Barker et al v. Gottlieb et al
Filing
88
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS SECOND AMENDED COMPLAINT 59 . Signed by JUDGE LESLIE E. KOBAYASHI on 05/28/2014. -- This Court grants Plaintiff leave to file a third amended comp laint setting forth the claims that this Court has dismissed without prejudice, if Plaintiff can amend those claims to cure the defects identified in this Order. Plaintiff shall file his third amended complaint by no later than June 30, 2014. (eps)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
CIVIL 13-00236 LEK-BMK
)
)
Plaintiff,
)
)
vs.
)
)
JOSHUA L. GOTTLIEB, JONATHAN )
DUBOWSKY, DONALD BORNEMAN,
)
)
CHARLES HALL, SCOTT HARRIS,
THE VALUE EXCHANGE ADVISORS, )
also known as/doing business )
as TVXA, GEMCO-PACIFIC ENERGY )
)
LLC, aka GPE and ROES 1-25,
)
)
Defendants.
_____________________________ )
CHARLES BARKER III,
ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS’ MOTION TO DISMISS SECOND AMENDED COMPLAINT
On January 23, 2014, Defendants Joshua L. Gottlieb,
Jonathan Dubowsky, Donald Borneman, Charles Hall, Scott Harris,
the Value Exchange Advisors, doing business as TVXA (“TVXA”), and
GEMCo-Pacific Energy LLC, also known as GPE (“GPE,” all
collectively “Defendants”) filed their Motion to Dismiss Second
Amended Complaint (“Motion”).
[Dkt. no. 59.]
Pro se Plaintiff
Charles Barker III (“Plaintiff”) filed two different documents
titled “Plaintiff’s Opposition to Defendants Motion for Summary
Judgment” on February 6, 2014 and February 10, 2014.
62, 63.]
[Dkt. nos.
Defendants filed their reply memorandum (“Reply”) on
February 14, 2014.
[Dkt. no. 66.]
Plaintiff thereafter filed a
document titled “Opposition to Defendants Motion to Dismiss”
(“Memorandum in Opposition”) on February 21, 2013.1
Plaintiff
filed a supplemental memorandum pursuant to this Court’s
April 25, 2014 entering order (“Supplemental Memorandum”).2
[Dkt. nos. 84 (EO), 85 (Supplemental Memorandum).]
The Court
finds this matter suitable for disposition without a hearing
pursuant to Rule LR7.2(d) of the Local Rules of Practice of the
United States District Court for the District of Hawai`i (“Local
Rules”).
After careful consideration of the Motion, supporting
and opposing memoranda, and the relevant legal authority,
Defendants’ Motion is HEREBY GRANTED IN PART AND DENIED IN PART
for the reasons set forth below.
Specifically, Amended Counts I
(related to fraud as to future availability of financing), II,
III, IV, V, VIII, IX, X, XI, XII, and XIII are DISMISSED WITH
PREJUDICE, and Amended Counts I (related to fraudulent
alterations of agreements), VI, VII, XIV, and XV are DISMISSED
WITHOUT PREJUDICE.
1
Although Plaintiff’s Memorandum in Opposition has a file
stamp dated February 19, 2014, the district court’s electronic
case filing (“ECF”) system reflects that the document was filed
on February 21, 2014.
2
The April 25, 2014 entering order directed Plaintiff to
address a threshold standing issue that he did not address in his
previous memoranda. Plaintiff filed another supplemental
memorandum on May 15, 2014. [Dkt. no. 86.] The two supplemental
memoranda appear to be identical, although there are some
differences in the exhibits attached to each document.
2
BACKGROUND
The relevant factual and procedural background of this
case is set forth in this Court’s October 16, 2013 Order Granting
in Part and Denying in Part Defendants’ Motion for Judgment on
the Pleadings (“10/16/13 Order”).
[Dkt. no. 44.3]
Plaintiff filed his original Complaint on May 15, 2013.
The Complaint alleged the following claims: fraud (“Count I”);
“breach of fiduciary responsibility” (“Count II”); professional
misconduct (“Count III”); violations of United States securities
laws (“Count IV”); misrepresentation (“Count V”); malfeasance
(“Count VI”); misappropriation of corporate funds (“Count VII”);
breach of contract; (“Count VIII”); anticipatory breach of
contract (“Count IX”); theft of real property purchase contract
(“Count X”); theft of intellectual property (“Count XI”);
negligence (“Count XII”); tortious interference (“Count XIII”);
and violation of interstate commerce laws (“Count XIV”).
The 10/16/13 Order dismissed all of Plaintiff’s claims
without prejudice.
2013 WL 5675534, at *8.
As to Plaintiff’s
federal claims, this Court ruled as follows: Count IV, titled
“VIOLATIONS OF SECURITIES LAWS OF THE UNITED STATES,” failed to
state a claim because the Complaint did not allege that Gottlieb,
Borneman, Hall, TVXA and GPE offered and/or sold securities; and
Count XIV did not satisfy the requirements of Fed. R. Civ. P.
3
The 10/16/13 Order is also available at 2013 WL 5675534.
3
8(a)(2) because it did not identify the specific laws Defendants
allegedly violated, nor did it state how Plaintiff was harmed by
the alleged violations.
Id. at *5.
The 10/16/13 Order noted that the remainder of the
claims in the Complaint appeared to be state law claims.
Id.
This Court noted that those claims allegedly arose out of three
agreements, one between TVXA and Cogentech - Pacific, LLC
(“CPL”), one between GPE and Haleakala Holdings LLC (“HCL”), and
one between Hamakua Energy Partners (“HEP”), HCL, and CPL
(collectively “the Agreements”).4
This Court noted that,
although the Complaint alleged that Plaintiff was a principal of
HCL and CPL (collectively “the LLCs”), Plaintiff, individually,
was not a party to any of the Agreements.
Id. at *6.
This Court
concluded that “[i]t is the LLCs themselves that have standing to
pursue claims arising from the Agreements.”
omitted).
Id. (citation
This Court therefore concluded that Plaintiff’s state
law claims
fail[ed] to state plausible claims for relief
because: 1) to the extent that Plaintiff is trying
to prosecute claims which belong to the LLCs,
Plaintiff lacks standing to do so; and 2) to the
extent that Plaintiff is trying to prosecute
claims which belong to him individually, the
claims are not sufficiently pled.
4
The Agreements are: the 8/18/11 Letter of Intent; the
9/1/11 Joint Venture Agreement; and the 10/13/11 GPE 60 Letter
Agreement. 10/16/13 Order, 2013 WL 5675534, at *6; see also id.
at *2 (describing each agreement).
4
Id. at *7 (footnote omitted).
The 10/16/13 Order cautioned Plaintiff that, if his
amended complaint failed to address the deficiencies this Court
identified in the order, this Court could dismiss his claims with
prejudice.
