Frost-Tsuji Architects v. Highway Inn, Inc. et al

Filing 320

ORDER DENYING MOTION FOR RECONSIDERATION OF ORDER FILED ON AUGUST 26, 2014 re 232 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 10/27/2014. (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electro nic 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
FROST-TSUJI ARCHITECTS,

)
)
Plaintiff,
)
)
vs.
)
)
HIGHWAY INN, INC.; HO`OLA
)
MAU, LLC; BRYCE UYEHARA,
)
A.I.A., INCORPORATED; J.
)
KADOWAKI, INC.; FESTIVAL
)
MANAGEMENT CORPORATION; et
)
al,
)
)
Defendants.
)
_____________________________ )

CIVIL NO. 13-00496 SOM/BMK
ORDER DENYING MOTION FOR
RECONSIDERATION OF ORDER
FILED ON AUGUST 26, 2014

ORDER DENYING MOTION FOR RECONSIDERATION
OF ORDER FILED ON AUGUST 26, 2014
I.

INTRODUCTION.
Plaintiff Frost-Tsuji Architects seeks reconsideration

of the order entered on August 26, 2014, granting summary
judgment against Frost-Tsuji on its copyright infringement claim
in Count IV of the Second Amended Complaint.

Frost-Tsuji claims

but does not establish clear error in the order.
No one disputes that Frost-Tsuji owns the copyright in
drawings it created for Defendant Highway Inn, Inc., depicting a
restaurant Highway Inn planned to build.

Even if the court

assumes that Highway Inn used those drawings to construct its
restaurant, Highway Inn clearly had a license to do that.

That

license is a complete defense to the copyright claim asserted in
Count IV for not only Highway Inn, but also for other Defendants
in this case.

The arguments raised in the motion for

reconsideration are unsupported by the record and contradict
admissions Frost-Tsuji previously made.1

While Frost-Tsuji urges

this court to interpret facts in its favor, this court has
already done that, nevertheless ruling against Frost-Tsuji.

In

connection with the underlying summary judgment proceeding,
Frost-Tsuji failed to provide this court with evidence supporting
its argument that there was a genuine issue of fact that needed
to be tried.

Accordingly, the court denies the motion for

reconsideration.
II.

FACTUAL BACKGROUND
Highway Inn and Frost-Tsuji entered into a letter

agreement dated December 1, 2012, requiring Frost-Tsuji to design
and oversee the development of a full-service restaurant in the
Kakaako area of Honolulu.

See ECF No. 56-4, PageID #s 472-73.

Pursuant to that agreement, Frost-Tsuji was to “coordinate and
manage [Highway Inn’s] consultant team and provide for Concept,
Schematic, Design Development and Construction Document Phases.”
Id., PageID # 472.

Frost-Tsuji agreed “to provide the

professional services outlined and listed above, for a NOT TO
EXCEED SUM of $97,500.”

Id., PageID # 473.

1

On October 3, 2014, Frost-Tsuji submitted its Reply
Memorandum is Support of its Motion for Reconsideration. See ECF
No. 296. Attached to this Reply were a number of exhibits. The
court disregards these exhibits, as Frost-Tsuji provides no
explanation as to why it is submitting evidence for the first
time that it had in its possession before the cross-motions for
summary judgment were even filed.
2

In the present reconsideration motion, Frost-Tsuji
argues that Highway Inn’s use of the drawings Frost-Tsuji created
for the restaurant was conditioned on Frost-Tsuji’s continued
involvement in the project.

But such a condition is neither

supported by nor reasonably inferable from the record.

At best,

the letter agreement contemplates Frost-Tsuji’s involvement in
construction of the restaurant, as it states, “Construction
Administration to Certificate of Occupancy is also included in
our fees.”

Id. (emphasis added).

This is not, however,

equivalent to conditioning use of Frost-Tsuji’s architechtural
drawings on such involvement.
Clearly, Frost-Tsuji owns the copyrights to its
drawings.

The letter agreement states that, “per AIA standard

contract, Architect’s drawings, specifications, and all design
work are ‘instruments of service’, and all copyrights to all
items designed are for the specific jobsite address only, and
design copyrights, formulas, custom furniture, fixtures or
fabrics remain under the ownership of the Architect.”

Id.

