Barber v. Ohana Military Communities, LLC

Filing 104

ORDER GRANTING DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL MANAGEMENT, INC.'S 88 MOTION TO DISMISS PLAINTIFFS' FOURTH CLAIM IN THE 76 SECOND AMENDED CLASS ACTION COMPLAINT FOR DAMAGES AND INJUNCTIVE RE LIEF (ECF No. 88). Signed by JUDGE HELEN GILLMOR on 5/12/2015. ~ Defendants Ohana Military Communities, LLC, and Forest City Residential Management, Inc.'s Motion to Dismiss Plaintiffs' Fourth Claim in the Second Ame nded Class Action Complaint for Damages and Injunctive Relief (ECF No. 88 ) is GRANTED. Plaintiffs' Fourth Claim for Relief for Unfair & Deceptive Trade Practices pursuant to Haw. Rev. Stat. § 480 is DISMISSED WITH PREJUDICE. (ecs, )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

CARA BARBER, MELISSA JONES,
MELISSA STREETER, KATIE
ECKROTH, BOB BARBER, TIM
JONES, RYAN ECKROTH, on behalf
of themselves and all others
similarly situated,
Plaintiffs,
vs.
OHANA MILITARY COMMUNITIES,
LLC; FOREST CITY RESIDENTIAL
MANAGEMENT, INC.; DOE
DEFENDANTS 1-10,
Defendants.
______________________________

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CIVIL NO. 14-00217 HG-KSC

ORDER GRANTING DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND
FOREST CITY RESIDENTIAL MANAGEMENT, INC.’S MOTION TO DISMISS
PLAINTIFFS’ FOURTH CLAIM IN THE SECOND AMENDED CLASS ACTION
COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF (ECF No. 88)

Plaintiffs are military families who have leased housing
from Defendants at Marine Corp Base Hawaii.

Plaintiffs claim

Defendants did not disclose the presence of pesticides in the
soil before leasing housing to the military families.
Defendants Ohana Military Communities, LLC, and Forest
City Residential Management, Inc. move to dismiss Count IV
contained in the Plaintiffs’ Second Amended Complaint pursuant
to Federal Rule of Civil Procedure 12(b)(1).
1

Defendants

assert Plaintiffs lack standing to bring a claim pursuant to
the Hawaii Unfair and Deceptive Trade Practices Act because
Plaintiffs are not consumers and they have not purchased a
good or service.
Defendants Ohana Military Communities, LLC and Forest
City Residential Management, LLC’s Motion to Dismiss
Plaintiffs’ Fourth Claim in the Second Amended Class Action
Complaint for Damages and Injunctive Relief (ECF No. 88) is
GRANTED.

PROCEDURAL HISTORY

On April 3, 2014, Plaintiffs Cara Barber, Melissa Jones,
Melissa Streeter, and Katie Eckroth, on behalf of themselves
and all others similarly situated, filed a Complaint in the
Circuit Court of the First Circuit, State of Hawaii.
(Complaint, attached as Ex. A. to Defendants’ Notice of
Removal, ECF No. 1-4).
On May 6, 2014, Defendants Ohana Military Communities,
LLC, and Forest City Residential Management, Inc. removed the
state court action to the United States District Court,
District of Hawaii.

(ECF No. 1).

On May 13, 2014, Defendants filed “DEFENDANTS OHANA
MILITARY COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL
2

MANAGEMENT, LLC’S MOTION TO DISMISS PLAINTIFFS’ CLASS ACTION
COMPLAINT FOR DAMAGES.”

(ECF No. 8).

Also on May 13, 2014, Defendants filed “DEFENDANTS OHANA
MILITARY COMMUNITIES, LLC AND FOREST CITY RESIDENTIAL
MANAGEMENT, INC.’S REQUEST FOR JUDICIAL NOTICE IN SUPPORT OF
THEIR MOTION TO DISMISS PLAINTIFFS’ CLASS ACTION COMPLAINT FOR
DAMAGES.”

(ECF No. 9).

