Barber v. Ohana Military Communities, LLC
Filing
24
ORDER Granting in Part and Denying in Part Defendants Ohana Military Communities, LLC, and Dorest City Residential Management, Inc.'s Motion To Dismiss 8 With Leave to Amend and Granting Defendants Ohana Military Communities, LLC, and Dorest C ity Residential Management, Inc.'s Request for Judicial Notice in Support of Their Motion To Dismiss 9 . Signed by JUDGE HELEN GILLMOR on 7/15/14. (gab, )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
)
)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
)
OHANA MILITARY COMMUNITIES,
)
LLC; FOREST CITY RESIDENTIAL
)
MANAGEMENT, INC.; DOE
)
DEFENDANTS 1-10,
)
)
Defendants.
)
_______________________________ )
CARA BARBER, MELISSA JONES,
MELISSA STREETER, KATIE
ECKROTH, on behalf of
themselves and all others
similarly situated,
CIVIL NO. 14-00217 HG-KSC
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS OHANA
MILITARY COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL
MANAGEMENT, INC.’S MOTION TO DISMISS (ECF No. 8) WITH LEAVE TO
AMEND
and
GRANTING DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND FOREST
CITY RESIDENTIAL MANAGEMENT, INC.’S REQUEST FOR JUDICIAL NOTICE
IN SUPPORT OF THEIR MOTION TO DISMISS (ECF No. 9)
Plaintiffs are military families who have leased housing
from Defendants at Marine Corp Base Hawaii between 2006 to the
present.
Plaintiffs filed a Class Action Complaint alleging that
Defendants failed to provide safe and healthy living conditions.
Plaintiffs contend that Defendants had knowledge that the soil at
1
the Marine Corp Base Hawaii was contaminated with pesticides.
Plaintiffs claim Defendants did not disclose the presence of the
pesticides before leasing housing to the military families.
Plaintiffs claim they attempted to mediate their disputes with
Defendants pursuant to the terms of their lease agreements, but
Defendants refused.
Plaintiffs seek injunctive relief, monetary damages,
attorneys fees and costs, disgorgement of profits, and punitive
damages.
Defendants Ohana Military Communities, LLC, and Forest City
Residential Management, Inc. move to dismiss the Complaint
pursuant to Federal Rules of Civil Procedure 8(a), 9(b), and
12(b)(6).
Defendants filed a Request for Judicial Notice in
support of their Motion to Dismiss.
Defendants’ Request for Judicial Notice in Support of their
Motion to Dismiss (ECF No. 9) is GRANTED.
Defendants’ Motion to Dismiss (ECF No. 8) is GRANTED IN PART
AND DENIED IN PART.
Plaintiffs are permitted LEAVE TO AMEND
their Complaint consistent with this Order.
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
2
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 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 5, 2014, Plaintiffs filed “PLAINTIFFS’ OPPOSITION TO
DEFENDANTS’ MOTION TO DISMISS CLASS ACTION COMPLAINT.”
(ECF No.
16).
On June 6, 2014, Plaintiffs filed an Errata to Exhibit 2 of
their Opposition to Defendants’ Motion to Dismiss.
(ECF No. 17).
On June 13, 2014, the Court issued a Minute Order informing
Plaintiffs that their Opposition and Errata failed to conform to
the District of Hawaii Local Rules.
(ECF No. 20).
The Court put
Plaintiffs on notice that any further filings that fail to
3
conform to the District of Hawaii Local Rules shall be stricken.
(Id.)
On June 19, 2014, Defendants filed “DEFENDANTS OHANA
MILITARY COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL
MANAGEMENT, LLC’S REPLY MEMORANDUM IN SUPPORT OF THEIR MOTION TO
DISMISS PLAINTIFFS’ CLASS ACTION COMPLAINT FOR DAMAGES.”
(ECF
No. 21).
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).
BACKGROUND
The representatives of the Plaintiff Class are spouses of
military service members who have leased residential property at
Marine Corp Base Hawaii.
(Complaint at ¶¶ 5-9, ECF No. 1-4).
The Class representatives state that the Plaintiffs include “all
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.”
(Id. at ¶ 14).
The Complaint claims that the
Plaintiff Class “consists of thousands of current and former
tenants.”
(Id. at ¶ 15).
Plaintiffs allege that Defendant Ohana Military Communities,
LLC (“Defendant Ohana Communities”) is a private corporation that
4
owns the housing at Marine Corp Base Hawaii.
21).
(Id. at ¶¶ 10, 20-
Plaintiffs assert that Defendant Forest City Residential
Management, Inc. (“Defendant Forest City Management”) acts as the
agent for Defendant Ohana Communities and leases the housing at
Marine Corp Base Hawaii.
(Id. at ¶ 22).
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, 28, 30, 33).
Plaintiffs allege
Defendants maintained soil contamination levels at Marine Corp
Base Hawaii above the limits identified in the EPA’s Tier 1 and
Tier 2 Environmental Action Levels. (Id. at ¶¶ 28, 33-36).
Plaintiffs allege the Defendants did not disclose the
presence of pesticide-contaminated soils before leasing housing
to them.
(Id. at ¶¶ 29, 32, 33).
Plaintiffs claim their leases
with Defendant Ohana Communities contain a mediation provision.
(Id. at ¶ 25(c)).
Plaintiffs allege that Defendants refused to
mediate their concerns about the presence of pesticides in the
soil. (Id. at ¶ 41).