Plaintiff timely filed his Second Amended Complaint on
January 16, 2014.5
[Dkt. no. 53.]
The first eleven counts of
the Second Amended Complaint are identical to Counts I through
XI.
This Court will refer to those claims as “Amended Count I”
through “Amended Count XI.”
The Second Amended Complaint
includes a new claim titled “UNCOMPENSATED THEFT OF WORK PRODUCT”
(“Amended Count XII”).
Count XIII of the Second Amended
Complaint (“Amended Count XIII”) alleges the negligence claim
from Count XII; Count XIV of the Second Amended Complaint
(“Amended Count XIV”) alleges the tortious interference claim
from Count XIII; and Count XV of the Second Amended Complaint
(“Amended Count XV”) alleges the interstate commerce claim from
Count XIV.
Defendants now ask this Court to dismiss Plaintiff’s
claims in the Second Amended Complaint.
5
Plaintiff filed his Amended Complaint on November 13,
2013. [Dkt. no. 46.] Instead of attaching exhibits to the
Amended Complaint, on November 27, 2013, Plaintiff filed a
Request for Judicial Notice of All Exhibits Currently Contained
in Court File. [Dkt. no. 48.] This Court denied the request,
but gave Plaintiff leave to file the Second Amended Complaint.
5
DISCUSSION
I.
Plaintiff’s Two Filings Titled “Opposition
to Defendants Motion for Summary Judgment”
As a preliminary matter, this Court notes that it will
not consider either Plaintiff’s February 6, 2014 filing or his
February 10, 2014 filing.
These filings appear to arise from
Plaintiff’s mistaken belief that Defendants are seeking summary
judgment.
Further, Plaintiff filed his “Opposition to Defendants
Motion to Dismiss” on February 21, 2014.
This Court construes
that document as Plaintiff’s Memorandum in Opposition to the
instant Motion.
Because Plaintiff filed his Memorandum in
Opposition after Defendants filed their Reply, the Reply only
addresses the two filings titled “Opposition to Defendants Motion
for Summary Judgment.”
This Court, however, finds that it is
unnecessary for Defendants to respond to Plaintiff’s Memorandum
in Opposition.
II.
Federal Law Claims
As in the original Complaint, Plaintiff’s Second
Amended Complaint asserts both: 1) federal question jurisdiction
over claims arising under federal law, with supplemental
jurisdiction over claims arising under state law; and
2) diversity jurisdiction.
[Second Amended Complaint at
JURISDICTION AND VENUE ¶¶ 1-4.6]
6
Plaintiff attempts to allege
The “INTRODUCTION” to the Second Amended Complaint
(continued...)
6
federal claims in Amended Count IV and Amended Count XV.
In the
instant Motion, Defendants argue that Plaintiff failed to cure
the defects in his federal claims, and Defendants urge this Court
to dismiss Plaintiff’s federal claims with prejudice.
[Mem. in
Supp. of Motion at 14-15.]
A.
Amended Count IV
Amended Count IV appears to allege violations of 17
C.F.R. § 230.500, et seq., Regulation D, the Rules Governing the
Limited Offer and Sale of Securities Without Registration Under
the Securities Act of 1933 (“Regulation D”).
Amended Count IV
alleges that Defendants “have disseminated information to, and
solicited capital investments from, prospective investors about
the various projects which were conceived by Plaintiff Barker,
without benefit of a Prospectus and Offering Circular.”
[Second
Amended Complaint at ¶ 126.]
Regulation D does not contain requirements regarding a
prospectus and an offering circular for the offer and sale of
securities under Regulation D.
This Court will liberally
construe Plaintiff’s Amended Count IV as alleging violations of
6
(...continued)
contains paragraph numbers 1 and 2; the “JURISDICTION AND VENUE”
section contains paragraph numbers 1 through 5; the “SUMMARY” and
claims sections contain paragraph numbers 1 through 140; and the
“CALCULATION OF DAMAGES” section contains paragraph numbers 1
through 6. Thus, in any citation to a paragraph numbered 1
through 6, this Court will specify to which section of the Second
Amended Complaint the citation refers.
7
the Securities Act of 1933 (“the Securities Act”), instead of
alleging violations of Regulation D.
See Erickson v. Pardus, 551
U.S. 89, 94 (2007) (per curiam) (“A document filed pro se is to
be liberally construed.” (citation and internal quotation marks
omitted)).
The Securities Act does not contain a provision
requiring the issuance of an offering circular with the offer
and/or sale of securities.
Thus, the alleged offer and/or sale
of securities without an offering circular is not a violation of
the Securities Act.
The Securities Act does prohibit the offer and/or sale
of securities without a prospectus.
See 15 U.S.C. § 77b(a)(10)
(defining the term “prospectus”); 15 U.S.C. § 77e(b) (titled
“Necessity of prospectus meeting requirements of section 77j of
this title”).7
7
15 U.S.C. § 77l(a) states, in pertinent part:
Section 77e(b) states:
It shall be unlawful for any person, directly or
indirectly-(1) to make use of any means or instruments
of transportation or communication in
interstate commerce or of the mails to carry
or transmit any prospectus relating to any
security with respect to which a registration
statement has been filed under this
subchapter, unless such prospectus meets the
requirements of section 77j of this title; or
(2) to carry or cause to be carried through
the mails or in interstate commerce any such
security for the purpose of sale or for
delivery after sale, unless accompanied or
(continued...)
8
Any person who-(1) offers or sells a security in violation
of section 77e of this title . . .
. . . .
shall be liable, subject to subsection (b) of this
section, to the person purchasing such security
from him, who may sue either at law or in equity
in any court of competent jurisdiction, to recover
the consideration paid for such security with
interest thereon, less the amount of any income
received thereon, upon the tender of such
security, or for damages if he no longer owns the
security.
(Emphases added.)
Even assuming, arguendo, that Plaintiff can
prove that Defendants offered and/or sold securities without a
required prospectus, Plaintiff has not alleged that Defendants
offered and/or sold the securities in question to him.
Defendants therefore are not liable to Plaintiff for the alleged
violation of the Securities Act.
Amended Count IV fails to state a claim that is
plausible on its face.
See Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (“To survive a motion to dismiss, a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’
A claim has facial
plausibility when the plaintiff pleads factual content that
allows the court to draw the reasonable inference that the
7
(...continued)
preceded by a prospectus that meets the
requirements of subsection (a) of section 77j
of this title.
9
defendant is liable for the misconduct alleged.” (quoting and
citing Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 570, 556
(2007))).
Further, based on the allegations of the Second
Amended Complaint and in light of the fact that Plaintiff has
already had the opportunity to cure the defects in this claim,
this Court finds that further amendment of Amended Count IV would
be futile.