The parties contemplated replacing the letter agreement
with a formal contract.

Frost-Tsuji was supposed to “convert”

the letter agreement “into a Standard AIA Short Form Contract
between Architect and Owner, not later than December 31, 2012.”
Id.

Frost-Tsuji did not meet that deadline.

3

Nor did it send a

proposed formal contract to Highway Inn before creating and
delivering the architectural drawing for Highway Inn.2
The January 25, 2013, drawing states:
ALL DOCUMENTS ARE FOR PRICING ONLY AND NOT
FOR CONSTRUCTION:
All Contract Documents, Drawings,
Specifications, Calculations, are released
for PRICING ONLY and are NOT FOR
CONSTRUCTION, and remain under the SOLE
OWNERSHIP and COPYRIGHT of the ARCHITECT and
the CONSULTANTS.
It also states, “© ALL DRAWINGS, DIGITAL FILES, AND WRITTEN
MATERIAL APPEARING HEREIN CONSTITUTE THE ORIGINAL AND UNPUBLISHED
WORDS OF THE ARCHITECT AND THE SAME WAY MAY NOT BE DUPLICATED,
USED OR DISCLOSED WITHOUT THE WRITTEN CONSENT OF THE ARCHITECT IN
ADVANCE OF USE.”

It is not surprising that that drawing stated

that it was “FOR PRICING ONLY AND NOT FOR CONSTRUCTION,” as it
did not contain the stamp required by the version of Hawaii
Administrative Rule 16-115-9 in effect at the time for filing the
drawing with a public official.

See Haw. Admin. R. § 16-115-9

(effective August 29, 1994, as amended on October 26, 2001, and

2

The court is inferring that Frost-Tsuji actually delivered
the drawing. Frank H. Frost, of Frost-Tsuji, says that Oversized
Exhibit N is a plan dated January 25, 2013. See Declaration of
Frank H. Frost ¶ 16, ECF No. 56-3, PageID # 471 (a digital copy
of that plan is located in the record as ECF No. 135-5, PageID
# 1393). Frost-Tsuji claims that, after it was terminated, the
next architect hired by Highway Inn continued to use that
drawing. Id. Frost-Tsuji’s argument that Highway Inn is
improperly using its January 25, 2013, drawing in violation of
its copyright rights suggests that Frost-Tsuji delivered the
drawing to Highway Inn.
4

May 23, 2013) (requiring an architect’s stamp whenever a design
drawing is “filed with public officials”).

It therefore appears

that Highway Inn could not have gotten a permit to build the
restaurant without submitting plans that were “stamped” by an
architect.
Only after creating the drawing did Frost-Tsuji, on
February 1, 2013, propose a formal contract.

See Declaration of

Monica Toguchi ¶ 11, ECF No. 177-1, PageID # 1779.

The proposed

contract was not based on a standard AIA contract with the words
“Short Form” in its title, although the letter agreement had
referred to conversion into a “Standard AIA Short Form Contract.”
In any event, it is undisputed that the proposed formal contract
was not executed by Highway Inn.
III.

RECONSIDERATION STANDARD.
Frost-Tsuji seeks reconsideration of an interlocutory

order.

That is, Frost-Tsuji seeks reconsideration of an order

granting partial summary judgment on a single claim that left
other claims for further adjudication.

Accordingly, the

reconsideration motion is governed by Local Rule 60.1, which
allows such motions based on “(a) Discovery of new material facts
not previously available; (b) Intervening change in law; and
(c) Manifest error of law or fact.”

“Mere disagreement with a

previous order is an insufficient basis for reconsideration.”
White v. Sabatino, 424 F. Supp. 2d 1271, 1274 (D. Haw. 2006).

5

“Whether or not to grant reconsideration is committed to the
sound discretion of the court.”

Id. (internal quotation marks

omitted).
IV.

FROST-TSUJI’S MOTION FOR RECONSIDERATION IS DENIED.
A.

Highway Inn Had a License to Use the Architectural
Drawings Created by Frost-Tsuji.

Frost-Tsuji initially contends that this court erred in
determining that Highway Inn had an implied nonexclusive license
to use Frost-Tsuji’s architectural drawings in connection with
the building of its restaurant.

Frost-Tsuji argues that it

conditioned Highway Inn’s use of the drawings on Frost-Tsuji’s
continued involvement with the construction project.