Plaintiffs claim they sustained damages including
“overpayment of rent, future medical expenses, and medical
monitoring of their health and the health of their family
members.”
(Id. at ¶¶ 47, 68, 76, 86, 93, 104, 114, 125, 135).
Plaintiffs voluntarily withdrew Count II alleged in their
5
Complaint for tortious breach of contract.
ECF No. 16).
(Opposition at p. 13,
Plaintiffs seek injunctive relief, general,
special, treble, and consequential damages, fees and costs,
disgorgement of profits, and punitive damages.
(Complaint at pp.
22-23, ECF No. 1-4).
Defendants filed a Motion to Dismiss.
(ECF No. 8).
Defendants move to dismiss all claims against them pursuant to
Federal Rules of Civil Procedure 12(b)(6).
Defendants also move
to dismiss Plaintiffs’ claims for Unfair and Deceptive Practices,
Fraud, Intentional Misrepresentation, and Negligent
Misrepresentation pursuant to Rule 9(b), alleging these claims
were not pled with sufficient particularity.
LEGAL STANDARDS
The Court must dismiss a complaint as a matter of law
pursuant to Federal Rule of Civil Procedure 12(b)(6) where it
fails “to state a claim upon which relief can be granted.”
Rule
(8)(a)(2) of the Federal Rules of Civil Procedure requires “a
short and plain statement of the claim showing that the pleader
is entitled to relief.”
When considering a Rule 12(b)(6) motion
to dismiss, the Court must presume all allegations of material
fact to be true and draw all reasonable inferences in favor of
the non-moving party.
Cir. 1998).
Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th
Conclusory allegations of law and unwarranted
6
inferences are insufficient to defeat a motion to dismiss.
at 699.
Id.
The Court need not accept as true allegations that
contradict matters properly subject to judicial notice or
allegations contradicting the exhibits attached to the complaint.
Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th
Cir. 2001).
In Bell Atl. Corp. v. Twombly, the United States Supreme
Court addressed the pleading standards under the Federal Rules of
Civil Procedure in the anti-trust context.
550 U.S. 544 (2007).
The Supreme Court stated that Rule 8 of the Federal Rules of
Civil Procedure “requires more than labels and conclusions, and a
formulaic recitation of the elements of a cause of action,” and
that “[f]actual allegations must be enough to raise a right to
relief above the speculative level.”
Id. at 555.
Most recently, in Ashcroft v. Iqbal, the Supreme Court
clarified that the principles announced in Twombly are applicable
in all civil cases.
129 S.Ct. 1937 (2009).
The Court stated
that “the pleading standard Rule 8 announces does not require
‘detailed factual allegations,’ but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me-accusation.”
at 1949 (citing Twombly, 550 U.S. at 555).
Id.
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.
Id. (quoting Twombly, 550 U.S. at 570).
7
A claim has
facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the
defendant is liable for the misconduct alleged.
Twombly, 550 U.S. at 556).
Id. (citing
The plausibility standard is not akin
to a “probability requirement,” but it asks for more than a sheer
possibility that a defendant has acted unlawfully.
Twombly, 550 U.S. at 556).
Id. (quoting
Where a complaint pleads facts that
are “merely consistent with” a defendant’s liability, it “stops
short of the line between possibility and plausibility of
‘entitlement to relief.’”
Id. (quoting Twombly, 550 U.S.
at 557).
The complaint “must contain sufficient allegations of
underlying facts to give fair notice and to enable the opposing
party to defend itself effectively” and “must plausibly suggest
an entitlement to relief, such that it is not unfair to require
the opposing party to be subjected to the expense of discovery
and continued litigation.”
AE ex rel. Hernandez v. Cnty of
Tulare, 666 F.3d 631, 637 (9th Cir. 2012) (internal quotations
omitted).
Rule 9(b) Heightened Pleading Standard for Fraud Claims
Fraud claims must meet the heightened pleading standard of
Federal Rule of Civil Procedure 9(b).
See Almaden v. Peninsula
Mortg., Inc., 2012 WL 6738512, *3 (D. Haw. 2012).
8
Rule 9(b)
requires a party asserting a fraud claim to “state with
particularity the circumstances constituting fraud or mistake.”
Fed. R. Civ. P. 9(b).
The claim must be accompanied by the “who,
what, when, where and how” of the misconduct charged.
Kearns v.
Ford Motor Co., 567 F.3d 1120, 1124 (9th Cir. 2009) (internal
citation and quotation marks omitted).
A plaintiff “must state
the time, place and specific content of the false representations
as well as the identities of the parties to the
misrepresentation.”
Alan Neuman Productions, Inc. v. Albright,
862 F.2d 1388, 1393 (9th Cir. 1988).
The circumstances
constituting fraud must be “specific enough to give defendants
notice of the particular misconduct ... so that they can defend
against the charge and not just deny that they have done anything
wrong.”
Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1106 (9th
Cir. 2003) (quoting Neubronner v. Milken, 6 F.3d 666, 672 (9th
Cir. 1993)).
ANALYSIS
I.
DEFENDANTS’ REQUEST FOR JUDICIAL NOTICE
Federal Rule of Evidence 201 allows a court to take judicial
notice of public documents.
Almaden v. Peninsula Mortg., Inc.,
2012 WL 6738512, *1, n.1 (D. Haw. 2012).
Federal Rule of Civil Procedure 12(b)(6) allows a court to
accept and consider extrinsic materials offered in connection
9
with a motion to dismiss without converting the motion into one
for summary judgment.