On June 26, 2014, a hearing was held on the Defendants’
Motion to Dismiss and Request for Judicial Notice in Support
of its Motion to Dismiss.

(ECF No. 22).

On July 15, 2014, the Court issued an ORDER GRANTING IN
PART AND DENYING IN PART DEFENDANTS OHANA MILITARY
COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL MANAGEMENT,
INC.’S MOTION TO DISMISS WITH LEAVE TO AMEND AND GRANTING
DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND FOREST CITY
RESIDENTIAL MANAGEMENT, INC.’S REQUEST FOR JUDICIAL NOTICE.
(ECF No. 24).

The Order permitted Plaintiffs to file an

Amended Complaint by August 29, 2014.

(Id. at p. 32).

The

Court also ordered the Parties to appear before the Magistrate
Judge in order to structure a mediation consistent with the
mediation provision contained in the lease documents of the
Parties.

(Id. at p. 34).

On August 29, 2014, Plaintiffs filed a FIRST AMENDED

3

CLASS ACTION COMPLAINT FOR DAMAGES & INJUNCTIVE RELIEF.

(ECF

No. 25).
On October 10, 2014, the Parties filed a JOINT
STIPULATION REGARDING MEDIATION.

(ECF No. 29).

On October 29, 2014, Plaintiffs filed a MOTION FOR CLASS
CERTIFICATION.

(ECF No. 32).

On December 18, 2014, the Magistrate Judge issued
FINDINGS AND RECOMMENDATION TO DENY WITHOUT PREJUDICE
PLAINTIFFS’ MOTION FOR CLASS CERTIFICATION.

(ECF No. 51).

On January 8, 2015, the Court issued an ORDER ADOPTING
MAGISTRATE JUDGE’S FINDINGS AND RECOMMENDATION.

(ECF No. 70).

On January 20, 2015, Plaintiffs filed SECOND AMENDED
CLASS ACTION COMPLAINT FOR DAMAGES & INJUNCTIVE RELIEF.
No. 76).

(ECF

The Second Amended Complaint added Bob Barker, Tim

Jones, and Ryan Eckroth as named members of the Plaintiffs’
Class.

(Id.)

On February 19, 2015, Defendants filed DEFENDANTS OHANA
MILITARY COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL
MANAGEMENT, LLC’S MOTION TO DISMISS PLAINTIFFS’ FOURTH CLAIM
IN THE SECOND AMENDED CLASS ACTION COMPLAINT FOR DAMAGES AND
INJUNCTIVE RELIEF.

(ECF No. 88).

On March 19, 2015, Plaintiffs filed PLAINTIFFS’
OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS PLAINTIFFS’ FOURTH

4

CLAIM IN THE SECOND AMENDED COMPLAINT FOR DAMAGES AND
INJUNCTIVE RELIEF.

(ECF No. 95).

On April 9, 2015, Defendants filed their Reply.

(ECF No.

98).
On April 24, 2015, Plaintiffs filed a Letter of
Previously Uncited Authorities.

(ECF No. 99).

Also on April 24, 2015, Defendants filed their Notice of
Supplemental Authorities.

(ECF No. 100).

On April 30, 2015, a hearing was held on Defendants’
Motion to Dismiss Claim IV.
BACKGROUND

The representatives of the Plaintiffs’ Class are military
services members or the spouses of military service members
who have leased private residential property at Marine Corp
Base Hawaii.

(Second Amended Class Action Complaint (“SAC”)

at ¶¶ 5-9, ECF No. 76).

The Plaintiffs state that they are

class representatives that include “[a]ll former and present
persons who have leased or resided in residential property
from Ohana [Military Communities, LLC] at Marine Corp Base
Hawaii in Kaneohe, Hawaii, from 2006 to the present.”
¶ 15).

(Id. at

The Complaint claims that the Plaintiffs’ Class

“consists of thousands of current and former tenants.”
at ¶ 16).
5

(Id.

