Honolulu Data Entry Project, Ltd. v. D. Bello Associates

Filing 300

ORDER RE FEES AND COSTS re 276 , 277 , 278 , 280 - Signed by Judge BARRY M. KURREN on 9/10/2014. "For the foregoing reasons, the Court DENIES both Motions for taxable costs, and DENIES HDEP's Motion for Attorneys ' Fees and non-taxable costs. Each party shall bear their own expenses." (emt, )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
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Plaintiff,
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vs.
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D. BELLO ASSOCIATES,
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DOUGLAS W. BELLO, and
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JEFFREY A. BATES
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Defendants.
______________________________ )
HONOLULU DATA ENTRY
PROJECT, LTD. dba HDEP
INTERNATIONAL

Civ. No. 12-000467 BMK
ORDER RE FEES AND COSTS

ORDER RE FEES AND COSTS
Before the Court are Plaintiff Honolulu Data Entry Project’s
(“HDEP”) Bill of Costs, (Doc. 278), HDEP’s Motion for Attorney’s Fees And
Related Non-Taxable Costs, (Doc. 277), and Defendant and Counterclaimant
D. Bello Associates et al.’s (“DBA”) Motion for Costs. (Doc. 276.)
After careful consideration of the Motions and the supporting and
opposing memoranda, all three Motions are DENIED.1

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The Court elects to decide these Motions without a hearing, pursuant to Local Rule 7.2(d).
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BACKGROUND
The Court held a bench trial on March 11, 2014, through March 25,
2014. At trial HDEP asserted eight claims against DBA:
Count I – Declaratory Judgment that the oral agreement between HDEP and
DBA has been validly terminated and that HDEP has no continuing
obligation to pay commissions to DBA or to renew contracts with existing
customers and DBA;
Count II – Breach of Contract and of the Covenant of Good Faith and Fair
Dealing, alleging that since 2005, DBA has failed to fully perform all its
obligations under the parties’ original oral contract;
Count III – Breach of Contract, alleging that DBA violated the noncompetition provision of the parties’ December 2012 Partial Settlement
Agreement;
Count IV – Unfair Competition in violation of Hawaii Revised Statute
(“HRS”) § 480-2, alleging that DBA made dishonest and disparaging
representations about HDEP to customers;
Count V – Defamation, alleging that DBA, Bello, and Bates made false and
defamatory statements concerning HDEP;
Count VI – Tortious Interference with Prospective Business Advantage,
alleging that Bell and Bates purposefully interfered with HDEP’s exclusive
business relationships;
Count VII – Tortious Interference with Contractual Relationships, alleging
that Bello and Bates intentionally induced customers to breach their existing
contracts with HDEP; and
Count VIII – Fraudulent Inducement, alleging that Bates and Bello
conspired to interfere with and steal away existing customers from HDEP.
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The Court categorized HDEP’s claims as retrospective, current, and
prospective. The Court held that HDEP’s primary claim in terms of alleged
damages (Claim II) was retrospective. HDEP alleged that DBA had breached the
parties’ cooperative agreement by not adequately performing its obligations since
2005. In connection with this primary claim HDEP presented two alternative
theories of damages seeking either $4,076,314.43 or $2,431,565.04.
At the conclusion of trial, the Court rejected HDEP’s primary claim
for retrospective damages and found in part for HDEP on only two of its eight
claims. First, on Claim I, the Court granted declaratory judgment in favor of
HDEP “to the extent that HDEP validly terminated its cooperative agreement with
DBA . . . and has no continuing obligation to renew joint contracts with existing
customers.” The Court, however, entered judgment against HDEP “to the extent
that HDEP’s termination of its cooperative agreement did not relieve HDEP of the
obligation to pay commissions to DBA as established under the parties’
cooperative agreement and their January 2012 Commission Agreement.” In short,
HDEP owed commissions on current joint contracts, but was not obligated to
renew such contracts and continue paying commissions into the future. Second, on
Claim III, the Court entered judgment for HDEP on one of two claims alleging
breach of a non-competition agreement between the parties.
DBA in turn asserted four counter-claims against HDEP:
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Count I – Breach of Contract, alleging that since terminating their
collaboration, HDEP has failed to pay commissions to DBA as specified in
the parties January 2012, written commission agreement, including for all
reasonably foreseeable contract renewals;
Count II – Accounting, alleging that DBA is entitled to an accounting of all
amounts owing and unpaid to DBA since termination of the oral agreement;
Count III – Breach of the Implied Covenant of Good Faith and Fair Dealing
by refusing to pay commissions and unilaterally terminating joint DBAHDEP customer contracts and reentering into HDEP only customer contract;
Count IV – Declaration as to DBA’s rights to Intellectual Property including
matrices, manuals, instructions, protocols, and software utilized in servicing
customers.
DBA’s primary claims (Counts I and III) involved HDEP’s alleged
breach of contract for failure to make commission payments to DBA. These
claims encompassed both current and prospective elements. As to the current
aspect of DBA’s breach of contract claim, the Court held DBA was owed
commissions on existing joint contracts beginning from August 22, 2012 subject to
several qualifications that eliminated some of HDEP’s commission obligations.
According to HDEP’s calculations, which DBA contests in a separate Motion, this
portion of the Court’s ruling imposed an obligation on HDEP to pay $587,448.15
in commissions in addition to $219,313.70 held in escrow, and as yet undetermined
future commissions on some ongoing joint contracts. (Doc. 76, Exh. B.)
Prospectively, the Court held that HDEP had no ongoing obligation to renew and
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to pay commissions on all joint contracts ten years into the future. DBA had
estimated that the total amount owed on both current and prospective commissions
amounted to $8,001,305. Additionally, the Court granted DBA’s request for an
accounting and held that DBA was a co-owner of intellectual property (Claim IV),
but that DBA had failed to establish a right to compel HDEP to provide copies of
such intellectual property.
Both parties now move for taxable costs pursuant to Federal Rules of
Civil Procedure (“FRCP”) Rule 54(d), and HDEP moves for non-taxable costs and
attorneys’ fees pursuant to HRS § 607-14. DBA requests for $12,873.91 in
taxable costs. (Doc. 276, Exh. C.) HDEP, in turn, requests for $23,695.69 in
taxable costs (Doc. 278), and $623,288.69 in non-taxable costs and attorneys’ fees.
(Doc. 277 at 1.)
DISCUSSION
Under FRCP Rule 54(d), costs are allowed as of course to the
prevailing party unless the court otherwise directs.2 See Fed.R.Civ.P. 54(d)(1);
see also Trans Container Servs. (Basel) A.G. v. Security Forwarders, Inc., 752 F.2d
483, 488 (9th Cir.1985). The trial judge has wide discretion in awarding costs
under Rule 54(d) and may deny costs to the prevailing party in its discretion