Davis v. HSBC Bank Nevada, N.A., 691 F.3d
1152, 1160 (9th Cir. 2012).
Defendants request the Court take judicial notice of two
documents:
(1)
The Hawaii Department of Health’s “Technical Guidance
Manual for the Implementation of the Hawaii State
Contingency Plan,” (Ex. A, ECF No. 9), and
(2)
The Hawaii Department of Health’s “Evaluation of
Environmental Hazards at Sites with Contaminated Soil
and Groundwater.” (Ex. B, ECF No. 9).
Both documents are public records from the Hawaii Department
of Health.
Courts may take judicial notice of a state agency’s
public records.
Disabled Rights Action Committee v. Las Vegas
Events, Inc., 375 F.3d 861, 866 n.1 (9th Cir. 2004).
Defendants’ Request for Judicial Notice in Support of Their
Motion to Dismiss (ECF No. 9) is GRANTED.
II.
DEFENDANTS’ MOTION TO DISMISS
Count I: Breach of Contract
A breach of contract claim requires a plaintiff to identify:
(1) the contract at issue; (2) the parties to the contract; (3)
whether the plaintiff performed under the contract; (4) the
particular provision of the contract allegedly violated by the
defendant; (5) when and how the defendant allegedly breached the
10
contract; and (6) how the plaintiff was injured.
Evergreen
Eng’rg, Inc. v. Green Energy Team LLC, 884 F.Supp.2d 1049, 1059
(D. Haw. 2012).
A.
Breach of Contract Claim Against Ohana Communities
Plaintiffs, in Count I of the Complaint, allege a claim for
breach of contract against Defendant Ohana Communities.
The
Complaint identifies the parties and the contracts at issue.
The
Complaint alleges the contracts at issue are the lease agreements
entered into between Plaintiffs and Defendant Ohana Communities
to lease military housing at Marine Corp Base Hawaii.
at ¶ 43, ECF No. 1-4).
(Complaint
Plaintiffs claim that they performed
under the contracts by paying rent.
(Id. at ¶¶ 44, 47).
Plaintiffs’ Complaint states Defendant Ohana Communities
violated two particular provisions of their leases.
First, the
Complaint alleges Defendant Ohana Communities violated the lease
agreements by failing to provide safe and habitable housing.
(Id. at ¶¶ 45, 46(b); Lease at ¶ 12, ECF No. 17-1).
Second, the
Complaint asserts that Defendants failed to mediate with
Plaintiffs’ concerns about the safety of the conditions at Marine
Corp Base Hawaii.
(Complaint at ¶ 46(d), ECF No. 1-4; Lease at ¶
34, ECF No. 17-1).
1.
Failure to Provide Safe and Habitable Housing
11
Plaintiffs claim their leases were breached when Defendant
Ohana Communities failed to disclose the presence of pesticidecontaminated soils at Marine Corp Base Hawaii and exposed
military families to increased risks of health problems.
(Complaint at ¶¶ 39, 46(a)-(b), ECF No. 1-4).
The class
representatives provide the months and years that they began
leasing their residences at Marine Corp Base Hawaii.
(Id. at ¶¶
6-9).
A breach of contract claim requires an allegation that the
plaintiff suffered an injury.
Nottage v. Bank of New York
Mellon, 2012 WL 5305506, *8 (D. Haw. Oct. 25, 2012); see Aguilera
v. Pirelli Armstrong Tire Corp., 223 F.3d 1010, 1015 (9th Cir.
2000).
Plaintiffs sufficiently allege injuries for the breach of
contract.
Plaintiffs claim they overpaid rent as a result of the
Defendant Ohana Communities’ failure to provide safe and
habitable housing.
(Complaint at ¶ 39, ECF No. 1-4).
Defendants’ Motion to Dismiss Count I for Breach of Contract
to provide safe and habitable housing as to Defendant Ohana
Communities is DENIED.
2.
Failure to Mediate
The Complaint does not sufficiently state a claim for breach
of contract based on Defendant Ohana Communities’ failure to
mediate.
The Complaint does not state when Defendant Ohana
12
Communities failed to mediate with Plaintiffs.
41).
(Id. at ¶¶ 40-
The Complaint does not provide the date when Plaintiffs
requested a mediation or informed Defendant Ohana Communities
that it was invoking the provision in their leases.
The Complaint does not identify the representatives they
contacted from Defendant Ohana Communities.
Plaintiffs do not
provide any date when Defendant Ohana Communities allegedly
refused to engage in mediation with them.
Plaintiffs’ claim
against Ohana Communities with respect to their alleged breach of
contract as to the mediation provision lacks particularity.
Defendants’ Motion to Dismiss Count I for Breach of Contract
for failure to mediate as to Defendant Ohana Communities is
GRANTED.
Plaintiffs’ claim for breach of contract for failure to
mediate as to Defendant Ohana Communities, alleged in Count I of
the Complaint, is DISMISSED WITH LEAVE TO AMEND.
B.
Breach of Contract Claim Against Forest City Management
Plaintiffs, in Count I of the Complaint, attempt to allege a
claim for breach of contract against Defendant Forest City
Management.
(Complaint at ¶ 43, ECF No. 1-4).
Defendant Forest City Management is not a party to the
Leases.
(Lease at ¶ 1, ECF No. 17-1).
The Leases explain that
Defendant Forest City Management manages the property on behalf
13
of Defendant Ohana Communities.
(Id.)