Plaintiffs allege that Defendant Ohana Military
Communities, LLC (“Defendant Ohana Communities”) is a private
corporation that owns the housing at Marine Corp Base Hawaii.
(Id. at ¶¶ 21-23).

Plaintiffs assert that Defendant Forest

City Residential Management, Inc. (“Defendant Forest City
Management”) acts as the agent for Defendant Ohana Communities
and leases the private housing at Marine Corp Base Hawaii.
(Id. at ¶ 23).
Plaintiffs assert that before Defendants obtained the
housing at Marine Corp Base Hawaii in 2006, they had knowledge
that the soil was contaminated with pesticides and presented
health risks.

(Id. at ¶¶ 27-32).

Plaintiffs state that the United States Environmental
Protection Agency (“EPA”) has formulated a system of
regulatory levels for assessing risk from pesticide residues
in soil.

(Id. at ¶ 29).

Plaintiffs claim that the Defendants

knowingly maintained the soil at Marine Corp Base Hawaii above
the recommended regulatory levels for pesticides as identified
by the EPA.

(Id. at 29, 31-36).

Plaintiffs allege the Defendants did not disclose the
presence of pesticide-contaminated soils before leasing
housing to them.

(Id. at ¶¶ 30, 36-37, 39).

Plaintiffs

assert that the presence of pesticide-contaminated soils at

6

Marine Corp Base Hawaii has presented increased health risks
to them.

(Id. at ¶¶ 29, 39).

Plaintiffs’ Fourth Claim in their Second Amended
Complaint alleges the Defendants violated the Hawaii Unfair
and Deceptive Trade Practices Act, Haw. Rev. Stat. § 480-2, et
seq.

(SAC at ¶¶ 71-81).

Plaintiffs claim that they are

“consumers” pursuant to Haw. Rev. Stat. § 480-1, because they
“have personally invested their resources to lease military
housing from Defendants.”

(Id. at ¶ 73).

Defendants seek to dismiss Plaintiffs’ Claim for Unfair
and Deceptive Trade Practices pursuant to Haw. Rev. Stat. §
480.

(ECF No. 88).

Defendants assert Plaintiffs lack

standing to bring a claim pursuant to Haw. Rev. Stat. § 480
because Plaintiffs are not “consumers” as they have not
purchased a good or service, and they have not made a personal
investment.

LEGAL STANDARDS

A plaintiff has the burden of proving that subject matter
jurisdiction does in fact exist.

Thornhill Publ’g Co., Inc.

v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir.
1979).

Standing pertains to the court’s subject matter

jurisdiction and is analyzed pursuant to Fed. R. Civ. P.

7

12(b)(1).

White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000).

Federal Rule of Civil Procedure 12(b)(1) requires that a
case must be dismissed for lack of subject matter jurisdiction
when the Court lacks a constitutional or statutory basis to
adjudicate the controversy.

Fed. R. Civ. P. 12(b)(1); Leeson

v. Transamerica Disability Income Plan, 671 F.3d 969, 975 (9th
Cir. 2012).
A challenge to the Court’s subject matter jurisdiction
may be “facial or factual.”

Safe Air for Everyone v. Meyer,

373 F.3d 1035, 1039 (9th Cir. 2004).

In a facial attack, the

party challenging jurisdiction argues that the allegations
contained in a complaint are insufficient “on their face” to
invoke federal jurisdiction.

Id.

A facial challenge,

therefore, mirrors a traditional motion to dismiss analysis.
The Court must take all allegations contained in the pleading
“to be true and draw all reasonable inferences in [its]
favor.”

Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir.

2004).
In a factual attack, the party challenging jurisdiction
argues that the facts in the case, notwithstanding the
allegations in the Complaint, divest the Court of subject
matter jurisdiction.

See White v. Lee, 227 F.3d 1214, 1242

8

(9th Cir. 2000).

No presumptive truthfulness attaches to the

Complaint’s allegations.

Id.

The party challenging

jurisdiction presents “affidavits or other evidence properly
brought before the court” indicating that subject matter
jurisdiction is lacking.