The problem

with this argument is that it is not supported by the record and
is at odds with the position previously taken by Frost-Tsuji.
Conspicuously lacking from the record is any affidavit or
declaration from any Frost-Tsuji representative indicating that
Frost-Tsuji never intended that Highway Inn use its drawings if
Frost-Tsuji was off the project.

Frost-Tsuji’s earlier position

in its Motion for Partial Summary Judgment on Count IV, ECF No.
55, was that the parties intended the “AIA standard contract” to
govern their relationship and that, pursuant to section 7.3 of
that document, Highway Inn had been granted a nonexclusive
license to use Frost-Tsuji’s drawings provided that
Highway inn “substantially perform[ed] its obligations, including
prompt payment of all sums when due.”
6

See ECF No. 55-1, PageID

# 438.

Frost-Tsuji also argued that, when it terminated its

relationship with Highway Inn on May 10, 2014, for nonpayment,
the license it granted to Highway Inn terminated pursuant to
section 7.3 of the standard AIA contract.

Id., PageID # 440.

Given those arguments, Frost-Tsuji’s argument in the present
reconsideration motion that it never intended to grant a
nonexclusive license to Highway Inn is hard to accept.
Even if the court ignores what appears to be FrostTsuji’s earlier concession that it did give Highway Inn a license
to use its drawings, Highway Inn has established as a matter of
law that it had such a license.

In the reconsideration motion,

Frost-Tsuji agrees that the court properly adopted the Ninth
Circuit’s test for determining when an implied license is
granted.
# 2975.

See Motion for Reconsideration, ECF No. 232, PageID
Such a license is granted when “(1) a person (the

licensee) requests the creation of a work, (2) the creator (the
licensor) makes that particular work and delivers it to the
licensee who requested it, and (3) the licensor intends that the
licensee-requestor copy and distribute his work.”

Asset

Marketing Sys., Inc. v. Gagnon, 542 F.3d 748, 754-55 (9th Cir.
2008) (quotation marks and citation omitted).

With respect to

the intent element in the third prong, Gagnon notes that “[t]he
relevant intent is the licensor’s objective intent at the time of
the creation and delivery of the [copyrighted work] as manifested

7

by the parties’ conduct.”

Id. at 756.

Relevant factors in

determining intent include:
(1) whether the parties were engaged in a
short-term discrete transaction as opposed to
an ongoing relationship; (2) whether the
creator utilized written contracts . . .
providing that copyrighted materials could
only be used with the creator’s future
involvement or express permission; and
(3) whether the creator’s conduct during the
creation or delivery of the copyrighted
material indicated that use of the material
without the creator’s involvement or consent
was permissible.
Id. (quoting John G. Danielson, Inc. v. Winchester-Conant Props.,
Inc., 322 F.3d 26, 41 (1st Cir. 2003)).
In moving for reconsideration, Frost-Tsuji focuses on
the third prong, arguing that it did not intend to grant a
license absent its ongoing participation in the restaurant
project.

See id., PageID # 2977 (“Because of the ongoing

relationship contemplated under the architectural contract,
[Frost-Tsuji] never manifested the intent to grant [Highway Inn]
a nonexclusive license to use [Frost-Tsuji’s] Copyrighted
Works.”).

But Frost-Tsuji did not condition Highway Inn’s use of

the drawings on Frost-Tsuji’s continued involvement in the
project.

The only executed contract, the letter agreement,

stated that Frost-Tsuji would provide “Concept, Schematic, Design
Development and Construction Document Phases.”

It then indicated

that “Construction Administration to Certificate of Occupancy is
also included in our fees.”

Id. (emphasis added).
8

ECF No. 56-4,

PageID # 473.

“Including” construction administration in the fee

is not the same as conditioning the use of the architectural
drawings on Frost-Tsuji’s continued involvement with the project.
At most, based on its written contract, Frost-Tsuji had an
expectation that it would be involved throughout construction.
As Gagnon notes, courts may examine unexecuted
contracts “as evidence of the intent of the party submitting the
contract” to determine whether the parties intended that a
license be given to use a copyrighted work.
756.