The Complaint does not provide sufficient information about
the relationship between Plaintiffs, Defendant Forest City
Management, and Defendant Ohana Communities.
The Complaint does
not state facts about any obligation Defendant Forest City
Management has to Plaintiffs because of its relationship with
Defendant Ohana Communities.
The provisions in the Lease
identified by Plaintiffs do not refer to any obligations that
Defendant Forest City Management has to Plaintiffs.
12, 34).
(Id. at ¶¶
Plaintiffs have not alleged any other contract between
themselves and Defendant Forest City Management.
Plaintiffs have
not articulated a claim against Forest City Management for breach
of contract.
Defendants’ Motion to Dismiss Count I for Breach of Contract
as to Defendant Forest City Management is GRANTED.
Plaintiffs’ claim for breach of contract against Defendant
Forest City Management, alleged in Count I of the Complaint, is
DISMISSED WITH LEAVE TO AMEND.
Count II: Tortious Breach of Contract
Plaintiffs have withdrawn Count II for Tortious Breach of
Contract.
(Opposition at p. 13, ECF No. 16).
Plaintiffs concede
that the cause of action for tortious breach of contract is not
recognized pursuant to Hawaii law.
14
Francis v. Lee Enterprises,
Inc., 971 P.2d 707, 717 (Haw. 1999).
Defendants’ Motion to Dismiss Count II is GRANTED.
Plaintiffs’ claim for tortious breach of contract, alleged
in Count II of the Complaint, is DISMISSED WITH PREJUDICE.
Count III: Breach of Warranty of Habitability
A property owner breaches the implied warranty of
habitability if he leases his property with a defect or unsafe
condition that is “of a nature and kind which will render the
premises unsafe, or unsanitary and thus unfit for living.”
Armstrong v. Cione, 736 P.2d 440, 445 (Haw. Ct. App. 1987); Lemle
v. Breeden, 462 P.2d 470, 474 (Haw. 1969) (recognizing the
doctrine of implied warranty of habitability and finding rat
infestation of leased premises constituted a breach).
The leased
premises must be substantially unsuitable for living so that the
breach of the warranty would constitute a constructive eviction
of the tenant.
A.
Armstrong, 736 P.2d at 445.
Breach of Warranty of Habitability Claim Against Ohana
Communities
Plaintiffs’ Complaint sufficiently alleges that Defendant
Ohana Communities violated the doctrine of implied warranty of
habitability.
The Complaint alleges that Defendant Ohana
Communities leased the premises it owned to Plaintiffs and the
15
premises contained unsafe conditions.
The Complaint states
Defendants “failed to warn military families of pesticidecontaminated soils” and “knowingly and intentionally exposed
military families at [Marine Corp Base Hawaii] to higher rates of
cancer and other adverse health outcomes.”
ECF No. 1-4).
(Complaint at ¶ 39,
Plaintiffs’ allegations are sufficient to state a
claim for breach of warranty of habitability.
Defendants’ Motion to Dismiss Count III as to Defendant
Ohana Communities is DENIED.
B.
Breach of Warranty of Habitability Claim Against Forest
City Management
Plaintiffs have not sufficiently alleged a claim for breach
of warranty of habitability against Defendant Forest City
Management.
Plaintiffs have not stated that Defendant Forest
City Management was an owner of their residences or otherwise
owed a duty to them sufficient to state a claim for breach of
warranty of habitability.
Defendants’ Motion to Dismiss Count III as to Defendant
Forest City Management is GRANTED.
Plaintiffs’ claim for breach of warranty of habitability
against Defendant Forest City Management, alleged in Count III of
the Complaint, is DISMISSED WITH LEAVE TO AMEND.
Count IV: Violations of Hawaii Landlord-Tenant Code
16
Plaintiffs, in Count IV of the Complaint, allege Defendants
violated the Hawaii Landlord-Tenant Code, pursuant to Sections
521-10 and 521-42(a)(1) of the Hawaii Revised Statutes (“HRS”).
The Hawaii Landlord-Tenant Code defines “landlord” as “the owner,
lessor, sublessor, assigns or successors in interest of the
dwelling unit or the building of which it is a part and in
addition means any agent of the landlord.”
HRS § 521-8.
Plaintiffs claim Defendant Ohana Military Communities is the
owner of their residences at Marine Corp Base Hawaii and that
Defendant Forest City Management is the agent.
A.
HRS § 521-10
HRS § 521-10 imposes a duty upon landlords and tenants to
act in good faith.
Plaintiffs claim Defendants breached their duty to act in
good faith when leasing the housing at Marine Corp Base Hawaii.
Plaintiffs assert Defendants failed to disclose the soil at
Marine Corp Base Hawaii was contaminated with pesticides.
(Complaint at ¶¶ 73-74, ECF No. 1-4).
B.
HRS § 521-42(a)(1)
HRS § 521-42(a)(1) requires a landlord to “comply with all
applicable building and housing laws materially affecting health
and safety.”
HRS § 521-42(a)(1) is the Hawaii state statutory
codification of the implied warranty of habitability.
Plaintiffs allege the Defendants breached their duty to
17
provide healthy and safe housing pursuant to the Hawaii LandlordTenant Code.
(Complaint at ¶ 73, ECF No. 1-4).
The Complaint
states Defendants “intentionally and knowingly exposed Class
Plaintiffs and their families to increased health risks for
cancer and other adverse health outcomes without their knowledge
and against their will.”
(Id.)