See Johnson v. Am. Airlines, Inc., 834 F.2d 721, 724
(9th Cir. 1987) (noting that “courts have discretion to deny
leave to amend a complaint for futility” (citation and quotation
marks omitted)).
Defendants’ Motion is GRANTED as to Amended Count IV,
and Amended Count IV is DISMISSED WITH PREJUDICE.
B.
Amended Count XV
In the 10/16/13 Order, this Court concluded that
Plaintiff’s claim for “VIOLATION OF INTERSTATE COMMERCE LAWS”
failed to state a claim because it did not “identify the specific
laws Defendants allegedly violated, nor [did] it state how
Plaintiff was harmed by the alleged violations.”
5675534, at *5.
2013 WL
Plaintiff has amended this claim to include the
allegations that:
No state business tax registry was filed by either
TVXA or GPE, in violation of Hawai`i law requiring
same, yet both of these entities, owned solely by
Defendants Gottlieb, Borneman, Hall and Harris,
were actively engaged in doing business in Hawaii.
Moreover, both Defendants Gottlieb and Dubowsky
were hiring contractors, purchasing materials, and
hiring individuals without filing state or federal
10
returns for such activities, without reporting
such activities to the state tax revenue office,
and without paying mandatory payroll deductions,
federal and state tax withholdings or depositing
same to state and federal tax authorities. As
Plaintiff is a principal in Kama`aina Topsoil,
this has exposed Plaintiff Barker to potential tax
liabilities and penalties.
[Second Amended Complaint at ¶ 139.]
Plaintiff’s claim for the
“VIOLATION OF INTERSTATE COMMERCE LAWS” (Amended Count XV) now
alleges violations of both federal tax laws and state tax laws.
This Court finds that, construed liberally, Plaintiff’s Amended
Count XV alleges “a short and plain statement of the claim
showing that [Plaintiff] is entitled to relief.”
See Fed. R.
Civ. P. 8(a)(2).
These alleged violations, however, have only injured
Plaintiff by subjecting him to “potential tax liabilities and
penalties.”
[Id. (emphasis added).]
Article III of the United States Constitution
limits the power of the courts to the resolution
of actual “Cases” and “Controversies.” U.S.
Const., art. III, § 2; Valley Forge Christian
Coll. v. Ams. United for Separation of Church &
State, Inc., 454 U.S. 464, 471, 102 S. Ct. 752, 70
L. Ed. 2d 700 (1982). “[T]he irreducible
constitutional minimum of standing contains three
elements”: (1) injury in fact, (2) causation, and
(3) redressability. Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61, 112 S. Ct. 2130,
119 L. Ed. 2d 351 (1992). Thus, the party seeking
to establish standing must show the “actual or
imminent” “invasion of a legally protected
interest” that is “fairly traceable to the
challenged action” and is “likely . . . to be
redressed by a favorable decision.” Id. at
560–61, 112 S. Ct. 2130 (emphasis added)
(alterations, citations, and quotation marks
11
omitted). The party seeking to establish
jurisdiction . . . bears the burden of
demonstrating standing. DaimlerChrysler Corp. v.
Cuno, 547 U.S. 332, 342 & n.3, 126 S. Ct. 1854,
164 L. Ed. 2d 589 (2006); Lujan, 504 U.S. at 561,
112 S. Ct. 2130. . . .
Ass’n of Pub. Agency Customers v. Bonneville Power Admin., 733
F.3d 939, 969-70 (9th Cir. 2013) (some alterations in Bonneville
Power).
Insofar as Plaintiff has only alleged that he faces
potential tax liability and penalties as a result of Defendants’
alleged violations of federal and state tax laws, Plaintiff has
not alleged an injury in fact.
Even considering the allegations
in the Second Amended Complaint as a whole, this Court concludes
that Plaintiff has not pled sufficient factual allegations that
would support a reasonable inference that Plaintiff has standing
to pursue the claims in Amended Count XV.
678.
See Iqbal, 556 U.S. at
Amended Count XV therefore fails to state a claim that is
plausible on its face.
This Court, however, finds that it is
possible to cure the defects in Amended Count XV by amendment, if
Plaintiff can allege that he faces actual or imminent tax
liabilities or penalties as a result of Defendants’ alleged
violations of federal and state tax laws.
See Harris v. Amgen,
Inc., 573 F.3d 728, 737 (9th Cir. 2009) (“Dismissal without leave
to amend is improper unless it is clear that the complaint could
not be saved by any amendment.” (citation and quotation marks
omitted)).
12
Defendants’ Motion is GRANTED IN PART AND DENIED IN
PART as to Amended Count XV, which is DISMISSED WITHOUT
PREJUDICE.
III. State Law Claims
In the instant Motion, Defendants argue that
Plaintiff’s Second Amended Complaint still fails to allege
sufficient factual allegations that would support a reasonable
inference that Plaintiff has standing to pursue his state law
claims.
Defendants therefore urge this Court to dismiss all of
Plaintiff’s state law claims with prejudice.
[Mem. in Supp. of
Motion at 18.]
In the 10/16/13 Order, this Court set forth the
applicable Hawai`i law relevant to the analysis of Plaintiff’s
standing to pursue his state law claims, 2013 WL 5675534, at *67, and this Court incorporates that analysis into this Order.
In
response to the 10/16/13 Order, Plaintiff has included numerous
allegations in the Second Amended Complaint alleging that:
Defendants’ actions have harmed him personally; when he did the
work connected with the projects that are at issue in this case
(“the Projects”),8 he acted as an individual and not on behalf of
8
As this Court noted in connection with the original
Complaint, the Projects at issue in the Second Amended Complaint
include:
a biomass-to-biofuel facility at the site of the
former Hamakua Sugar Mill, in Haina Camp on the
(continued...)
13
any entity; and the tangible and intellectual property he
produced in connection with the Projects belonged to him
personally.
For example, Plaintiff alleges:
•“This Amended Complaint concerns solely and exclusively the
causes of action and financial and other harm which as been
inflicted upon Plaintiff Barker personally by the
Defendants.” [Second Amended Complaint at Introduction ¶ 1
(emphasis in original).]
•“None of the ideas, concepts, plans, properties, contracts,
opportunities, documents, reports, data, studies or analyses
ever belonged to any of the ‘business entities’ that were
formed by the parties. All of the foregoing were entirely
the intellectual and tangible property of the Plaintiff
Barker herein as an individual person.” [Id. at pg. 7 n.1.]