Gagnon, 542 F.3d at

Given Frost-Tsuji’s admission in its motion for summary

judgment that it intended to grant Highway Inn a license to use
its copyrighted works based on the standard AIA contract
language, Frost-Tsuji cannot persuasively argue that it had no
such intent given its expectation of involvement in the whole
project.

In other words, the unexecuted standard AIA contract

that Frost-Tsuji heavily relies on objectively demonstrates its
intent to provide Highway Inn with a license to use Frost-Tsuji’s
copyrighted works.
Nor is the court persuaded that Frost-Tsuji’s conduct
at the time it delivered the drawings to Highway Inn indicates
that it did not grant a license to Highway Inn.

When Frost-Tsuji

delivered the drawings to Highway Inn, Frost-Tsuji wrote on those
drawings, “FOR PRICING ONLY AND ARE NOT FOR CONSTRUCTION,” also
noting that the drawings “MAY NOT BE DUPLICATED, USED OR

9

DISCLOSED WITHOUT THE WRITTEN CONSENT OF THE ARCHITECT IN ADVANCE
OF USE.”

See Oversized Exhibit N.

The language on the document

therefore clearly indicates that Frost-Tsuji intended Highway Inn
to use the drawing “FOR PRICING.”

At a minimum, this language

indicates that Frost-Tsuji intended that Highway Inn have some
use of the drawings.

Nevertheless, given Frost-Tsuji’s previous

argument that its license was revoked, the court is not persuaded
by the argument in this reconsideration motion that the language
on the copyrighted works indicates that no license was ever
intended to be given.
Even when the court turns to the issue of whether
Frost-Tsuji revoked the license it gave to Highway Inn to use the
copyrighted works, the court finds Frost-Tsuji’s analysis
unpersuasive.

As the court noted in its order granting partial

summary judgment, Highway Inn paid a substantial amount of money
for the drawings at issue.

Under Effects Assocs., Inc. v. Cohen,

908 F.2d 555, 558-59 (9th Cir. 1990), full payment is not a
condition precedent to a determination that an implied
nonexclusive license exists.

Because Highway Inn paid

substantial consideration for the license, the license it
received to use Frost-Tsuji’s work was irrevocable.
542 F.3d at 757.

See Gagnon,

In other words, Frost-Tsuji could not simply

revoke the license, which is what its motion for reconsideration
claims it did.

See ECF No. 232-1, PageID # 2993.

10

The court concluded in its order granting partial
summary judgment in favor of Defendants on the copyright claim
that the terms of the standard AIA contract were not incorporated
by reference into the letter agreement.
# 2879-80, 2889.

See ECF No. 222, PageID

For the reasons discussed below, Frost-Tsuji’s

motion for reconsideration does not persuade the court otherwise.
Nevertheless, even assuming that the terms of the standard AIA
contract indicate Frost-Tsuji’s intent with respect to the
license, those terms do not demonstrate that Frost-Tsuji limited
the license in any meaningful way.
Under section 9.5 of the supposed standard AIA
contract, Highway Inn would have had the right to terminate the
agreement “upon not less than seven days’ written notice . . .
without cause.”

This court determined that Highway Inn

terminated its contract with Frost-Tsuji via an e-mail of April
25, 2013, ECF No. 56-10, PageID # 522, and that, at the latest,
that termination became effective seven days later.
222, PageID # 2894.

See ECF No.

Frost-Tsuji’s motion for reconsideration

does not contest this determination.

Instead, Frost-Tsuji

ignores that determination and argues that it subsequently
terminated the relationship for nonpayment pursuant to section
9.4 of the proposed contract in a writing dated May 3, 2013, that
was effective on May 10, 2013.

See Declaration of Bennett J.

Chin ¶ 6, ECF No. 56-2, PageId # 465.

11

Frost-Tsuji says that,

under section 7.3 of the proposed formal contract, its
termination of the relationship for cause put an end to any
license it had granted Highway Inn to use its copyrighted works.
See ECF No. 56-7, PageID # 509.

However, because Highway Inn had

already terminated the relationship, Frost-Tsuji cannot be said
to have terminated the relationship such that the court should
apply the section of the unexecuted agreement governing
termination for cause.

Under section 11.9 of the proposed

agreement, because Highway Inn had terminated the agreement, it
had the right to pay a licensing fee for the continued use of the
copyrighted works.