Plaintiffs have sufficiently stated a claim against
Defendants for violating Hawaii’s Landlord-Tenant code pursuant
to HRS §§ 521-10, 42(a)(1).
Defendants’ Motion to Dismiss Count IV for violating the
Hawaii Landlord-Tenant code is DENIED.
Count V:
Unfair & Deceptive Trade Practices
Plaintiffs allege that Defendants failed to disclose that
the soil at Marine Corp Base Hawaii was contaminated with
pesticides before leasing residences to the Plaintiff class.
Plaintiffs assert Defendants violated Hawaii’s Unfair and
Deceptive Trade Practices Act (“UDAP”), HRS § 480-2, based on
these allegations.
Section 480-2 outlaws “unfair methods of competition and
unfair or deceptive acts or practices in the conduct of any trade
or commerce.”
HRS § 480-2.
A practice is unfair when it
“offends established public policy and when the practice is
immoral, unethical, oppressive, unscrupulous or substantially
18
injurious to consumers.”
Bathazar v. Verizon Haw., Inc., 123
P.3d 194, 202 (Haw. 2005).
An act is deceptive when it is (1) a representation,
omission, or practice that (2) is likely to mislead consumers
acting reasonably under the circumstances where (3) the
representation, omission, or practice is material.
In re
Kekauoha-Alisa, 674 F.3d 1083, 1091 (9th Cir. 2012).
Only consumers, the attorney general, or the director of the
office of consumer protection may bring a UDAP claim.
2(d).
HRS § 480-
A consumer bringing a UDAP claim must allege: (1) a
violation of HRS § 480; (2) injury resulting from such violation;
and (3) damages.
Hawaii Med. Ass’n v. Hawaii Med. Serv. Ass’n,
Inc., 148 P.3d 1179, 1215-16 (Haw. 2006); In re Kekauoha-Alisa,
674 F.3d at 1092; HRS § 480-13(b)(1).
An injury must be “fairly
traceable to the defendant’s actions.”
Flores v. Rawlings Co.,
LLC, 177 P.3d 341, 355 n.23 (Haw. 2008) (internal citation
omitted).
A UDAP claim alleging fraudulent business practices must be
pled with particularity, pursuant to Federal Rule of Civil
Procedure 9(b).
Smallwood v. Ncsoft Corp., 730 F.Supp.2d 1213,
1232-33 (D. Haw. 2010).
Rule 9(b) requires a party asserting
fraud to “state with particularity the circumstances constituting
fraud.”
Fed. R. Civ. P. 9(b).
The claim must be accompanied by
the “who, what, when, where and how” of the misconduct charged.
19
Kearns, 567 F.3d at 1125.
Plaintiffs sufficiently allege a claim against Defendants
for violating Hawaii’s UDAP statute.
Plaintiffs allege that
Defendants’ actions were unfair and deceptive.
Plaintiffs claim
Defendants misled them when they failed to disclose that
contaminated soils had been found at Marine Corp Base Hawaii.
(Complaint at ¶ 81, ECF No. 1-4).
Plaintiffs claim that
Defendants did not disclose the presence of contaminated soils in
order to “entice military families to enter leases.”
82).
(Id. at ¶
Plaintiffs assert that after entering into their leases,
the Defendants provided the residents with a Community Handbook
that “only contained a non-specific reference that chlordane and
other pesticides ‘may be found’ throughout the United States
rather than acknowledging pesticide-contaminated soils had been
confirmed at [Marine Corp Base Hawaii].”
(Id. at ¶ 36).
Plaintiffs provide the dates when the class representatives
signed their leases with Defendants.
(Id. at ¶¶ 5-9, 24).
The
Complaint alleges Plaintiffs suffered injuries including
overpayment of rent because of Defendants’ unfair and deceptive
practices.
(Id. at ¶¶ 85-87).
Defendants’ Motion to Dismiss Count V for unfair and
deceptive trade practices is DENIED.
Count VI: Negligence
20
A successful negligence claim must satisfy the following
four elements: (1) a duty, or obligation, recognized by the law,
requiring the actor to conform to a certain standard of conduct,
for the protection of others against unreasonable risks; (2) a
failure on the actor’s part to conform to the standard required;
(3) a reasonably close causal connection between the conduct and
the resulting injury; and (4) actual loss or damage resulting to
the interests of another.
Ono v. Applegate, 612 P.2d 533, 538
(Haw. 1980).
The Hawaii Intermediate Court of Appeals has explained that
the duty to warn against unusual hazards has long been recognized
as a source of tort liability.
Kajiya v. Dep’t of Water Supply,
629 P.2d 635, 639 (Haw. Ct. App. 1981) (internal citation
omitted).
Pursuant to Hawaii law, one who is in control of “what
he knows or should know is a dangerous agency, which creates a
foreseeable peril to persons or property that is not readily
apparent to those endangered to the extent that it is reasonably
possible, one owes a duty to warn them of such potential danger.”
Id. at 640.
A.
Negligence for Failure to Warn
Plaintiffs allege that Defendants violated their duty to
warn against unusual hazards.
Plaintiffs claim Defendants were
in control of the housing at Marine Corp Base Hawaii and failed
21
to disclose that the soil was contaminated with pesticides and
presented health risks.
(Complaint at ¶¶ 90-91, ECF No. 1-4).
Plaintiffs sufficiently state an injury based on “overpayment of
rent.”
(Id. at ¶ 93).