Savage v. Glendale Union High Sch.,

343 F.3d 1036, 1039 n.2 (9th Cir. 2003).

The burden then

shifts to “the party opposing the motion [to] furnish
affidavits or other evidence to satisfy its burden of
establishing subject matter jurisdiction.”

Id.; Colwell v.

Dep’t of Health and Human Serv., 558 F.3d 1112, 1121 (9th Cir.
2009).

Failure to present suitable evidence establishing

subject matter jurisdiction necessitates dismissal.

Moore v.

Maricopa Cnty. Sheriff’s Office, 657 F.3d 890, 895 (9th Cir.
2011).

ANALYSIS
I.

Plaintiffs Lack Standing to Bring a Claim Pursuant to
Hawaii’s Unfair and Deceptive Trade Practices Act, Haw.
Rev. Stat. § 480

Standing is a critically important jurisdictional
limitation.

It is an essential and unchanging part of the

case-or-controversy requirement of Article III of the United
States Constitution.

Lujan v. Defenders of Wildlife, 504 U.S.

555, 560 (1992).

9

Standing is gauged by the specific common law, statutory,
or constitutional claims that a party presents and determines
whether the particular plaintiff is entitled to an
adjudication of the particular claims asserted.

Int’l Primate

Prot. League v. Adm’r. of Tulane Educ. Fund, 500 U.S. 72, 77
(1991).

A plaintiff must demonstrate standing for each claim

and each form of relief sought.

Davis v. Fed. Elec. Comm’n,

554 U.S. 724, 734 (2008).
Plaintiffs’ Second Amended Complaint states that the
Defendants failed to disclose that the soil at Marine Corp
Base Hawaii was contaminated with pesticides before leasing
residences to the Plaintiffs’ Class.

Count IV in Plaintiffs’

Second Amended Complaint alleges that Defendants’ actions were
violations of Hawaii’s Unfair or Deceptive Acts and Practices
laws (“UDAP”), as provided in Haw. Rev. Stat. § 480.
Defendants assert that this Court should dismiss Count IV
contained in Plaintiffs’ Second Amended Complaint.

Defendants

argue that Plaintiffs do not have standing to bring a claim
pursuant to Haw. Rev. Stat. § 480.
Defendants bring a facial attack and argue that the
allegations contained in the Second Amended Complaint as to
Plaintiff’s Count Four for Unfair and Deceptive Trade
Practices are insufficient “on their face” to invoke

10

jurisdiction.

Safe Air for Everyone, 373 F.3d at 1039.

The

Court takes all allegations contained in the Second Amended
Complaint as true in order to determine whether Plaintiffs
have standing to bring a UDAP claim.

Wolfe, 392 F.3d at 362.

Section 480-2 of the Hawaii Revised Statutes outlaws
“unfair methods of competition and unfair or deceptive acts or
practices in the conduct of any trade or commerce.”
Stat. § 480-2.

Haw. Rev.

Only consumers, the attorney general, or the

director of the office of consumer protection may bring a UDAP
claim.

HRS § 480-2(d); Hawaii Med. Ass’n v. Hawaii Med. Serv.

Ass’n, Inc., 148 P.3d 1179, 1215-16 (Haw. 2006); HRS § 48013(b)(1).
The Hawaii state courts have repeatedly held that an
individual is not a consumer, and therefore has no standing to
sue pursuant to Haw. Rev. Stat. § 480-2, when that person has
not either:
(1)

purchased, attempted to purchase, or been solicited
to purchase goods or services from the defendant, or

(2)

committed money, property, or services in a personal
investment.

Hough v. Pacific Ins. Co., 927 P.2d 858, 871-72 (Haw.
1996); Hunt v. First Ins. Co. of Hawaii, Ltd., 922 P.2d 976,
986 (Haw. App. 1996); see also Dalesandro v. Longs Drug Stores
Cal., Inc., 383 F.Supp.2d 1244, 1248 (D. Haw. 2005).

11

1.

