
Ostendorp asserts that this was error because
Plaintiff first mentioned the alleged oral contract in his
Opposition and has not provided any supporting evidence.
Id. at
5.
Third, Ostendorp objects to the Magistrate Judge’s
refusal to consider his third-party beneficiary arguments.
at 10.
Id.
Ostendorp asserts that this was error because he made the
third-party beneficiary arguments in his prior pleadings and also
in response to arguments in Plaintiff’s Opposition related to an
alleged oral contract.
Id. at 11.
Fourth, Ostendorp objects to the finding that
Plaintiff’s claims were not subject to the dispute resolution
11
provision.
Specifically, he objects to the finding that the
retainer agreement did not unambiguously express an intent to
submit disputes to arbitration, that the subject matter of the
dispute was not within the scope of the arbitration agreement,
and that Ostendorp’s equitable estoppel claim failed.
Id. at 14-
23.
Finally, Ostendorp objects to the Magistrate Judge’s
partial denial of his Motion to Stay and denial of his Motion to
Disqualify Plaintiff’s Counsels.
The Court will address the Magistrate Judge’s
consideration of Plaintiff’s Opposition, the merits of
Ostendorp’s Motion to Compel, and Ostendorp’s Motions to Stay and
to Disqualify Plaintiff’s Counsels, respectively.
The Court will
not address Ostendorp’s other objections as they are
inconsequential to the disposition of the instant motions.
I.
Plaintiff’s Untimely Opposition
In deciding to consider Plaintiff’s Opposition, the
Magistrate Judge explained that it was only one day late and that
Ostendorp was not prejudiced because he had – and took – a full
fourteen days thereafter to file his reply.
F&R at 8-9.
Ostendorp’s only argument in support of his objection is that
deadlines should be taken seriously.
Ostendorp’s Obj. 23-24.
Although true, Plaintiff barely missed the filing deadline.
Ostendorp does not assert that he was prejudiced in anyway by the
12
one day delay.
Consequently, the Magistrate Judge did not abuse
his discretion in considering Plaintiff’s Opposition.
II.
Motion to Compel Mediation and/or Arbitration
A.
Legal Framework
Hawaii has adopted the Uniform Arbitration Act,
codified in Hawaii Revised Statutes (“H.R.S.”) Chapter 658A.10/
Under this Act, an agreement to arbitrate a controversy existing
or arising between the parties is “valid, enforceable, and
irrevocable except upon a ground that exists at law or in equity
for the revocation of a contract.”
H.R.S. § 658A-6(a).
If a
party refuses to arbitrate, § 658A-7(a) provides that upon motion
of a person showing an agreement to arbitrate, “the court shall
. . . order the parties to arbitrate unless it finds that there
is no enforceable agreement to arbitrate.”
If there is not an
enforceable arbitration agreement, the court “shall not, pursuant
to subsection (a) . . . order the parties to arbitrate.”
H.R.S.
§ 658A-7(c).
Before granting a motion to compel arbitration, a court
must generally determine: (1) that there is a valid agreement to
arbitrate between the parties, and (2) that the dispute falls
within the scope of that agreement.
10/
See Haw. Med. Ass’n v. Haw.
Defendant Ostendorp’s Motion is governed by Hawaii law,
rather than the Federal Arbitration Act, because the retainer
agreement at issue does not involve a maritime transaction or a
transaction in interstate commerce. See 9 U.S.C. § 2.
13
Med. Serv. Ass’n, 148 P.3d 1179, 1193 (Haw. 2006).
In making
such a determination, a court should apply contract law
principles.
B.
See id. at 1194.
The Validity of the Agreement
To constitute a valid and enforceable arbitration
agreement, the agreement must have the following three elements:
“(1) it must be in writing; (2) it must be unambiguous as to the
intent to submit disputes or controversies to arbitration; and
(3) there must be bilateral consideration.”
Haw., Inc., 135 P.3d 129, 158-60 (2006).
Douglass v. Pflueger
Here, it is undisputed
that the dispute resolution provision is in writing, there is an
unambiguous intent for Defendant Kawena Young and Ostendorp to
submit to arbitration, and there is bilateral consideration
between Ostendorp and Defendant Kawena Young.
Plaintiff,
however, is not a party to the retainer agreement and contends
that therefore, there is not an unambiguous intent for him to
submit disputes to arbitration.
“Arbitration is a matter of contract,” and thus, “a
party cannot be required to submit to arbitration any dispute
which he has not agreed so to submit.”
Sher v. Cella, 160 P.3d
1250, 1254 (Haw. App. 2007) (internal quotations omitted).
Hawaii appellate courts have recognized that a signatory may bind
a nonsignatory to an arbitrate agreement pursuant to the
following theories: “1) incorporation by reference; 2)
14
assumption; 3) agency; 4) veil-piercing/alter ego; and 5)
estoppel.”