Plaintiffs have stated a claim for negligence based on
Defendants’ alleged failure to warn Plaintiffs about the
pesticide-contaminated soil.
Defendants’ Motion to Dismiss Count
VI for negligence as to Defendants’ failure to warn is DENIED.
B.
Negligence During Construction
The Complaint also contains allegations regarding
Defendants’ actions during construction at Marine Corp Base
Hawaii.
Plaintiffs claim that Defendants caused “substantial
fugitive dust” during the demolition and construction of new
housing.
(Id. at ¶ 37).
The Complaint does not provide
sufficient information about when the construction took place.
Plaintiffs do not identify the location of the construction or
their proximity to the construction.
The Complaint lacks
particularity with respect to the events surrounding Defendants’
construction projects.
Plaintiffs have not sufficiently alleged
a claim for negligence based on their exposure to dust created
during Defendants’ construction projects.
Defendants’ Motion to Dismiss Count VI as to Plaintiffs’
negligence claim based on Defendants’ actions during construction
22
is GRANTED.
Plaintiffs’ claim for negligence based on Defendants’
actions during construction at Marine Corp Base Hawaii, alleged
in Count VI of the Complaint, is DISMISSED WITH LEAVE TO AMEND.
Count VII:
A.
Negligent & Intentional Infliction of Emotional
Distress
Negligent Infliction of Emotional Distress
The elements of a claim for negligent infliction of
emotional distress (“NIED”), pursuant to Hawaii law, are: (1)
that the defendant engaged in negligent conduct; (2) that the
plaintiff suffered serious emotional distress; and (3) that such
negligent conduct of the defendant was a legal cause of the
serious emotional distress.
Wood v. Greenberry Fin. Servs.,
Inc., 907 F.Supp.2d 1165, 1186 (D. Haw. 2012).
An NIED claim is
merely a negligence claim alleging a wholly psychic injury.
Duty
and breach of duty are essential elements of an NIED claim and
are analyzed utilizing ordinary negligence principles.
Kahoohanohano v. Dep’t of Human Servs., 178 P.3d 538, 582 (Haw.
2008).
Pursuant to HRS § 663-8.9, a party cannot bring an NIED
claim “if the distress or disturbance arises solely out of damage
to property or material objects,” unless the emotional distress
results in physical injury to or mental illness of the person who
23
experiences the emotional distress.
Doe Parents No. 1 v. Dep’t
of Educ., 58 P.3d 545, 580-81 (Haw. 2002).
Requiring physical
injury or mental illness as a predicate injury for an NIED claim
attempts to avoid the possibility of trivial or fraudulent claims
due to the subjective nature of assessing purely psychological
injury, while promoting the purpose of negligence law.
Id. at
579.
The Hawaii Supreme Court has carved out exceptions to the
predicate injury requirement in cases that provide “the requisite
assurance that plaintiff’s psychological distress is trustworthy
and genuine.”
Doe Parents No. 1, 58 P.3d at 581.
No physical
manifestation of a psychological injury is required for an NIED
claim where a reasonable person, normally constituted, would be
unable to adequately cope with the mental stress engendered by
the circumstances of the case.
Kahoohanohano, 178 P.3d at 582.
NIED claims have been permitted where a plaintiff alleged
exposure to HIV-positive blood.
John & Jane Roes v. FHP, Inc.,
985 P.2d 661, 668 (Haw. 1999).
Other claims have been permitted
based on the mishandling of a corpse and negligent placement of a
child in an environment with a child molester.
Freeland v. Cnty
of Maui, 2013 WL 6528831, *22 (D. Haw. Dec. 11, 2013).
The Complaint claims Plaintiffs suffered emotional distress
because they were exposed to carcinogens at Marine Corp Base
Hawaii because of Defendants’ negligent conduct.
24
(Complaint at ¶
103, ECF No. 1-4).
A defendant may be liable for negligent
infliction of emotional distress when he causes a plaintiff’s
exposure to a significant health risk.
P.2d at 668.
John & Jane Roes, 985
Plaintiffs have sufficiently pled a cause of action
for NIED based on the allegations that Defendants exposed
Plaintiffs to significant health risks.
Defendants’ Motion to Dismiss Count VII for negligent
infliction of emotional distress is DENIED.
B.
Intentional Infliction of Emotional Distress
The elements of intentional infliction of emotional distress
(“IIED”) pursuant to Hawaii law, are: (1) that the act allegedly
causing the harm was intentional or reckless, (2) that the act
was outrageous, and (3) that the act caused (4) extreme emotional
distress to another.
Enoka v. AIG Hawaii Ins. Co., Inc., 128
P.3d 850, 872 (Haw. 2006).
The term “outrageous” has been construed to mean “without
just cause or excuse and beyond all bounds of decency.”
(citing Lee v. Aiu, 936 P.2d 655, 670 n.12 (Haw. 1997)).
Id.
Acting
with tortious or criminal intent, or intent to inflict emotional
distress, does not necessarily rise to the levels of
outrageousness required for an IIED claim.
Soone v. Kyo-Ya Co.,
Ltd., 353 F.Supp.2d 1107, 1116 (D. Haw. 2005) (citing Ross v.
Stouffer Hotel Co. Ltd., 879 P.2d 1037, 1048 (Haw. 1994)).
25
The term “extreme emotional distress” includes, “inter alia,
mental suffering, mental anguish, nervous shock, and other highly
unpleasant mental reactions.”
Enoka, 128 P.3d at 872 (internal
quotations omitted).