Plaintiffs Are Not Consumers Because Their
Transactions with Defendants Did Not Involve “Goods”
or “Services”
A.

Real Estate and Residences Are Not “Goods”
Pursuant to Haw. Rev. Stat. § 480

In Cieri v. Leticia Query Realty, Inc., 905 P.2d 29, 42
(Haw. 1995), the plaintiff brought a Hawaii state law claim
for Unfair or Deceptive Acts and Practices (“UDAP”), pursuant
to Haw. Rev. Stat. § 480.

The plaintiff brought the claim

against the seller of real property that they had purchased.
On appeal to the Hawaii Supreme Court, the defendant argued
that the plaintiff lacked standing to bring a UDAP claim,
asserting real estate transactions were not transactions
involving “goods” as defined by Hawaii law.

905 P.2d at 40.

The Hawaii Supreme Court agreed with the defendant on
appeal.

Id.

The Hawaii Supreme Court relied upon the

definition of “goods” as provided in Section 2-105 of the
Hawaii Uniform Commercial Code in examining the plaintiff’s
UDAP claim.

Cieri, 905 P.2d at 41.

Section 2-105(1) of the Hawaii Revised Statutes provides:
“Goods” means all things (including specially
manufactured goods) which are movable at the time of
identification to the contract for sale other than
the money in which the price is to be paid,
investment securities (Article 8) and things in
action. “Goods” also includes the unborn young of
animals and growing crops and other identified
things attached to realty as described in the
12

section on goods to be severed from realty (section
490:2-107).
Haw. Rev. Stat. 490: 2-105(1).

The Hawaii Supreme Court

found that real estate and residences are not “goods” for
purposes of bringing a UDAP claim.

Cieri, 905 P.2d at 40-41.

The appellate court held that the plaintiff lacked standing to
bring a UDAP claim on the basis that the underlying real
property transaction did not involve “goods.”

Id. at 41.

The

Hawaii Supreme Court explained that any reference to real
estate or residences was “conspicuously absent” from the
Hawaii Commercial Code’s definition of “goods.”

Id.

The

Court reasoned that transactions for real estate and
residences were not intended to be considered “goods” for a
UDAP claim.

Id.

Here, Plaintiffs have not purchased, attempted to
purchase, or been solicited to purchase “goods” from
Defendants.

A lease of rental property does not involve the

purchase of “goods” pursuant to Haw. Rev. Stat. § 480-1.
Cieri, 905 P.2d at 41; see also Kona Hawaiian Assoc. v.
Pacific Group, 680 F.Supp. 1438, 1453 (D. Haw. 1988) (finding
that a real estate transaction involving the sale of a hotel
is not a transaction involving goods or services).

B.

Leases for Rental Property Are Not “Goods or
“Services” Pursuant to Haw. Rev. Stat. § 480
13

Hawaii state courts have relied on the Hawaii Supreme
Court’s interpretation in Cieri and found that transactions
involving leases of rental property do not involve either
“goods” or “services” for purposes of bringing a UDAP claim
pursuant to Haw. Rev. Stat. § 480.

Fernandez v. Mark

Development, Inc., 262 P.3d 670, 2011 WL 5089808, *2 (Haw.
App. Oct. 25, 2011); Takayama v. Zera, 2010 WL 973484, *5
(Haw. App. Mar. 18, 2010); Smith v. Pink, 2010 Haw. App. Lexis
150 (Haw. App. Apr. 15, 2010); Joy A. McElroy, M.D., Inc. v.
Maryl Group, Inc., 114 P.3d 929, 941 (Haw. App. 2005).
The Hawaii Intermediate Court of Appeals has held that a
rental agreement is a transfer of real property for a
specified term, and not a “service” pursuant to Haw. Rev.
Stat. § 480-1.

Fernandez, 2011 WL 5089808, *2 (Haw. App. Oct.

25, 2011).
Three State Supreme Courts analyzing consumer protection
statutes that contain language similar to the Hawaii UDAP
statute, have also found that leases for rental property are
not transactions for “goods” or “services”.