See ECF No. 56-7, PageID # 514.

Admittedly, nothing in the record suggests that Highway
Inn has paid a licensing fee for the continued use of FrostTsuji’s drawings.

This is by no means dispositive.

This court

previously determined that the proposed contract that was based
on the standard AIA document was not incorporated by reference
into the letter agreement.

Certainly, at the time it executed

the letter agreement in December 2012, Highway Inn could not have
known what the licensing fee would be in the event of a
termination of the relationship, as that license fee is not part
of the standard AIA contract.

See ECF No. 222, PageID # 2869.

The copyrighted work was apparently delivered to Highway Inn on
or about January 25, 2013.

See Oversized Exhibit N; Decl. of

Frank H. Frost, ¶ 16, ECF No. 56-3, PageID # 471 (indicating that

12

Oversized Ex. N is a copy of the plans dated January 25, 2013).
Even if Frost-Tsuji intended to charge such a license fee in the
event Highway Inn terminated the relationship, Frost-Tsuji did
not disclose that intent or what the fee would be until it
subsequently sent the proposed contract to Highway Inn on
February 1, 2013.

See ECF No. 56-7, PageID #s 498, 514.

This

court is unpersuaded by any argument that, for Highway Inn to
continue to use the copyrighted works, it had to pay a license
fee that was not even proposed to Highway Inn until after the
copyrighted work had been delivered, especially when Highway Inn
never executed the proposed agreement.
B.

Frost-Tsuji Waived the Argument that it Restricted
the Scope of the License it Granted to Highway
Inn.

In its motion for summary judgment on Count IV, ECF No.
55, and in its opposition to the cross-motion for summary
judgment on Count IV, ECF No. 198, Frost-Tsuji admitted that it
granted a license to Highway Inn to use its copyrighted work but
argued that it revoked that license.

Frost-Tsuji did not argue

that it restricted the scope of the license through the language
on the copyrighted work that limited its use to pricing and
stated that the work was not for construction.

On this motion

for reconsideration, Frost-Tsuji now argues that, when it
delivered the copyrighted work to Highway Inn, it restricted use

13

of the copyrighted work to pricing only and prohibited its use in
construction.

Frost-Tsuji has waived this argument.

Under Local Rule 7.4, “Any argument raised for the
first time in the reply shall be disregarded.”

If Frost-Tsuji

could not make a new argument for the first time in its reply in
support of its motion for summary judgment, it certainly cannot
do so after filing that reply.

Frost-Tsuji’s belated attempt to

restrict the scope of the license is unavailing.
Even if Frost-Tsuji had not waived the argument, FrostTsuji would not prevail with that argument.

Frost-Tsuji intended

to grant a license to Highway Inn to use its copyrighted designs
under the proposed contract it sent to Highway Inn in February
2013, after it delivered the copyrighted work to Highway Inn in
January 2013.

For example, in its motion for summary judgment,

Frost-Tsuji wrote, “Prior to Frost-Tsuji’s termination, [Highway
Inn’s] license to use the Plans depended on its payment for
services.

Since [Highway Inn] did not pay Frost-Tsuji, it lost

its license to use the Plans.

Moreover, no one had a license to

copy or use the Plans following Frost-Tsuji’s termination.”

ECF

No. 55-1, PageID # 448.
In the order granting summary judgment to Defendants on
Count IV, this court agreed that Frost-Tsuji had granted a
license to Highway Inn to use the drawings.

Although the court

disagrees with Frost-Tsuji’s assertion that the proposed contract

14

governs the license granted to Highway Inn, the court views the
proposed contract as objectively demonstrating Frost-Tsuji’s
intent to grant a license to Highway Inn to use those drawings.
Highway Inn’s implied nonexclusive license to use the drawings is
a complete defense to the copyright claim asserted in Count IV.
This court has already ruled that the proposed contract did not
govern the parties’ relationship, and that even if Highway Inn
made only partial payment for services rendered under the letter
agreement, that did not affect the license given.

Instead, to

the extent Frost-Tsuji is owed money under the contract, FrostTsuji has state-law claims for nonpayment.

See ECF No. 222,

PageID #s 2886-88.
In any event, Frost-Tsuji’s drawing dated January 25,
2013, was not the actual drawing used in constructing the
restaurant.

