Bruser v. Bank of Hawaii

Filing 241

ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR RECONSIDERATION re 234 - Signed by JUDGE LESLIE E. KOBAYASHI on 1/31/2019. On the basis of the foregoing, the Brusers' Motion for Reconside ration, filed November 30, 2018, is HEREBY GRANTED IN PART and DENIED IN PART. The Motion for Reconsideration is GRANTED insofar as the amendments noted herein, and DENIED in all other respects. The Court ORDERS BOH to submit an amended Or der of Appointment for this Court's review and approval, which shall reflect any revisions made necessary by this Order. The proposed amended order shall be submitted by February 11, 2019. If there are no changes to the original proposed Order of Appointment, the Court ORDERS BOH to resubmit the original proposed Order of Appointment by February 11, 2019. (emt, )

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII

MICHAEL DAVID BRUSER, TRUSTEES
UNDER THAT CERTAIN UNRECORDED
REVOCABLE LIVING TRUST AGREEMENT
DATED JULY 11, 1988, AS AMENDED,
DOING BUSINESS AS DISCOVERY BAY
CENTER; AND LYNN BRUSER,
TRUSTEES UNDER THAT CERTAIN
UNRECORDED REVOCABLE LIVING
TRUST AGREEMENT DATED JULY 11,
1988, AS AMENDED, DOING BUSINESS
AS DISCOVERY BAY CENTER;

CIV. NO. 14-00387 LEK

Plaintiffs,
vs.
BANK OF HAWAII, A HAWAII
CORPORATION, AS TRUSTEE, AS
SUCCESSOR BY MERGER WITH
HAWAIIAN TRUST COMPANY, LIMITED,
A FORMER HAWAII CORPORATION AND
AS SUCCESSOR TRUSTEE UNDER THAT
CERTAIN TRUST AGREEMENT DATED
JUNE 6, 1974;
Defendant.
ORDER GRANTING IN PART AND DENYING IN
PART PLAINTIFFS’ MOTION FOR RECONSIDERATION
On November 23, 2018, this Court issued the Order
(1) Granting Defendant/Counterclaim Plaintiff Bank of Hawaii’s
Motion For Appointment of Temporary Receiver and (2) Granting in
Part and Denying in Part Intervenor Defendant/Counterclaim

Plaintiff Association of Apartment Owners of Discovery Bay’s
Substantive Joinder (“11/23/18 Order”).

[Dkt. no. 233.1]

On November 30, 2018, Plaintiffs/Counterclaim Defendants
Michael David Bruser and Lynn Bruser (“the Brusers”) filed a
motion for reconsideration of the 11/23/18 Order (“Motion for
Reconsideration”).

[Dkt. no. 234.]

On December 14, 2018,

Intervenor Defendant/Counterclaim Plaintiff Association of
Apartment Owners of Discovery Bay (“AOAO”) filed its statement
of no position, and Defendant/Counterclaim Plaintiff Bank of
Hawaii, as Trustee (“BOH”), filed its memorandum in opposition.
[Dkt. nos. 237, 238.]

The same day, Defendants/Counterclaim

Plaintiffs Susan Sheetz and Patricia Sheetz Bow (collectively
“Sheetz Bow”), and Defendants/Counterclaim Plaintiffs Julie G.
Henderson, Trustee of the Julie G. Henderson Irrevocable Trust;
Julie G. Henderson, Trustee of the Jean K. Gowans Irrevocable
Trust; Julie G. Henderson, Trustee of the Louis L. Gowans, Jr.,
Irrevocable Trust; and Richard L. Gowans, Trustee of the
Richard L. Gowans Irrevocable Trust (collectively
“Henderson/Gowans”), filed their respective joinders of simple
agreement in the memorandum in opposition.
240.]

[Dkt. nos. 239,

The Court has considered the Motion for Reconsideration

as a non-hearing matter pursuant to Rule LR7.2(e) of the Local

1

The 11/23/18 Order is also available at 2018 WL 6161978.
2

Rules of Practice for the United States District Court for the
District of Hawaii (“Local Rules”).

The Brusers’ Motion for

Reconsideration is hereby granted in part and denied in part for
the reasons set forth below.
BACKGROUND
The relevant factual and procedural background of this
case is set forth in the 11/23/18 Order.

Only the facts

relevant to the Motion for Reconsideration will be repeated
herein.

The Brusers initiated this action by filing their

Complaint for Declaratory Judgment on August 29, 2014, to
dispute their liability for payment of certain trustee’s fees
(“Trustee Fee” or “Fee”) pursuant to the Trust Agreement dated
June 6, 1974 (“Trust Agreement”).

[Dkt. no. 1.]

BOH filed its

counterclaim against the Brusers on January 28, 2015 alleging,
inter alia, a claim for declaratory judgment that, pursuant to
the Condominium Conveyance Document, dated December 1, 1976
(“CCD”), the Brusers were obligated to pay the Trustee Fee.2
[Dkt. no. 34.]

2

BOH also alleged a breach of contract claim arising out of
the Trust Agreement and CCD; a claim for breach of the covenant
of good faith and fair dealing; and sought recovery of its
attorneys’ fees and costs incurred as a result of enforcing the
CCD. See 11/23/18 Order, 2018 WL 6161978, at *2. In addition,
this Court permitted several other parties to intervene and file
their respective counterclaims. See id. at *1 n.3.
(. . . continued)
3

The parties proceeded to a bench trial on February 2,
2016, and this Court’s Findings of Fact and Conclusions of Law
and Order followed on June 28, 2016 (“6/28/16 FOF/COL”).
no. 192.3]

[Dkt.