See Roberson v.

Southwood Manor Assocs, LLC, 249 P.3d 1059, 1062 (Alaska
2011); Heritage Hills, Ltd. v. Deacon, 551 N.E.2d 125, 128
(Ohio 1990); see State v. Schwab, 693 P.2d 108, 113-14 (Wash.

14

1985) (en banc).
Plaintiffs rely on a number of out-of-circuit and out-ofstate opinions that involve consumer protection statutes that
contain language distinct from the Hawaii UDAP statute.

Most

of the statutes Plaintiffs cite to explicitly provide for a
cause of action that involves real property or rental
property.

The Hawaii Supreme Court found that the Hawaii

legislature explicitly omitted any reference to real property
in its statutes.

Cieri, 905 P.2d at 41.

Plaintiffs reliance

on non-binding precedent and cases interpreting statutes from
other jurisdictions is not persuasive.

a.

Haw. Rev. Stat. § 521-74.5 of the Hawaii
Landlord-Tenant Code Does Not Provide Plaintiffs
with Standing to Bring a Cause of Action
Pursuant to Haw. Rev. Stat. § 480-2

Plaintiffs contend that the Hawaii state legislature
intended for tenants with residential leases to have standing
to bring a claim pursuant to Haw. Rev. Stat. § 480-2.
Plaintiffs point to Haw Rev. Stat. § 521-74.5 of the Hawaii
Landlord-Tenant Code as a basis for their argument.
Haw. Rev. Stat. § 521-74.5 expressly provides for claims
pursuant to Haw. Rev. Stat. § 480-2 when the landlord
interrupts the tenant’s water, electricity, or other essential
service in order to recover possession of the property.
15

Section 521-74.5 of the Hawaii Landlord-Tenant Code states:
The landlord shall not recover or take possession of
a dwelling unit by the wilful interruption or
diminution of running water, hot water, or electric
gas, or other essential service to the tenant
contrary to the rental agreement or section 521-42,
except in the case of abandonment or surrender. A
landlord who engages in this act shall be deemed to
have engaged in an unfair method of competition or
unfair and deceptive acts or practices in the
conduct of any trade or commerce within the meaning
of section 480-2; provided that in addition to the
penalties available under section 480-3.1, there
shall also be minimum damages of three times the
monthly rent or $1,000, whichever is greater.
Haw. Rev. Stat. § 521-74.5 (emphasis added).
Haw. Rev. Stat. § 521-74.5 does not provide standing to
all tenants with residential leases to bring claims pursuant
to Haw. Rev. Stat. § 480-2.

The Hawaii legislature limited a

tenant’s ability to bring a UDAP claim based on the specific
acts listed in the statute.

Haw. Rev. Stat. § 521-74.5 allows

tenants to bring § 480-2 claims only as to “this act” of
“wilful interruption or diminution of running water, hot
water, or electric gas, or other essential service to the
tenant.”

Haw. Rev. Stat. § 521-74.5.

A basic principle of statutory construction is that a
negative inference may be drawn from the exclusion of language
from one statutory provision that is included in other
provisions of the same statute.

Barnhart v. Signmon Coal Co.,

Inc., 534 U.S. 438, 439-40 (2006.
16

In Russello v. United

States, 464 U.S. 12, 23 (1983), the United States Supreme
Court explained that where a legislature includes particular
language in one section of a statute but omits it in another
section, it is generally presumed that the legislature acted
intentionally and purposefully in the disparate inclusion or
exclusion.
The exclusion of references to Haw. Rev. Stat. § 480 from
any other provision of the Hawaii Landlord-Tenant Code
demonstrates that the Hawaii legislature intended to limit the
availability of UDAP claims to tenants with claims pursuant to
Haw. Rev. Stat. § 521-74.5.

Russello, 464 U.S. at 23.

Where

the Hawaii legislature wanted to provide tenants with the
ability to bring UDAP claims in the Hawaii-Landlord Tenant
Code, it did so explicitly.

Barnhart, 534 U.S. at 452-53.