That drawing lacked the requisite stamp for

submission to government officials and therefore could not have
been used to obtain a building permit for construction of the
restaurant.

Interpreting the facts in the light most favorable

to Frost-Tsuji, the court may assume that someone, possibly the
new architect, Bryce E. Uyehara, used Frost-Tsuji’s January 25,
2013, drawing as a starting point in creating the drawing that
was eventually stamped by Uyehara and used in the construction of
the restaurant.

See Oversized Ex. N.

A comparison of Frost-

Tsuji’s and Uyehara’s drawing indicates that Frost-Tsuji’s

15

drawings was not simply photocopied, its copyright management
information erased, and Uyehara’s stamp added.

See id.

Instead,

even if Frost-Tsuji’s account is correct, Frost-Tsuji’s design
appears at most to have possibly been relied on for the ultimate
design of the restaurant, which was, according to Frost-Tsuji,
“substantially similar” to its copyrighted work.

See ECF No. 55,

PageID # 446-47.
Highway Inn had a license to use the January 25, 2013,
drawing, and that license was not limited by a notation that the
drawing was not to be used in construction.

Frost-Tsuji has not

given the court any evidence showing why that notation was placed
on the document.

Certainly, there can be no dispute that, at the

time the document was delivered by Frost-Tsuji to Highway Inn,
Frost Tsuji intended the drawing to be the design of the
restaurant and intended to prepare a subsequent version of the
drawing for use in the construction of the restaurant.

Any

expectation by Frost-Tsuji that it would continue to be involved
in the project and would receive more payment does not negate the
license it gave to Highway Inn to use its drawing.
C.

The Entire Standard AIA Contract Was Not
Incorporated By Reference Into the Letter
Agreement.

In the order granting summary judgment in favor of
Defendants on Count IV, the court determined that the letter
agreement did not incorporate the terms of the standard AIA

16

contract into it.

Nothing in the reconsideration motion

justifies a different result.
The letter agreement mentions the standard AIA contract
in three places.

First, in the paragraph regarding termination,

the letter agreement states, “Any termination of this Agreement
shall be per AIA Standard Contract language which is either party
may terminate this agreement at any time with 7 day written
notice.”

Second, in the paragraph regarding copyrights, it

states, “Note that per AIA standard contract, Architect’s
drawings, specifications, and all design work are ‘instruments of
service’, and all copyrights to all items designed are for the
specific jobsite address only, and design copyrights . . . remain
under the ownership of the architect.”

Third, the letter

agreement states that Frost-Tsuji “will convert this Letter
Agreement into a Standard AIA Short Form Contract between
Architect and Owner, not later than December 31, 2012.”
No. 56-4, PageID # 473.

See ECF

As the court previously held, this does

not mean that Highway Inn agreed to every term contained in the
standard AIA form contract, as Highway Inn could not have known
how the blanks in the standard AIA form contract would be filled
out.

If the parties had intended to have the standard form

govern their relationship, they could have executed the standard
form, rather than a letter agreement.

Highway Inn is not bound

by the terms of the lengthy standard AIA contract that were not

17

incorporated into the letter agreement.

See ECF No. 222, PageID

# 2879.
Frost-Tsuji contends that the court erred in
determining that the record does not disclose the parties’ intent
as to how to read the termination language in the letter
agreement, arguing that there is a genuine issue of fact as to
whether the termination language contained in the standard AIA
contract was incorporated by reference into the letter agreement
by the language “shall be per AIA Standard Contract language
which is either party may terminate this agreement at any time
with 7 day written notice.”
order.

Frost-Tsuji misconstrues the court’s

The court’s order recognized that factual issues should

be tried but noted that it had before it no declaration,
affidavit, deposition testimony, or other evidence that might
enable the trier of fact to determine what the parties intended
by the termination language in the letter agreement.

It was that

circumstance that caused the court to apply the rule of last
resort–-interpreting the ambiguous language against the drafter.
See ECF No. 222, PageID # 2891-92.
Frost-Tsuji had it within its power to submit evidence,
if it existed, as to what it intended by the termination language
in the letter agreement.

It is because Frost-Tsuji failed to

identify the evidence it would have introduced at trial that the
court construed the ambiguous language against it.

18

In so ruling,

the court did not render meaningless any material term of the
letter agreement.