In re United Public Workers, AFSCME, Local 646,
AFL-CIO, 244 P.3d 609, 616 (Haw. App. 2010) (internal quotations
omitted); Sher, 160 P.3d at 1254.
Hawaii appellate courts have
also recognized that a signatory may bind a third-party
beneficiary to an arbitration agreement.
See Sher, 160 P.3d at
1256; Vickey v. Hastert, 201 P.3d 628 (Table), 2009 WL 383682, at
*9-10 (Haw. App. 2009).
Ostendorp argues that Plaintiff may be bound to the
agreement under equitable estoppel and third-party beneficiary
theories.
Even if Ostendorp is correct, Plaintiff’s claims are
not within the scope of the arbitration provision and thus the
Court cannot compel Plaintiff to arbitrate his claims.
Thus, the
Court finds it unnecessary to consider Ostendorp’s arguments with
respect to whether Plaintiff is bound by the arbitration
agreement despite being a nonsignatory.11/
C.
The Scope of the Arbitration Provision
“Although the public policy underlying Hawaii law
strongly favors arbitration over litigation, the mere existence
of an arbitration agreement does not mean that the parties must
11/
[Judge: Because I think that Ostendorp’s estoppel and
third-party beneficiary arguments are valid, I think it is best
to assume for the sake of argument that Plaintiff may be bound as
a nonsignatory. I do not think it necessary to address this
issue because it would not support an alternative reason to deny
the Motion to Compel Arbitration.]
15
submit to an arbitrator disputes which are outside the scope of
the arbitration agreement.”
Haw. Med. Ass’n, 148 P.3d at 1194
(internal quotations omitted).
Whether an issue falls within the
scope of an agreement to arbitrate “depends on the wording of the
contractual agreement to arbitrate.”
omitted).
Id. (internal quotations
A court should interpret the agreement terms according
to their plain, ordinary meaning and accepted use in common
speech.
See State Farm Fire & Cas. Co. v. Pac. Rent-All, Inc.,
978 P.2d 753, 762 (Haw. 1999).
Based on the plain language of the retainer agreement,
Plaintiff’s claims are not within the scope of the dispute
resolution provision.
The retainer agreement states that if “you
believe that a problem needs formal resolution, the following
discussion is how we will solve such a problem.”
Mot. Ex. A (emphasis added).
See Ostendorp’s
The retainer agreement is addressed
to and signed by only Defendant Kawena Young.
See id.
“you” unambiguously refers to Defendant Kawena Young.
Therefore
Likewise,
“we” unambiguously refers to the only two parties to the contract
- Defendant Kawena Young and Ostendorp.
As the Magistrate Judge explained, Plaintiff’s claims
against Ostendorp do not arise from a problem that Defendant
Kawena Young believes needs formal resolution and thus are not
within the scope of the dispute resolution provision.
The
dispute resolution mandate is limited to “we,” i.e., Defendant
16
Kawena Young and Ostendorp.
“‘Courts have consistently drawn a
distinction between arbitration clauses specifically identifying
the parties to which it applies, and a broader form of
arbitration clause which does not restrict the parties.’”
Upper
Lakes Towing Co. v. ZF Padova, No. 2:08-CV-63, 2009 WL 4730762,
at *2 (W.D. Mich. Dec. 4, 2009) (quoting In re Southwind Shipping
Co., 709 F. Supp. 79, 82 (S.D.N.Y. 1989)); see Parkway Dodge,
Inc. v. Yarbrough, 779 So.2d 1205, 1209–10 (Ala. 2000)
(preventing a nonsignatory manufacturer from enforcing an
arbitration provision that was specifically limited to disputes
between the signing parties (“dealer” and “purchaser”) because
the language was not broad enough to reach the manufacturer).
In Upper Lakes Towing Co. v. ZF Padova, No. 2:08-CV-63,
2009 WL 4730762 (W.D. Mich. Dec. 4, 2009), the court considered
whether a nonsignatory to a contract containing a clause
compelling arbitration for “disputes arising between both
parties” could enforce the clause against a signatory.
*2.
Id. at
The court concluded that the dispute between the signatory
and the nonsignatory was not within the scope of the arbitration
provision because the nonsignatory was not a party to the
contract.
Id.
The court explained that the provision “did not
state ‘all disputes’ without qualification or even ‘all disputes
17
arising in connection with the contract.’”12/
Id.
Similarly, in Cont’l U.K. Ltd. v. Anagel Confidence
Compania Naviera, S.A., 658 F. Supp. 809 (S.D.N.Y. 1987), the
court held that a nonsignatory cargo owner could not compel
arbitration pursuant to an agreement that required arbitration
for “any dispute aris[ing] between Owners and the Charters.”
at 810.
Id.
The court concluded that although the arbitration clause
was incorporated into a bill of lading to which the nonsignatory
was connected, the clause was not broad enough to cover the
dispute because the nonsignatory was not an “owner” or
“charterer” within the meaning of the clause.