•“Plaintiff Barker, without any involvement, assistance,
participation of any of the Defendants, negotiated a
purchase agreement with Ambit Funding in January 2011,
leading to an executed purchase contract, signed on January
29, 2011 and February 1, 2011, respectively.” [Id. at
SUMMARY ¶ 5.9] Plaintiff also alleges that he “personally
8
(...continued)
island of Hawai`i (“Haina Mill Project”); the
development and marketing of a 1,100,000 cubic
yard topsoil resource on one of parcels of the
Haina Mill property under the name Kama`aina Earth
Products (“KAEP” and “the KAEP Topsoil Project”);
and the acquisition of the Hamakua Energy Partners
power plant (“HEP Power Plant Project”).
10/16/13 Order, 2013 WL 5675534, at *1.
9
This allegation refers to the Real Estate Purchase
Contract between Haina Mill Mortgage Lender, LLC, as seller, and
Moku Nui Land Company, Inc., as buyer regarding six parcels of
real property in the County of Hawai`i. [Second Amended
Complaint, Exh. 3 at 1.] The Second Amended Complaint refers the
six parcels collectively as “Haina Mill.” [Second Amended
Complaint at SUMMARY ¶ 3.] This Court will refer to the document
as the “Haina Mill Purchase Contract.” Plaintiff signed the
Haina Mill Purchase Contract as “President Moku Nui Land
(continued...)
14
arranged for the funding” of this project.
[Id. at ¶ 34.]
•“Plaintiff Barker, as an individual person, - and not as ideas
or intellectual property or conceptions owned by any
business entity, whatsoever, brought to Defendants Gottlieb,
Borneman, Hall, Harris, TVXA and GPE, the idea, concept,
economic analyses, technical and engineering evaluations,
and the business opportunity of purchase of” the HEP Power
Plant. [Id. at ¶ 16 (emphasis in original).]
•“Plaintiff Barker, as an individual person, and not as assets or
ideas belonging to any company or business entity, was the
source of all concepts, ideas, plans, documents and
opportunities proposing utilization of biomass to create
other valuable products in Hawaii.” [Id. at ¶ 17.]
•“Plaintiff Barker has personally, and not as assets or ideas
belonging to any company or business entity, expended
extraordinary amounts of time, effort, and expenses in
developing and furthering the business opportunities that
were brought to the Defendants.” [Id. at ¶ 30.]
•“All ideas, concepts, plans, documents were and remain solely
the work product and intellectual property of Plaintiff
Barker personally.” [Id. at ¶ 45.]
•All of the Projects “were the ideas, conceptions, intellectual
property and personal work product of Plaintiff Barker.”
[Id. at ¶ 118.]
For the purposes of the instant Motion, this Court
assumes that Plaintiff’s factual allegations are true.
See
Harris v. Amgen, Inc., 738 F.3d 1026, 1035 (9th Cir. 2013) (“We
review de novo the district court’s grant of a motion to dismiss
9
(...continued)
Company.” [Id., Exh. 3 at 9.]
This Court notes that the copy of the Haina Mill Purchase
Contract that Plaintiff submitted as Exhibit 3 does not have page
numbers. The page numbers in this Court’s citation to Exhibit 3
refer to the pages number on the Exhibit as it appears in the
district court’s ECF system.
15
under Rule 12(b)(6), accepting all factual allegations in the
complaint as true and construing them in the light most favorable
to the nonmoving party.” (citation and quotation marks omitted)).
The state law claims in the Second Amended Complaint, however,
still rely upon the allegations that: 1) Defendants committed,
through the 8/18/11 Letter of Intent, the 9/1/11 Joint Venture
Agreement, and the 10/13/11 GPE 60 Letter Agreement, to secure
funding for the Projects; and 2) Defendants failed to fulfill
their obligations to secure such funding.
Complaint at ¶¶ 51-55, 80, 116.]
[Second Amended
Plaintiff alleges that, as a
result of Defendants’ failure to provide the agreed upon funding,
the Projects did not proceed, “which has been the direct
causation of financial harm to Plaintiff Barker personally.”
[Id. at ¶ 79.]
This allegation, however, is a legal conclusion,
and the tenet that a court must accept as true all of the
allegations contained in a complaint — “is inapplicable to legal
conclusions.”
Iqbal, 129 S. Ct. at 1949.
Although the 8/18/11 Letter of Intent is addressed to
Plaintiff and Garrett Smith, it is addressed to Plaintiff in his
capacity as “Executive Vice President” of CPL, and the letter
expressly states that it “is executed by and between” TVXA and
CPL.
[Second Amended Complaint, Exh. 4 at 1.]
Plaintiff,
individually, is not a party to the agreement, which merely notes
that CPL “represent[s] the interests of Garrett Smith, Chuck
16
Barker, and affiliates.”
[Id.]
Similarly, the 9/1/11 Joint Venture Agreement and the
10/13/11 GPE 60 Letter Agreement are between GPE and CPL.
[Complaint, Exh. 2 at 1;10 Second Amended Complaint, Exh. 5 at
12.]
According to the copy that Plaintiff submitted with the
original Complaint (which this Court notes is not executed by
TVXA), J. Garrett Smith signed the document on behalf of CPL as
its “Chief Technology Officer.”
[Complaint, Exh. 2 at 22.]
The
10/13/11 GPE 60 Letter Agreement acknowledges that Plaintiff
“individually and with partners Kika Bukoski, Jonny Dubowsky,
Tony Moglia and others, which together comprise Haleakala
Holdings, LLC . . . along with [CPL] . . . have invested time and
resources toward structuring the acquisition of the” HEP Power
Plant.
[Second Amended Complaint, Exh. 5 at 1.]
Like the
8/18/11 Letter of Intent, however, the 10/13/11 GPE 60 Letter
Agreement is addressed to Plaintiff in his capacity as “Executive
Vice President” of CPL.
A.
[Id. at 2-12.]
Claims Enforcing the Agreements
First, the fact that Plaintiff individually expended
time and resources in the development of the Agreements and/or in
the events that arose out of the Agreements does not change the
10
Plaintiff did not submit the 9/1/11 Joint Venture
Agreement as an exhibit to the Second Amended Complaint. Exhibit
2 to the original Complaint does not have page numbers. The page
numbers in this Court’s citations refer to the page numbers in
the ECF System.
17
fact that he is not a party to any of the Agreements.
Further,
although the Agreements may have acknowledged Plaintiff’s
contributions, nothing in any of the Agreements indicates that
Plaintiff, as an individual, was an intended third-partybeneficiary of that agreement.
See Ass’n of Apartment Owners of
Newtown Meadows ex rel. Bd. of Dirs. v. Venture 15, Inc., 115
Hawai`i 232, 269-70, 167 P.3d 225, 262-63 (2007) (describing
intended third-party-beneficiary exception to the general rule
that “third parties do not have enforceable contract rights”
(citation and quotation marks omitted)).
This Court therefore
concludes that Plaintiff, as an individual, does not have
standing to bring claims for breach of the Agreements or to
otherwise enforce Defendants’ obligations under the Agreements.