The court simply interpreted the ambiguous

language of that agreement based on a longstanding rule governing
the construction of contract terms when there is no evidence
establishing the intent of the parties.
The letter agreement referred to converting it into a
“Standard AIA Short Form Contract between Architect and Owner.”
Frost-Tsuji says that AIA Document B101-2007 is that document.
AIA Document B101-2007 is a “Standard Form of Agreement Between
Owner and Architect.”

See ECF No. 56-5.

Even if this document

is the “Short Form Contract” referred to in the letter agreement,
and even if this document governed the relationship between
Frost-Tsuji and Highway Inn, Frost-Tsuji would not be entitled to
a different ruling from this court.
Under section 7.3 of that contract, the architect
grants the owner a nonexclusive license to use the copyrighted
work “provided that the Owner substantially performs its
obligations, including prompt payment of all sums when due.”
Under that section, read in conjunction with sections 9.1 and
9.4, when the architect terminates the agreement for nonpayment,
the license terminates.

See ECF No. 56-5, PageID #s 486-89.

The

standard AIA contract also provides that the owner may terminate
the agreement on seven days’ written notice for the owner’s
convenience and without cause.

Id., PageID # 489.

19

In the court’s order granting summary judgment in favor
of Defendants on Count IV, the court determined that Highway Inn
terminated its relationship with Frost-Tsuji, effective at the
latest on May 3.

See ECF No. 222, PageID # 2894.

This is

consistent with Frost-Tsuji’s admission in its opposition to the
motion for summary judgment: “On April 25, 2013, [Highway Inn]
attempted to terminate the Letter Agreement without proper
notice. . . .

The termination became effective on May 3, 2013,

in accordance with the terms of the Letter Agreement . . . .”
ECF No. 198, PageID # 2167.

Accordingly, Frost-Tsuji’s attempt

to terminate the agreement effective May 10, 2013, had no legal
effect, as the relationship had already been terminated.

Frost-

Tsuji is therefore unpersuasive in arguing that, under section
7.3 of the standard AIA contract, the license it granted to
Highway Inn terminated when Frost-Tsuji terminated the agreement
for nonpayment.
Nor can Frost-Tsuji rely on section 11.9 of the
standard AIA agreement as requiring Highway Inn to pay a license
fee for the continued use of the copyrighted work after Highway
Inn terminated the relationship.

That license fee was not

identified at the time of the letter agreement.
5, PageID # 491.

See ECF No. 56-

Accordingly, even if the standard form AIA

contract was incorporated by reference into the Letter Agreement,
Highway Inn was not on notice of what, if any, license fee would

20

be required under section 11.9 of the standard agreement.

There

was simply no meeting of the minds on this point.
In part, section 7.3 of the standard AIA contract,
states that an owner has a license to use copyrighted works so
long as it “substantially performs its obligations, including
prompt payment of all sums when due.”
# 486.

ECF No. 56-5, PageID

It is not at all clear that this part of section 7.3 was

incorporated by reference into the letter agreement.

Although

section 7.3 is in the section of the alleged standard form
governing copyrights, see ECF No. 56-5, PageID # 486, the letter
agreement says only that Frost-Tsuji is the owner of the
copyright of the drawings and mentions nothing about licenses.
See ECF No. 56-4, PageID # 473.

The reference in the letter

agreement to a future conversion into a standard short form AIA
agreement hardly appears sufficient to incorporate the total of
section 7.3 into the letter agreement.

See ECF No. 222, PageID

# 2879-80.
At most, based on section 7.3 of the standard AIA
contract, Frost-Tsuji can argue that it intended that Highway Inn
have a license to use the copyrighted work only if Highway Inn
“substantially perform[ed] its obligations, including prompt
payment of all sums when due.”

ECF No. 56-5, PageID # 486.

However, as discussed above, once a nonexclusive license is
implied, that license becomes irrevocable upon payment of

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substantial consideration, even if full payment is not made.
Frost-Tsuji’s remedy is not under copyright law, but under a
state contract law.
There is no dispute that, at the time the drawing was
delivered to Highway Inn in January 2013, Highway Inn had been
paying its bills.

On or about February 6, 2013, Frost-Tsuji sent

Highway Inn a bill for $25,286.56, which Highway Inn paid the
same day.