Plaintiffs have stated that Defendants’ intentional and
reckless actions caused “emotional distress” and “fear.”
(Complaint at ¶ 103, ECF No. 1-4).
Knowingly exposing families
to carcinogens and increased health risks may rise to the level
of “outrageousness.”
The Complaint contains sufficient facts to
state a claim for intentional infliction of emotional distress.
Defendants’ Motion to Dismiss Count VII for intentional
infliction of emotional distress is DENIED.
Counts VIII and IX: Fraud, Intentional Misrepresentation and
Negligent Misrepresentation
The elements of fraud or intentional misrepresentation,
pursuant to Hawaii law, are: (1) false representations made by
the defendant, (2) with knowledge of their falsity (or without
knowledge of their truth or falsity), (3) in contemplation of
plaintiff’s reliance upon them, and (4) plaintiff’s detrimental
reliance.”
Fisher v. Grove Farm Co., Inc., 230 P.3d 382, 403
(Haw. Ct. App. 2009) (citing Hawaii’s Thousand Friends v.
Anderson, 768 P.2d 1293, 1301 (Haw. 1989)); Wood v. Greenberry
Financial Servs., Inc., 907 F.Supp.2d 1165, 1178 (D. Haw. 2012).
26
The elements of a negligent misrepresentation claim are: (1)
false information that is supplied as a result of the failure to
exercise reasonable care or competence in communicating
information; (2) the person for whose benefit the information is
supplied suffered the loss; and (3) the recipient relies upon the
misrepresentation.”
Aana v. Pioneer Hi-Bred Intern., Inc., Civ.
Nos. 12-0231, 12-0665LEK-BMK; 2014 WL 806224, *12 (D. Haw. Feb.
27, 2014).
Allegations of express fraud must meet the heightened
pleading standard and require “specificity including an account
of the time, place and specific content of the false
representations.”
Swartz v. KPMG LLP, 476 F.3d 756, 764 (9th
Cir. 2007) (internal quotations and citations omitted).
In contrast, allegations of fraud by omission are not able
“to specify the time, place, and specific content of an omission
as precisely as would a plaintiff in a false representation
claim.”
Falk v. General Motors Corp., 496 F.Supp.2d 1088, 1098-
99 (N.D. Cal. 2007).
For fraud by omission claims, “the
plaintiff may find alternative ways to plead the particular
circumstances of the fraud.
A plaintiff cannot plead either the
specific time of the omission or the place in a fraud by omission
claim, as he is not alleging an act, but a failure to act.”
Washington v. Baenziger, 673 F.Supp. 1478, 1482 (N.D. Cal. 1987)
(international citations and quotations omitted).
27
A.
Fraud By Omission
Plaintiffs have stated claims for fraud, intentional
misrepresentation, and negligent misrepresentation based on
Defendants’ alleged failure to disclose that the soil at Marine
Corp Base Hawaii was contaminated with pesticides.
Plaintiffs
allege that Defendants had knowledge that Marine Corp Base Hawaii
was contaminated with pesticides but did not inform Plaintiffs
before they signed their leases.
No. 1-4).
(Complaint at ¶¶ 110, 121, ECF
Plaintiffs claim Defendants either intentionally or
negligently chose not to alert potential residents about the
contamination.
(Id. at ¶¶ 111, 122).
Plaintiffs allege damages,
including overpayment of rent, as a result of Defendants’
omissions.
(Id. at ¶¶ 114, 125).
Defendants’ Motion to Dismiss Counts VIII and IX for fraud,
intentional misrepresentation, and negligent misrepresentation as
to Defendants’ failure to disclose pesticide contamination at
Marine Corp Base Hawaii, is DENIED.
B.
Fraud By Express Statements
The Complaint alleges that “Defendants have expressly
represented that the housing they provide is safe and habitable
for military families.”
(Complaint at ¶¶ 109, 120, ECF No. 1-4).
The Complaint states that “after entering leases with Class
28
Plaintiffs, Defendants asserted it is safe for families to work
and play in their yards although they now admit that children and
pets should not be allowed to play in the yards near old house
foundations and that families should not grow fruits or
vegetables in the yards near old house foundations.”
(Id. at ¶¶
112, 123).
The Complaint does not provide sufficient facts to state a
cause of action for fraud or misrepresentation based on
Defendants’ express statements to Plaintiffs.
Plaintiffs do not
differentiate between express statements made by Defendant Ohana
Military Communities and Defendant Forest City Management.
Rule
9(b) requires 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.
Swartz, 476 F.3d at 765.
Plaintiffs do not describe the alleged statements made by
either of the Defendants with particularity.
The Complaint does
not provide sufficient information about who made the
representations and when and where the statements were made.
Defendants’ Motion to Dismiss Counts VIII and IX as to
Plaintiffs’ claims for fraud, intentional misrepresentation, and
negligent misrepresentation based on Defendants’ express
statements is GRANTED.
Plaintiffs’ claims for fraud, intentional misrepresentation,
29
and negligent misrepresentation based on Defendants’ express
statements regarding the safety of the housing at Marine Corp
Base Hawaii, alleged in Counts VIII and IX of the Complaint, are
DISMISSED WITH LEAVE TO AMEND.
Count X: Prima Facie Tort
Plaintiffs, in Count X of their Complaint, allege that
Defendants committed a prima facie tort.
Defendants claim that
Hawaii law does not recognize prima facie tort as a cause of
action.
The Hawaii Supreme Court has not addressed the issue of
whether prima facie tort is an actionable claim under Hawaii law.