2

“Taxable” costs awardable under FRCP Rule 54(d)(1) are limited to the costs specified in 28
U.S.C. § 1920.
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provided the court indicates its reasons. See id.; see also K-S-H Plastics, Inc. v.
Carolite, Inc., 408 F.2d 54, 60 (9th Cir. 1969).
Hawaii Revised Statutes (“HRS”) § 607-14 provides that “in all
actions in the nature of assumpsit . . . there shall be taxed as attorney’s fees, to be
paid by the losing party, . . . a fee that the court determines to be reasonable . . .
provided that this amount shall not exceed twenty-five per cent of the judgment.”
Unlike an award of taxable costs under FRCP Rule 54(d), under Hawaii law, courts
lack the discretion to deny fees once a prevailing party is determined. Kahuku
Agr. Co. (Hawaii) v. P.R. Cassiday, Inc., 725 P.2d 1186, 1188 (Haw. 1986).
As set out above, the first inquiry in considering a monetary award
under FRCP Rule 54(d) or HRS § 607-14 is the determination of a prevailing
party. To determine which party prevailed, the trial court is required to first
identify the “disputed main issue,” which itself is identified by looking to “the
principle issues raised by the pleadings and proof” in the case. Food Pantry, Ltd.
v. Waikiki Business Plaza Inc., 575 P.2d 869, 879 (Haw. 1978). Having
determined a disputed main issue(s), the court then determines “on balance, which
party prevailed on the issues.” Village Park Community Ass’n v. Nishimura, 122
P.3d 267, 283 (Haw. App. 2005).
However, “lawsuits do not invariably yield prevailing parties—some
lawsuits like some football games end in ties.” Kahuku Agr., 725 P.2d at 1189
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(Nakamura dissenting). In cases “where both parties gain a victory but also suffer
a loss,” there may be no actual prevailing party. Lauderdale v. Grauman, 725 P.2d
1199, 1200 (Mont. 1986); see also Costa v. Borges, 179 P.3d 316, 322 (Idaho,
2008) (“A trial court also has discretion to determine that there is no overall
prevailing party.”); (Lawry v. Palm, 192 P.3d 550, 570 (Colo. App. 2008) (while
there will generally be a winner and loser, “in a proper case, the trial court may
rule that neither party prevailed and award no fees.”).
DBA asserts it is entitled to costs as the prevailing party because it
“won” at least $587,448.15 in unpaid commissions, successfully defended against
HDEP’s tort claims, successfully defended against HDEP’s retrospective breach of
contract claim that sought either $4,076,314.43 or $2,431,565.04, and partly
succeeded on HDEP’s claim for breach of the parties’ non-competition agreement.
HDEP contends it is entitled to costs and fees as the prevailing party
because it succeeded, prior to trial, in getting a stipulation to dismiss DBA’s joint
venture/partnership claims that could have imposed significant financial
obligations on HDEP, successfully defended DBA’s pretrial efforts to compel
arbitration in California, successfully defended DBA’s prospective claims to future
commissions totaling $8,001,305.3

3

DBA argues that HDEP misstates the amount it successfully saved itself from owing because
DBA’s $8 million figure included current commissions on some existing joint contracts, which
DBA was in fact awarded.
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Under the circumstances of this case, the Court concludes that neither
HDEP nor DBA is the prevailing party. Both parties “lost” on their disputed main
issue. The Court denied DBA’s claim for the vast majority of some $8 million in
future commissions, and denied HDEP’s primary claim for retrospective breach of
contract alleging some $4 million in damages. That HDEP successfully defended
against a greater possible monetary loss is offset by the fact that the Court did
award DBA at least $800,000 in unpaid commissions, and denied all of HDEP’s
tort claims. Conversely, DBA’s receipt of these unpaid commissions and “win”
on the intellectual property issue is significantly offset by its failure on its claim for
some $7 million in additional damages. In sum, each party lost much more than it
gained in this litigation and the results are sufficiently mixed such that no party
clearly prevailed.

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CONCLUSION
For the foregoing reasons, the Court DENIES both Motions for
taxable costs, and DENIES HDEP’s Motion for Attorneys’ Fees and non-taxable
costs. Each party shall bear their own expenses.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, September 10, 2014

/S/ Barry M. Kurren
Barry M. Kurren
United States Magistrate Judge

Honolulu Data Entry Project, Ltd. dba HDEP International v. D. Bello Associates, Douglas W.
Bello, and Jeffrey A. Bates, Civ. No. 12-000467 BMK; ORDER RE FEES AND COSTS

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