The allegations in the Second Amended Complaint do not
claim that Plaintiffs’ water, electricity, or other essential
service were interrupted by the Defendants in order to recover
possession as provided in Haw. Rev. Stat. § 521-74.5.
Plaintiffs have not pled a claim pursuant to Haw. Rev. Stat. §
521-74.5 claim.

The Hawaii Landlord-Tenant Code does not

otherwise provide standing for a tenant to pursue a cause of
action pursuant to Haw. Rev. Stat. § 480-2.

b.

The Amenities Provided as Part of the
17

Plaintiffs’ Leases Do Not Qualify as “Services”
Pursuant to Haw. Rev. Stat. § 480

In their Opposition, Plaintiffs argue that their leases
included “services” that provide them with standing to bring a
claim pursuant to Haw. Rev. Stat. § 480-2.

Plaintiffs point

to the amenities that are provided as part of their leases
such as housing services, home maintenance, lawn services,
trash service, water and sewer services, community centers,
parks, and customer service.

(Pla’s Opposition at pp. 11-14,

ECF No. 95).
Plaintiffs have not pointed to any Hawaii cases that have
found that leases for rental properties that include amenities
confer the party with standing to bring a UDAP claim pursuant
to Haw. Rev. Stat. § 480.1

Hawaii state courts have

repeatedly found that residential leases do not confer
standing because they do not involve the purchase of a good or
a service.

Takayama, 2010 WL 973484, *5 (Haw. App. Mar. 18,

2010); Smith, 2010 Haw. App. Lexis 150, *3 (Haw. App. Apr. 15,

1

The Hawaii state case cited by Plaintiffs is unpublished
and non-citable pursuant to Haw. R. App. P. 35(c)(1) as it was
issued before July 1, 2008. The case does not address the
question of amenities as “services.” The case is otherwise
not persuasive as it did not address whether the lease
involved a “good” or “service” and the issue of standing was
not raised and not addressed. Watase v. Kapihe, 2008 WL
1904422, *2 (Haw. App. Apr. 30, 2008).
18

2010) (finding the plaintiffs lacked standing to bring a UDAP
claim because their rental of the defendant’s real property
did not involve the purchase of a good or service).
The California Court of Appeals has directly examined
Plaintiffs’ argument regarding amenities that are included as
a part of a tenant’s lease.

Freeman v. United Dominion Realty

Trust, Inc., 3008 WL 1838373, *9-10 (Cal. Ct. App. Cal. Rptr.
3d, May 6, 2008).
In Freeman, the plaintiff argued that he had standing to
bring a claim pursuant to the California consumer protection
statute because his residential lease included an array of
services include maintenance, lawn services, and a swimming
pool.

The California appeals court held that the services

included in the lease “were merely incidents of the landlordtenant relations; they did not change the fundamental nature
of the lease.”

Id. at *10.

The California Court of Appeal

held that the services provided by the landlord as part of the
lease did not provide the plaintiff with standing as a
“consumer” to sue pursuant to the California Consumer Legal
Remedies Act.

Id.

Just as in Freeman, the amenities included as part of
Plaintiffs’ leases are merely incidental to their leases and
do not qualify as “services” to confer them with standing.

19

The allegations in Plaintiffs’ Second Amended Complaint
do not involve the services discussed in Plaintiffs’
Opposition.

Plaintiffs’ allegations concern the failure of

Defendants to inform the tenants of the presence of pesticides
in the soil before Plaintiffs signed their leases.
(See Second Amended Complaint at ¶¶ 26-36, 74-78).

Plaintiffs

do not allege that the Defendants’ failed to provide the
amenities as part of their lease agreements.
Here, Plaintiffs have not purchased, attempted to
purchase, or been solicited to purchase “services” from
Defendants within the meaning of Haw. Rev. Stat. § 480-1.
Plaintiffs do not have standing to bring a UDAP claim.

2.