See 10/16/13 Order, 2013 WL 5675534, at *6-7.
Thus, Plaintiff’s
Amended Count VIII (BREACH OF CONTRACT) and Amended Count IX
(ANTICIPATORY BREACH OF CONTRACT) each fails to state a claim
that is plausible on its face.
Insofar as Plaintiff’s Amended Count II (BREACH OF
FIDUCIARY RESPONSIBILITY) and Plaintiff’s Amended Count XIII
(NEGLIGENCE)11 also seek to enforce Defendants’ obligations under
11
Although Amended Count XIII alleges negligence, the
allegations of that count show that it is another attempt to
enforce Defendants’ obligations under the Agreements. Amended
Count XIII alleges:
Defendants Gottlieb, Borneman, Hall, Harris, TVXA
(continued...)
18
the Agreements, Amended Counts II and XIII each fails to state a
claim that is plausible on its face.
In addition, Plaintiff’s
Amended Count X (THEFT OF REAL PROPERTY PURCHASE CONTRACT)
essentially seeks to enforce obligations under the Haina Mill
Purchase Contract, which Plaintiff, as an individual, was neither
a party to nor an intended third-party-beneficiary of.
This
Court therefore concludes that Amended Count X fails to state a
claim that is plausible on its face because Plaintiff does not
have standing to bring Amended Count X.
Based on the allegations of the Second Amended
Complaint and in light of the fact that Plaintiff has already had
the opportunity to cure the standing defects in these claims,
this Court finds that further amendment of Amended Counts II,
VIII, IX, X, and XIII would be futile.
Further, Amended Count III (PROFESSIONAL MISCONDUCT)
alleges that certain of the individual Defendants violated the
standards of conduct of their professions relevant to their roles
11
(...continued)
and GPE have committed . . . negligence and gross
dereliction of of [sic] their duties and
responsibilities to act as the financial partner
for the projects, per their agreement to act as
such. Based upon the most current information and
belief of Plaintiff, as of the date of the filing
of this Complaint, Defendants have wholly failed
to procure even a single dollar from any outside
investor or debt (loan) provider sources . . . .
[Second Amended Complaint at ¶ 137.]
19
in the Projects.
For example, the Second Amended Complaint
alleges that Defendant Hall is a licensed attorney and Defendant
Gottlieb is a licensed insurance agent.
Complaint at ¶ 124.]
[Second Amended
Insofar as Plaintiff, individually, was not
a party to the Agreements, none of the individual Defendants
represented Plaintiff, individually, in the Projects.
Plaintiff
therefore lacks standing to raise any professional misconduct
that the individual Defendants allegedly committed in connection
with the Projects.
Based on the allegations of the Second
Amended Complaint and in light of the fact that Plaintiff has
already had the opportunity to cure the standing defects his
professional misconduct claim, this Court finds that further
amendment of Amended Count III would be futile.
Defendants’ Motion is GRANTED as to Amended Count II,
Amended Count III, Amended Count VIII, Amended Count IX, Amended
Count X, and Amended Count XIII, which are DISMISSED WITH
PREJUDICE.
B.
Claims Regarding Losses Suffered by the LLCs
Amended Count I (FRAUD), Amended Count V
(MISREPRESENTATION), Amended Count VI (MALFEASANCE), Amended
Count VII (MISAPPROPRIATION OF CORPORATE FUNDS), and Amended
Count XIV (TORTIOUS INTERFERENCE) also allege actions and
omissions related to the Agreements, but these claims do not seek
to enforce the Agreements.
Instead, these claims allege that
20
Defendants’ actions caused various types of harm to the LLCs.
In
spite of Plaintiff’s amendments, these claims do not allege that
Defendants’ actions harmed Plaintiff individually.
As previously
noted, Plaintiff, as an individual, is not a party to the Haina
Mill Purchase Contract.
Thus, Plaintiff is not an owner of the
Haina Mill property, nor is he an owner of any other property or
assets of the LLCs.12
See Haw. Rev. Stat. § 428-501(a) (“A
member is not a co-owner of, and has no transferable interest in,
property of a limited liability company.”).
This Court therefore
concludes that Plaintiff lacks standing to pursue Amended Counts
I, V, VI, VII, and XIV because each claim seeks to recover losses
by, or other damages to, the LLCs, and these claims do not assert
that Plaintiff, as an individual, suffered an injury in fact as a
result of Defendants’ allegedly wrongful actions.
Amended Count
I, Amended Count V, Amended Count VI, Amended Count VII, and
Amended Count XIV are DISMISSED.
This Court, however, finds that it is arguably possible
for Plaintiff to cure the standing defects in these claims.
Plaintiff’s Supplemental Memorandum indicates that he may be able
to allege a plausible basis for standing because he has a
12
This Court does not construe Amended Counts I, V, VI,
VII, and XIV as addressing intellectual property or work product,
which, although created in connection with the Agreements and/or
the Projects, allegedly belongs to Plaintiff individually.
Plaintiff has alleged those claims in Amended Counts XI and XII.
21
distributional interest in the assets of LLCs.13
See Haw. Rev.
Stat. § 428-501(b) (stating that “[a] distributional interest in
a limited liability company is personal property”).
Plaintiff,
however, must allege how Defendants’ allegedly wrongful acts
resulted in the decrease in Plaintiff’s distributional share of
the LLCs’ assets.
This Court will therefore turn to the issue of
whether, even after the addition of allegations regarding harm to
Plaintiff’s distributional interests, further amendment of
Amended Counts I, V, VI, VII, and XIV would still be futile.
1.
Fraud-Based Claims
In addition to the fraud claim in Amended Count I,
Plaintiff also alleges fraud-based claims in Amended Count V
(MISREPRESENTATION) and Amended Count VI (MALFEASANCE).
This
Court applies the following standard in reviewing whether a
13
This Court notes that the Second Amended Complaint refers
to the “diminution of the ownership participation shares of
ownership by Plaintiff Barker.” [Second Amended Complaint at
¶ 84.] The Second Amended Complaint also asserts that Plaintiff
has a fifty-six percent interest in Kuleana Management, a twentyfive percent interest in KAEP, and an fifty percent interest in
the portion of the Haina Mill Project that is not owned by
TVXA/GPE. [Id. at CALCULATION OF DAMAGES ¶ 6.] These
allegations, individually and in the context of the entire Second
Amended Complaint, are not sufficient to show that Plaintiff, as
an individual, has a distributional interest in the business
property at issue in Amended Counts I, V, VI, VII, and XIV.
Thus, the Second Amended Complaint does not plead a sufficient
basis for Plaintiff’s standing to bring these claims. This Court
emphasizes that it has not considered Plaintiff’s Supplemental
Memorandum in reviewing whether these counts state claims upon
which relief can be granted. This Court has only considered the
Supplemental Memorandum to determine whether it would be futile
to allow Plaintiff to amend these claims.