Id. at 814-15.
The court explained that “courts recognize that parties are free
to choose their contractual language, and an arbitration clause
governing ‘all disputes arising out of this charter’ is meant to
have a much broader application than one governing disputes
between ‘owners and the charterers.’”
omitted).
Id. at 814 (citation
The court thus refused to “expand the arbitration
clause beyond its plain meaning.”
12/
Id.
The court in Upper Lakes Towning Co., recognized that
there were cases in which courts appear to have allowed an
arbitration agreement to be enforced by or against a nonsignatory
despite that the agreement was limited by its terms to disputes
between the parties to the agreement. Id. at *3. The court
found these cases inapplicable, however, because the
nonsignatories stood in the shoes of the signatory as either
successors in interest or by assumption. Id. Ostendorp does not
make any allegations that suggest Plaintiff should stand in the
shoes of Defendant Kawena Young as a successor in interest or by
assumption.
18
Here too, the provision at issue is not broadly worded.
Rather, it expressly restricts mandatory dispute resolution to
problems between Defendant Kawena Young and Ostendorp that
Defendant Kawena Young believes needs formal resolution.
Ostendorp argues that he is entitled to assert any claims or
defenses that he could assert against Defendant Kawena Young
against Plaintiff because Plaintiff is a third-party beneficiary.
Ostendorp’s Obj. 18.
He contends that consequently, because
Plaintiff believes there is a problem requiring formal
resolution, this dispute is arbitrable.
Id.
Although Ostendorp may assert Plaintiff’s status as a
third-party beneficiary to bind him to an arbitration agreement
in certain circumstances, the claims at issue must be within the
scope of the arbitration provision before Plaintiff can be
compelled to arbitrate.
814-15.
See Cont’l U.K. Ltd., 658 F. Supp. at
The court in Upper Lakes Towing Co., rejected a similar
argument as that made by Ostendorp.
It explained that the fact
that the parties were aware of the nonsignatory’s role when they
entered into the agreement “suggests that the arbitration
provision, as drafted, was intended to exclude [the
nonsignatory].” Upper Lakes Towing Co., 2009 WL 4730762, at *3.
Thus, to allow the nonsignatory to enforce the provision “would
be inconsistent with the plain meaning of the text and would
override the clear intent of the parties[.]”
19
Id. (alteration in
original) (internal quotations omitted).
In this case, the parties were aware that Ostendorp’s
role included keeping Plaintiff out of jail because it was
expressly stated in the retainer agreement.
Nonetheless, the
parties limited the application of the dispute resolution
provision to Defendant Kawena Young and Ostendorp and the scope
to problems that Defendant Kawena Young believes needed formal
resolution.
To substitute Plaintiff in the place of Defendant
Kawena Young for purposes of defining the terms of the dispute
resolution provision would unduly expand the scope of the
provision beyond the plain meaning of its express terms.
Accordingly, Plaintiff’s claims are not within the
scope of the dispute resolution provision.
III. Motion for Stay and Disqualification of Plaintiff’s Counsels
Ostendorp also objects to the Magistrate Judge’s Order
denying in part his Motion to Stay.13/
Because the Court has
concluded that Plaintiff’s claims are not subject to arbitration,
Ostendorp’s Motion to Stay is moot.
The Magistrate Judge concluded that until there is a
final determination by this Court regarding arbitrability,
13/
Motions to stay are non-dispositive motions that are
reviewed under the clearly erroneous and contrary to law standard
of review. Ka’aina v. Kauai Island Util. Co-op., Civ. No. 1000169 ACK-LEK, 2010 WL 3834999, at *3 (D. Haw. Sept. 24, 2010).
Thus, technically Ostendorp should have appealed rather than
objected to the Magistrate Judge’s determination.
20
Ostendorp’s Motion to Disqualify is premature.
F&R at 21.
Because this Court has adopted the Magistrate Judge’s conclusion
that Plaintiff cannot be compelled to arbitrate, Ostendorp’s
Motion to Disqualify is no longer premature and the Magistrate
Judge should now consider it.
CONCLUSION
For the foregoing reasons, the Court adopts the
Magistrate Judge’s F&R as modified by this Order.
Ostendorp’s Motion to Stay is moot.
Defendant
The Court directs the Clerk
of Court to lift the stay in this case.
The Court recommits
Ostendorp’s Motion to Disqualify Plaintiff’s Counsel to the
Magistrate Judge.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, June 19, 2012.
________________________________
Alan C. Kay
Sr. United States District Judge
Warne Keahi Young v. County of Hawaii, et al., Civ. No. 11-00580 ACK-RLP:
Order Adopting F&R as Modified, Lifting the Stay of Proceedings, and Referring
Ostendorp’s Motion to Disqualify to the Magistrate Judge.
21
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?