See ECF Nos. 177-10 and -11, PageId #s 1935, 1937.

Frost-Tsuji’s own accounting indicates that Highway Inn paid a
subsequent bill of $17,912 and that the total Highway Inn paid
was $81,620.98, $54,400 of which was for services contemplated by
the letter agreement.

See ECF No. 56-12, PageID # 527.

Highway

Inn therefore paid a substantial amount, giving it an irrevocable
license to use the copyrighted works delivered to it.
D.

The Court Did Not Err in Determining that FrostTsuji Had Agreed to Allow Ho`ola Mau, Highway
Inn’s LLC, to Run the Restaurant.

Frost-Tsuji argues that this court erred in determining
that Ho`ola Mau did not violate its copyright.

The court

disagrees.
Frost-Tsuji contends that, at the time the letter
agreement was signed in December 2012, it did not know of Highway
Inn’s intention to create Ho`ola Mau LLC and to use that entity
to run its restaurant.

See Declaration of Frank H. Frost ¶ 11,

ECF No. 199-2, PageID # 2197.

Even if true, that does not mean

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that Highway Inn could not transfer its license to use the
copyrighted works to its LLC or that Ho`ola Mau did not itself
have an implied nonexclusive license granted to it by FrostTsuji.

Monica Toguchi explained that Frost-Tsuji eventually

understood that the restaurant would be placed in the name of an
LLC.

See Declaration of Monica Toguchi ¶ 9, ECF No. 177-1,

PageID # 1778.

On or about February 11, 2013, Wendy Tsuji, of

Frost-Tsuji, sent Toguchi an e-mail asking for the final legal
name that would appear on the drawings and specifications.
ECF No. 177-6, PageID # 1883.

See

That e-mail asked whether the name

was going to be “your new LLC.”

Id.

Toguchi responded the same

day that “The LLC is Ho`ola Mau but has not been registered.”
Id., PageID # 1886.

This certainly suggests that Frost-Tsuji and

Highway Inn came to an agreement to allow Ho`ola Mau to use the
copyrighted works in building the restaurant.
In the motion for reconsideration, Frost-Tsuji disputes
any such agreement, contending that it actually prohibited Ho`ola
Mau from using the drawings.
supports that argument.

No timely submitted evidence

Frost-Tsuji now submits for the first

time evidence that was in its possession at the time of the
original motions.

Such evidence does not justify reconsideration

of the order on the original motions.

Local Rule 60.1(a) allows

reconsideration based on new material facts only when those facts
were not previously available.

Not only does Frost-Tsuji fail to

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show that the new evidence was previously unavailable, FrostTsuji offers no explanation at all for its tardy submission of
the material.

Accordingly, the court does not consider the e-

mail exchange attached as Exhibit C to the motion for
reconsideration, ECF No. 232-5.
Frost-Tsuji’s motion for reconsideration appears to be
arguing that its written acceptance of Ho`ola Mau was a necessary
prerequisite to a determination that Ho`ola Mau had a license to
use the copyrighted works.

But the Ninth Circuit has ruled that

nonexclusive licenses “‘may be granted orally, or may even be
implied from conduct.’”

Effects Assocs., Inc. v. Cohen, 908 F.2d

555, 558 (9th Cir. 1990) (quoting 3 M. Nimmer & D. Nimmer, Nimmer
on Copyright § 10.03[A], at 10-36 (1989)).

This court’s

determination that Highway Inn was permitted to transfer its
license to use Frost-Tsuji’s copyrighted work to Ho`ola Mau was
based on Frost-Tsuji’s own conduct.

See ECF No. 222, PageID

# 2895-97l.
V.

CONCLUSION.
Because Frost-Tsuji fails to demonstrate any reason

this court should reconsider its previous order granting summary
judgment in favor of Defendants on Count IV, Frost-Tsuji’s motion
for reconsideration, ECF No. 232, is denied.

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IT IS SO ORDERED.
DATED: Honolulu, Hawaii, October 27, 2014.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

Frost-Tsuji Architects v. Highway Inn, Inc., et al., Civ. No. 13-00496 SOM/BMK; ORDER
DENYING MOTION FOR RECONSIDERATION OF ORDER FILED ON AUGUST 26, 2014

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