22
plaintiff has sufficiently pled a fraud claim:
[Fed. R. Civ. P.] 9(b) requires that, “[i]n
alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud
or mistake.” Pursuant to Rule 9(b), a party is
required to make particularized allegations of the
circumstances constituting fraud. See Sanford v.
MemberWorks, Inc., 625 F.3d 550, 557–58 (9th Cir.
2010).
In their pleadings, Plaintiffs “must allege
the time, place, and content of the fraudulent
representation; conclusory allegations do not
suffice.” See Shroyer v. New Cingular Wireless
Servs., Inc., 622 F.3d 1035, 1042 (9th Cir. 2010)
(citation omitted). “Malice, intent, knowledge,
and other conditions of a person’s mind may be
alleged generally.” Fed. R. Civ. P. 9(b); see
also Odom v. Microsoft Corp., 486 F.3d 541, 554
(9th Cir. 2007) (en banc) (“[T]he state of mind—or
scienter—of the defendants may be alleged
generally.” (citation omitted)); Walling v.
Beverly Enters., 476 F.2d 393, 397 (9th Cir. 1973)
(stating that Rule 9(b) “only requires the
identification of the circumstances constituting
fraud so that the defendant can prepare an
adequate answer from the allegations” (citations
omitted)).
When there are multiple defendants,
Rule 9(b) does not allow a complaint to
merely lump multiple defendants together but
require[s] plaintiffs to differentiate their
allegations when suing more than one
defendant . . . and inform each defendant
separately of the allegations surrounding his
alleged participation in the fraud. In the
context of a fraud suit involving multiple
defendants, a plaintiff must, at a minimum,
identif[y] the role of [each] defendant[] in
the alleged fraudulent scheme.
Swartz v. KPMG LLP, 476 F.3d 756, 764–65 (9th Cir.
2007) (alterations in Swartz) (internal quotation
marks and citations omitted); see also Meridian
Project Sys., Inc. v. Hardin Constr. Co., 404 F.
23
Supp. 2d 1214, 1226 (E.D. Cal. 2005) (“When fraud
claims involve multiple defendants, the complaint
must satisfy Rule 9(b) particularity requirements
for each defendant.” (citations omitted)).
Lindsay v. Bank of Am., N.A., Civil No. 12–00277 LEK–BMK, 2012 WL
5198160, at *10-11 (D. Hawai`i Oct. 19, 2012) (some alterations
in Lindsay).
Amended Count I alleges that “Defendants Gottlieb,
Hall, TVXA and GPE have defrauded Plaintiff by engaging in
written contractual agreements which specifically iterate the
responsibilities of persons, including Plaintiff Barker, and then
Defendants later attempted to change or abrogate entirely their
duties, and repeatedly attempt to replace such agreements with
new agreements.”
[Second Amended Complaint at ¶ 121.]
Even if
this Court liberally construes Amended Count I as alleging that
Defendants Gottlieb, Hall, TVXA and GPE fraudulently attempted to
alter certain agreements, the Second Amended Complaint does not
allege the time, place, and content of the fraud that each of
those defendants allegedly engaged in, including which specific
agreements that each defendant fraudulently attempted to alter.
The current factual allegations in this portion of Amended Count
I do not meet the heightened pleading standard for a fraud claim.
This Court, however, finds that it is arguably possible for
Plaintiff to cure the defects in this portion of Amended Count I.
Amended Count VI alleges that “Defendants Gottlieb and
Dubowsky have committed an ongoing practice of personal and
24
corporate malfeasance, including obtaining, using, and expending
of funds for conduct of matters of business . . . and keeping
secret, clandestine, making unauthorized and unapproved decisions
and expenditures.”
[Id. at ¶ 128.]
The Second Amended Complaint
does not allege the time, place, and content of the fraud that
Defendant Gottlieb and Defendant Dubowsky each engaged in,
including the specific fraudulent expenditures and decisions each
allegedly made.
The current factual allegations in Amended
Count VI do not meet the heightened pleading standard for a fraud
claim.
This Court, however, finds that it is arguably possible
for Plaintiff to cure the defects in Amended Count VI.
Amended Count V and the remainder of Amended Count I
allege that certain Defendants made fraudulent representations
about their ability to secure financing for the projects at issue
in this case.
[Id. at ¶ 120 (“Defendants Gottlieb, Borneman,
Hall, Dubowsky, TVXA, and GPE have enticed and fraudulently
caused Plaintiff Barker to believe that they intended to and were
capable of providing capital and financing such as would fund the
subject projects.”); id. at ¶ 127 (“Defendants Gottlieb,
Borneman, Hall, TVXA, and GPE have made multiple material
misrepresentations as to their availability and access to capital
in the amounts to which they had represented they were capable of
provided [sic] for the initiation and conduct of business of the
subject business enterprises.”).]
25
The current factual
allegations of these claims do not meet the heightened pleading
standard for fraud claims.
Moreover, this Court has stated that,
under Hawai`i law, “representations about future events are not
sufficient to support a fraud claim.”
Niutupuivaha v. Wells
Fargo Bank, N.A., Civil No. 13–00172 LEK–KSC, 2013 WL 3819600, at
*13 (D. Hawai`i July 22, 2013) (some citations omitted) (citing
Pancakes of Haw., Inc. v. Pomare Props. Corp., 85 Haw. 300, 312,
944 P.2d 97, 109 (Haw. App. 1997) (“The false representation [for
purposes of fraud], to be actionable, must relate to a past or
existing material fact, and not to the happening of future
events.
Generally, fraud cannot be predicated upon statements
that are promissory in their nature at the time they are made and
that relate to future actions or conduct.” (alteration in
Niutupuivaha)).
Thus, this Court finds that it is not possible
for Plaintiff to cure the defects in these claims by amendment.
Defendants’ Motion is GRANTED as to Amended Count V and
as to the portion of Amended Count I alleging fraud regarding the
future availability of financing.
WITH PREJUDICE.
Those claims are DISMISSED
Defendants’ Motion is GRANTED IN PART AND DENIED
IN PART as to Amended Count VI and the portion of Amended Count I
alleging fraudulent alteration of agreements.
Those claims are
DISMISSED WITHOUT PREJUDICE.
2.
Misappropriation of Corporate Funds
Amended Count VII alleges:
26
Defendants Gottlieb and, Dubowsky, along with the
tacit approval of Hall and Borneman, have
committed an ongoing practice of personal and
corporate misappropriation of corporate funds,
including obtaining, using, and expending of funds
for conduct of matters of business of the herein
relevant entities, and making private, secret from
Plaintiff Barker, and making clandestine and
unauthorized decisions and expenditures. . . .