Plaintiffs Are Not Consumers Because Their
Transactions with Defendants Did Not Involve
“Personal Investments” Pursuant to Haw. Rev. Stat. §
480

Plaintiffs assert that even if their residential leases
do not qualify as “goods” or “services”, they allege in their
Second Amended Complaint they are consumers because they have
committed money, property, or services in a personal
investment pursuant to Haw. Rev. Stat. § 480-1.
In Cieri, the Hawaii Supreme Court held that although the
plaintiff’s purchase of real property was not the purchase of
a “good” for purposes of a UDAP claim, the plaintiff had
20

standing to bring a UDAP claim because he committed a personal
investment when he purchased real property.
44.

905 P.2d at 42-

The Hawaii Supreme Court reasoned that because the

purchase of a home is made with both an intent to reside on
the property and an intent to hold the property in
appreciation for its resale value, the plaintiff’s purchase of
real property qualified as a “personal investment” pursuant to
Haw. Rev. Stat. § 480-1.

Id. at 42.

The Hawaii Intermediate Court of Appeals has concluded
that the rental of a residence does not include the same
“personal investment” as the purchase of a residence.
Fernandez, 2011 WL 5089808, *2.

In Fernandez, the plaintiff

argued that she made a personal investment because her rental
contract included an option to purchase.

The Hawaii appeals

court held that because there was no evidence that the
plaintiff’s rental payments were applied toward the eventual
option to purchase her unit and because she never exercised
her option to buy the unit, she failed to demonstrate that she
had made a personal investment.

Id.; see McElroy, 114 P.3d at

942 (finding that improvements made to a leased commercial
space did not constitute a “personal investment” for a UDAP
claim).
Plaintiffs do not allege that they had any option to

21

purchase their units or that their lease agreements provided
for anything other than monthly payments of rent.

Monthly

payments of rent pursuant to a lease do not constitute a
personal investment for purposes of providing standing to
bring a UDAP claim.

Fernandez, 2011 WL 5089808, *2.

Just as in Fernandez, Takayama, and Smith, Plaintiffs
here lack standing to bring a UDAP claim based on their leases
for rental property.

Plaintiffs are not “consumers” within

the meaning of Haw. Rev. Stat. § 480-1 because their
residential leases did not involve the purchase of “goods,”
“services,” or “personal investments.”
A district court may dismiss a claim without granting
leave to amend where amendment would be futile.

Cervantes v.

Countrywide Home Loans, Inc., 656 F.3d 1034, 1041 (9th Cir.
2011).

Here, it is clear that no amendment can cure the

defects in Plaintiffs’ Fourth Claim in their Complaint
pursuant to Haw. Rev. Stat. § 480 and granting leave to amend
would be futile.

CONCLUSION

Defendants Ohana Military Communities, LLC, and Forest
City Residential Management, Inc.’s Motion to Dismiss
Plaintiffs’ Fourth Claim in the Second Amended Class Action

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Complaint for Damages and Injunctive Relief (ECF No. 88) is
GRANTED.
Plaintiffs’ Fourth Claim for Relief for Unfair &
Deceptive Trade Practices pursuant to Haw. Rev. Stat. § 480 is
DISMISSED WITH PREJUDICE.
IT IS SO ORDERED.
DATED: May 12, 2015, Honolulu, Hawaii.

/s/ Helen Gillmor
Helen Gillmor
United States District Judge

Cara Barber, Melissa Jones, Melissa Streeter, Katie Eckroth,
Bob Barber, Tim Jones, and Ryan Eckroth, on behalf of
themselves and all others similarly situated, v. Ohana
Military Communities, LLC; Forest City Residential Management,
Inc.; Doe Defendants 1-10; Civ. No. 14-00217 HG-KSC; ORDER
GRANTING DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND
FOREST CITY RESIDENTIAL MANAGEMENT, INC.’S MOTION TO DISMISS
PLAINTIFFS’ FOURTH CLAIM IN THE SECOND AMENDED CLASS ACTION
COMPLAINT FOR DAMAGES AND INJUNCTIVE RELIEF (ECF No. 88)
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