Metzler Contracting Co. LLC v. Stephens, Civ. No. 07-00261LEK,
2009 WL 1046666 (D. Haw. Apr. 17, 2009).
Plaintiffs rely on Giuliani v. Chuck, 620 P.2d 733, 738
(Haw. Ct. App. 1980) and Metzler Contracting Co. LLC v. Stephens,
2009 WL 1046666 (D. Haw. Apr. 17, 2009) to support their claim
that prima facie tort is a recognized cause of action under
Hawaii law.
In Giuliani, plaintiffs alleged that a defendant had
intentionally and improperly refused to return their $1,000
housing deposit.
The Hawaii Intermediate Court of Appeals held
that the plaintiffs had sufficiently pled a cause of action,
sounding in tort, for intentional harm to a property interest.
30
Giuliani, 620 P.2d at 738.
The Court of Appeals, in recognizing
the sufficiency of the plaintiffs’ claim, relied on Section 871
of the Restatement Second of Torts.
Section 871 provides:
One who intentionally deprives another of his legally
protected property interest or causes injury to the
interest is subject to liability to the other if his
conduct is generally culpable and not justifiable under
the circumstances.
Restatement Second of Torts § 871 (1979).
In Metzler, the Hawaii federal district court discussed
whether Giuliani supports finding that Hawaii law recognizes
prima facie tort as a separate cause of action.
The district
court explained in Metzler that although Giuliani appears to cite
Section 871 as a separate tort, no other Hawaii case cites
Giuliani or Section 871 for that proposition.
The Metzler court
predicted that the Hawaii Supreme Court would only recognize a
separate cause of action for prima facie tort under facts
virtually identical to Guiliani, where no alternative wellrecognized cause of action existed to remedy the alleged harm.
Metzler Contracting Co LLC, 2009 WL 1046666, at *5 (finding prima
facie tort cannot be pled as an alternative to a defamation
claim).
The Complaint here does not provide distinct allegations for
a claim for prima facie tort where no alternative cause of action
exists.
Plaintiffs pled the same facts and injuries for prima
facie tort as their alternative well-recognized causes of action.
31
Plaintiffs’ prima facie tort claim is futile.
The
circumstances of Plaintiffs’ case would not give rise to a prima
facie tort claim.
Other well-recognized causes of action exist
to remedy the alleged harm.
Defendants’ Motion to Dismiss Count X is GRANTED.
Plaintiffs’ claim for prima facie tort, alleged in Count X
of the Complaint, is DISMISSED WITH PREJUDICE.
CONCLUSION
Defendants’ Request for Judicial Notice in Support of their
Motion to Dismiss (ECF No. 9) is GRANTED.
Defendants Ohana Military Communities, LLC, and Forest City
Residential Management, Inc.’s Motion to Dismiss (ECF No. 8) is
GRANTED IN PART AND DENIED IN PART WITH LEAVE TO AMEND.
Plaintiffs may file an Amended Complaint by August 29, 2014.
The Amended Complaint must conform to the rulings contained in
this Order.
Plaintiffs voluntarily withdrew Count II for Tortious Breach
of Contract.
Plaintiffs have stated the following claims:
Count I:
Breach of Contract For Failure to
Provide Safe and Habitable Housing
Against Defendant Ohana Communities
Count III:
Breach of Warranty of Habitability
Against Defendant Ohana Communities
32
Count IV:
Violations of Hawaii’s Landlord-Tenant
Code
Count V:
Unfair and Deceptive Trade Practices
Count VI:
Negligence for Failure to Warn
Count VII:
Negligent & Intentional Infliction of
Emotional Distress
Count VIII & IX:
Fraud, Intentional Misrepresentation &
Negligent Misrepresentation for
Defendants’ Fraud by Omission
The Court’s rulings as to each Defendant are as follows:
The following claims are DISMISSED WITH LEAVE TO AMEND as to both
Defendants:
Count I:
Breach of Contract For Failure to
Mediate
Count VI:
Negligence During Construction
Counts VIII & IX:
Fraud, Intentional Misrepresentation &
Negligent Misrepresentation for
Defendants’ Express Statements
The following claims are DISMISSED WITH LEAVE TO AMEND as to
Defendant Forest City Management:
Count I:
Breach of Contract
Count III:
Breach of Warranty of Habitability
The following claim is DISMISSED WITH PREJUDICE:
33
Count X:
Prima Facie Tort
The Parties shall appear before Magistrate Judge Chang
before October 15, 2014, in order to structure a mediation
that is consistent with the mediation provision contained in
the lease documents of the Parties.
IT IS SO ORDERED.
DATED:
Honolulu, Hawaii, July 15, 2014.
/s/ Helen Gillmor
Helen Gillmor
United States District Judge
Cara Barber, Melissa Jones, Melissa Streeter, Katie 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 IN PART AND DENYING IN PART DEFENDANTS OHANA MILITARY
COMMUNITIES, LLC, AND FOREST CITY RESIDENTIAL MANAGEMENT, INC.’S
MOTION TO DISMISS (ECF No. 8) WITH LEAVE TO AMEND and GRANTING
DEFENDANTS OHANA MILITARY COMMUNITIES, LLC, AND FOREST CITY
RESIDENTIAL MANAGEMENT, INC.’S REQUEST FOR JUDICIAL NOTICE IN
SUPPORT OF THEIR MOTION TO DISMISS (ECF No. 9)
34
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?