[Second Amended Complaint at ¶ 130.]
This claim is similar to
Amended Count VI, but Amended Count VII does not sound in fraud,
and therefore this claim does not need to meet the heightened
pleading standard.
Defendants acknowledge that “[u]nder Hawai`i
law, ‘[i]t is fundamental that directors and officers must use
corporate funds for corporate purposes only or they will be
liable for misappropriation, diversion, or conversion of
corporate assets.’”
[Mem. in Supp. of Motion at 26 (quoting
Lussier v. Mau-Van Development, Inc., 4 Haw. App. 359, 371, 667
P.2d 804, 814 (Ct. App. 1983)).]
Defendants, however, argue that
Amended Count VII does not plead sufficient factual allegations
to meet the pleading standards of Iqbal and Fed. R. Civ. P.
8(a)(2).
[Id. at 26-27.]
This Court disagrees, assuming that
Plaintiff amends this count to allege the harm to his
distributional interest that he describes in his Supplemental
Memorandum.
If Plaintiff adds the allegations regarding the
damages to his distributional interests that the alleged
misappropriation of corporate funds caused, this Court would find
that Plaintiff’s misappropriation of corporate funds claim is
27
sufficiently pled.
Thus, this Court finds that further amendment
of Amended Count VII would not be futile.
Defendants’ Motion is GRANTED IN PART AND DENIED IN
PART as to Amended Count VII, which is DISMISSED WITHOUT
PREJUDICE.
3.
Tortious Interference
Amended Count XIV alleges:
Defendants Gottlieb, Borneman, Hall, Harris,
Dubowsky, TVXA and GPE have committed tortious
interference with the projects and opportunities
which have been conceived and brought forth by
Plaintiff Barker. Moreover, Defendants have
intentionally, and for purposes of their own
envisioned enrichment, interfered with and impeded
the personal and personal business prospects of
Plaintiff Barker, to the extreme prejudice and
financial harm to Plaintiff Barker. . . .
[Second Amended Complaint at ¶ 138.]
The Hawai`i Supreme Court has stated that:
The elements of the tort of intentional
interference with prospective business advantage
are:
(1) the existence of a valid business
relationship or a prospective advantage or
expectancy sufficiently definite, specific,
and capable of acceptance in the sense that
there is a reasonable probability of it
maturing into a future economic benefit to
the plaintiff; (2) knowledge of the
relationship, advantage, or expectancy by the
defendant; (3) a purposeful intent to
interfere with the relationship, advantage,
or expectancy; (4) legal causation between
the act of interference and the impairment of
the relationship, advantage, or expectancy;
and (5) actual damages.
28
Haw. Med. Ass’n v. Haw. Med. Serv. Ass’n, Inc.,
113 Hawai`i 77, 116, 148 P.3d 1179, 1218 (2006)
(quoting Robert’s Haw. Sch. Bus, Inc. v.
Laupahoehoe Transp. Co., 91 Hawai`i 224, 258, 982
P.2d 853, 887 (1999)).
Minton v. Quintal, 131 Hawai`i 167, 191, 317 P.3d 1, 25 (2013).
To the extent that Plaintiff attempts to allege a tortious
interference with prospective contractual relations claim, he
would have to establish these elements and the additional element
that the Defendants named in that claim “acted without proper
justification.”
See Whitey’s Boat Cruises, Inc. v. Napali–Kauai
Boat Charters, Inc., 110 Hawai`i 302, 317 n.25, 132 P.3d 1213,
1228 n.25 (2006) (“In addition to the elements required to
establish a claim for tortious interference with prospective
business advantage, a plaintiff asserting a claim for tortious
interference with prospective contractual relations must also
prove that ‘the defendant acted without proper justification.’”
(citation omitted)).
On a motion to dismiss, this Court need only determine
if there are sufficient factual allegations to support a
reasonable inference of liability.
Iqbal, 556 U.S. at 678.
The
current factual allegations of Amended Count XIV are not
sufficient to support a reasonable inference of liability either
as to: 1) the alleged interference with Plaintiff’s individual
prospective business advantage or Plaintiff’s prospective
contractual relations; or 2) the LLCs’ prospective business
29
advantage or the LLCs’ prospective contractual relations
(assuming that Plaintiff can amend this portion of his claim to
allege how his distributional interests in the LLCs’ assets were
harmed by the alleged interference).
This Court, however, finds
that it is arguably possible for Plaintiff to cure the defects in
Amended Count XIV by amendment.
Defendants’ Motion is GRANTED IN PART AND DENIED IN
PART as to Amended Count XIV, which is DISMISSED WITHOUT
PREJUDICE.
C.
Claims Regarding Plaintiff’s
Intellectual Property and Work Product
Amended Count XI alleges theft of Plaintiff’s
intellectual property, and Amended Count XII alleges theft of
Plaintiff’s work product.
Amended Count XI addresses seventeen
items, including, for example:
a.
The ideas, concepts, proprietary
information and opportunity to acquire the Haina
Mill property;
b.
The idea, concept, propriety information
and opportunity to construct and operate a biofuel
processing facility at Haina Mill;
. . . .
e.
The proprietary information and
opportunity to participate in a topsoil and
natural resource production operation;
f.
Information, proprietary documents and
opportunities regarding the forest resources on
the Hamakua Coast, at Pahala, Waiakea Forest, on
Hawaiian Home Lands, on Kamehameha School lands,
on Parker Ranch lands, on Kukaiau Ranch, and at
30
country and state lands.
. . . .
o.
economic information and proprietary
documents requested by Defendants used in their
evaluations of the various investments;
p.
Proprietary biomass and planting land
information requested from Plaintiff by
Defendants;
q.
And other of Plaintiff’s intellectual
property which has been obtained by the Defendants
from Plaintiff without due compensation by
Defendants.
[Second Amended Complaint at ¶¶ 135.a.-q.]
Amended Count XII
addresses seventeen items that are substantively identical to the
items identified in Amended Count XI.
[Id. at ¶¶ 136.a.-q.]
Plaintiff alleges that these items are either
intellectual property or personal work “belonging to, conceived
by, devised and invented by, and developed by the Plaintiff
Barker.”
[Id. at ¶¶ 135-36.]
Plaintiff alleges that Defendants
committed theft of these items, and others, and that Defendants
have not compensated him.
[Id.]
These portions of Amended Count
XI were part of Count XI in the original Complaint.
Amended
Count XII is a new claim.
As previously noted, Plaintiff, individually, was not a
party to the Agreements.
In the 10/16/13 Order, this Court
stated that “the state law claims appear to be based upon
activities that Plaintiff was involved in on behalf of the LLCs.
Neither the allegations in the Complaint nor the exhibits
31
attached thereto indicate that Plaintiff was acting on his own
behalf in the events at issue in this case.”
*7.
2013 WL 5675534, at
In the Second Amended Complaint, Plaintiff added the
following allegations to Count XI:
All of the lucrative prospective investments, the
Haina Mill real property, and the biomass, energy
and natural resource opportunities in Hawaii, and
the information, documents and analyses that
Defendants have attempted to usurp from Plaintiff
are the ideas, conceptions, intellectual property
and personal work product solely of Plaintiff
Barker. This has harmed Plaintiff by both the
failure of Defendants to compensate Plaintiff
Barker, as well as caused Plaintiff Barker to
suffer opportunity loss of extreme fiscal scale,
by Defendants [sic] actions having prevented
Plaintiff Barker from taking these opportunities
to project funders who are both honorable and
actually are capable of funding the project which
are the subject of this litigation.
[Second Amended Complaint at ¶ 135.]
includes these allegations.
Amended Count XII also
[Id. at ¶ 136.]
The original
Count XI alleged that Plaintiff created ideas and opportunities,
etc., for the Projects, but that the work belonged to him.
Thus,
the only new allegation is that Plaintiff lost fiscal
opportunities.
Plaintiff, however, has not cured the defects in
his theft of intellectual property claim because he has not
presented any allegations that Defendants agreed to compensate
him individually for the intellectual property that he created to
further the Projects.
The same defect applies to Plaintiff’s new
theft of work product claim.
This Court therefore concludes that
Amended Count XI and Amended Count XII each fails to state a
32
plausible claim for relief.
This Court must also determine whether allowing
Plaintiff to amend these claims would be futile.
The closest
cognizable tort claim under Hawai`i law to Amended Count XI and
Amended Count XII is conversion.
Conversion encompasses the following acts: “(1) A
taking from the owner without his consent; (2) an
unwarranted assumption of ownership; (3) an
illegal use or abuse of the chattel; and (4) a
wrongful detention after demand.” Tsuru v. Bayer,
25 Haw. 693, 696 (1920). The evidence presented
established a prima facie case that [the
Department of Hawaiian Home Lands (“DHHL”)]
committed acts (1) and (2) of this definition by
rounding up and selling Nobriga’s cattle without
his consent. DHHL emphasizes that it mistakenly
believed its actions were lawful. However,
conversion does not require wrongful intent. 18A
Am. Jur. 2d Conversion § 3 (2010); Federal Ins.
Co. v. Fries, 78 Misc. 2d 805, 355 N.Y.S.2d 741,
744 (N.Y. City Civ. Ct. 1974). “[T]he defendant’s
knowledge, intent, motive, mistake, and good faith
are generally irrelevant.” Morissette v. United
States, 342 U.S. 246, 253, 72 S. Ct. 240, 96 L.
Ed. 288 (1952). “So long as he [or she] intends
to deal with the property in a way which is in
fact inconsistent with the plaintiff’s right, he
[or she] is a converter.” Fries, 355 N.Y.S.2d at
744.
Freddy Nobriga Enters., Inc. v. Hawai`i Dep’t of Hawaiian Home
Lands, 129 Hawai`i 123, 129–30, 295 P.3d 993, 999–1000 (Ct. App.
2013) (some alterations in Freddy Nobriga Enters.).
This Court,
however, has ruled that “the tort claim of conversion does not
extend to the unauthorized taking of intangible property.”
J & J
Sports Prods., Inc. v. Alcantara, Civil No. 13–00220 LEK–RLP,
2014 WL 1669070, at *5 (D. Hawai`i Apr. 25, 2014).
33
Insofar as a
conversion claim alleging a taking of intellectual property or
work product14 is not cognizable under Hawai`i law, this Court
finds that further amendment of Amended Count XI and Amended
Count XII would be futile.
Defendants’ Motion is GRANTED as to Amended Count XI
and Amended Count XII, which are DISMISSED WITH PREJUDICE.
IV.
Summary and Leave to Amend
This Court has dismissed the following claims with
prejudice: the portion of Amended Count I alleging fraud
regarding the future availability of financing, Amended Count II,
Amended Count III, Amended Count IV, Amended Count V, Amended
Count VIII, Amended Count IX, Amended Count X, Amended Count XI,
Amended Count XII, and Amended Count XIII.15
This Court has dismissed the following claims without
prejudice: the portion of Amended Count I alleging fraudulent
alteration of agreements, Amended Count VI, Amended Count VII,
Amended Count XIV, and Amended Count XV.
14
Although documents that Plaintiff alleges he created are
tangible items, what he seeks to protect are the intangible
ideas, concepts, and opportunities memorialized in those
documents.
15
The dismissal with prejudice of Plaintiff’s claims which
this Court has found belong to the LLCs does not preclude the
LLCs from filing a separate action. This Court emphasizes that
it expresses no opinion as to the merit of such claims, if the
LLCs brought them.
34
This Court grants Plaintiff leave to file a third
amended complaint setting forth the claims that this Court has
dismissed without prejudice, if Plaintiff can amend those claims
to cure the defects identified in this Order.
Plaintiff shall
file his third amended complaint by no later than June 30, 2014.
This Court reminds Plaintiff that he must attach any exhibits
that he wishes to rely upon in the third amended complaint.
As
this Court has previously informed Plaintiff, he may not
incorporate by reference exhibits that he attached to prior
filings in this case.
See EO: Court Order Denying Plaintiff’s
Request for Judicial Notice of All Exhibits Currently Contained
in Court File, filed 12/5/13 (dkt. no. 49).
This Court emphasizes that Plaintiff does not have
leave to add new parties, claims, or theories of liability.
If
Plaintiff wishes to make other amendments, he must file a motion
showing good cause for an amendment to the Rule 16 Scheduling
Order because the deadline to add parties and amend pleadings was
May 9, 2014.
See Rule 16 Scheduling Order, filed 2/3/14 (dkt.
no. 61), at 2.
This Court CAUTIONS Plaintiff that, if he fails to file
his third amended complaint by June 30, 2014, or if the third
amended complaint fails to cure the defects identified in this
Order, the claims which this Court has dismissed without
prejudice will be dismissed with prejudice.
35
This Court will not
allow further amendments unless Plaintiff can demonstrate good
cause for his failure to cure the defects that this Court has
identified.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion to
Dismiss Second Amended Complaint, filed January 23, 2014, is
HEREBY GRANTED IN PART AND DENIED IN PART.
Plaintiff shall file
his third amended complaint, consistent with the terms of this
order, by no later than June 30, 2014.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, May 28, 2014.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
CHARLES BARKER, III VS. JOSHUA L. GOTTLIEB, ET AL; CIVIL 13-00236
LEK-BMK; ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION TO DISMISS SECOND AMENDED COMPLAINT
36
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