Pursuant to the 6/28/16 FOF/COL, the Clerk’s Office

entered judgment on June 28, 2016, as follows: (1) in favor of
BOH on its second counterclaim for breach of contract under the
CCD; (2) in favor of the Henderson/Gowans, AOAO, Yokoyama, and
Sheetz Bow’s claim for declaratory relief that the Brusers are
liable for the total amount of the unpaid Trustee Fee;
(3) awarding $137,434.50 to BOH as the difference between what
the Brusers owed and what they paid between October 2014 and
December 2015, with general excise tax (“GET”); and (4) awarding
attorneys’ fees and costs to BOH.

See dkt. no. 193

(“Judgment”); see also 6/28/16 FOF/COL, 2016 WL 3580612, at *78.

On July 28, 2016, the Brusers filed a Notice of Appeal of

the 6/28/16 FOF/COL and Judgment (“Ninth Circuit Appeal”).
[Dkt. no. 200.]
On June 29, 2018, the Hawai`i Intermediate Court of
Appeals (“ICA”) issued a Memorandum Opinion in In the Matter of
the Trust Agreement Dated June 6, 1974, as Amended, No. CAAP-150000409 (“ICA Opinion”), affirming, inter alia, the decision by
the Circuit Court of the First Circuit, State of Hawai`i

3

The 6/28/16 FOF/COL is also available at 2016 WL 3580612.
4

(“Probate Court”) to increase the Trustee Fee under the Trust
Agreement to $9,850 in favor of BOH for a five-year period
beginning October 2014 (“Trust Litigation”).4

See ICA Opinion,

2018 WL 3199232, at *14.
On July 31, 2018, BOH filed a Motion for Appointment
of a Temporary Receiver (“Receiver Motion”).

[Dkt. no. 221.]

BOH argued the Brusers had not paid BOH their award of
$137,434.50 pursuant to the Judgment, and failed to pay the full
monthly fee of $9,850 plus GET, which had been determined
reasonable in the underlying Trust Litigation.
Order, 2018 WL 6161978 at *5.

See 11/23/18

The Receiver Motion sought

appointment of Steve K. Sombrero of Cushman & Wakefield
ChaneyBrooks as the temporary receiver of the commercial unit at
the Discovery Bay Condominium, located at 1778 Ala Moana
Boulevard, Honolulu, Hawai`i 96815 (“Commercial Unit”), to:
1) collect and hold proceeds from the Commercial Unit pending
the resolution of the Ninth Circuit Appeal and any further
appellate review of the ICA Opinion; 2) apply the proceeds first
to the Commercial Unit’s maintenance and operation expenses, the
uncontested Trustee Fee, and the maintenance fees and
assessments of the AOAO allocable to the Commercial Unit

4

The ICA Opinion sets forth the relevant procedural and
factual background of the Trust Litigation proceedings, in which
BOH initially petitioned the Probate Court to permit it to
resign as trustee. See ICA Opinion, 2018 WL 3199232, at *5.
5

(excluding the temporary receiver’s fees), and second, to any
current real property taxes; 3) deposit any remaining proceeds
in an interest bearing account to hold until BOH is paid in full
under the terms of the Judgment; and 4) be paid for his monthly
service fees and costs in an amount the Court deems reasonable.
[Receiver Motion at 1-3.]

On August 28, 2018, the Brusers filed

a memorandum in opposition to the Receiver Motion.
no. 228.]

[Dkt.

The Brusers argued, inter alia, the appointment of a

temporary receiver was premature since the Brusers planned to
appeal the ICA Opinion and, “should the Hawaii Supreme Court
grant review, the odds of a reversal are very high historically
in every such grant of review.”

[Id. at 8.]

After weighing the factors in Canada Life Assurance
Co. v. LaPeter, 563 F.3d 837, 844 (9th Cir. 2009), this Court
granted the Receiver Motion.

In doing so, this Court considered

the Brusers’ argument with regard to the pending Ninth Circuit
Appeal and the appeal of the ICA Opinion, as well as the
Brusers’ failure to satisfy and comply with the Judgment entered
on July 28, 2016.

See 11/23/18 Order, 2018 WL 6161978, at *3,

*5.
In the Motion for Reconsideration, the Brusers submit
that, on November 29, 2018, the Hawai`i Supreme Court accepted
the Brusers’ application for certiorari.

[Motion for

Reconsideration, Decl. of Gary Victor Dubin (“Dubin Decl.”), at
6

¶ 5, Exh. A (Order Accepting Application For Writ of Certiorari,
filed 11/29/18 in the Hawai`i Supreme Court).]

Because the

11/23/18 Order was based in large part upon the ICA Opinion,
which is now pending appeal, the Brusers argue the 11/23/18
Order is premature, and urge this Court to reconsider and
withdraw its ruling appointing the temporary receiver, or to
stay the temporary appointment of a receiver.
STANDARD
This Court has previously stated that a motion for
reconsideration
“must accomplish two goals. First, a motion for
reconsideration must demonstrate reasons why the
court should reconsider its prior decision.
Second, a motion for reconsideration must set
forth facts or law of a strongly convincing
nature to induce the court to reverse its prior
decision.” See Davis v. Abercrombie, Civil No.
11-00144 LEK-BMK, 2014 WL 2468348, at *2
(D. Hawaii June 2, 2014) (citation and internal
quotation marks omitted). This district court
recognizes three circumstances where it is proper
to grant reconsideration of an order: “(1) when
there has been an intervening change of
controlling law; (2) new evidence has come to
light; or (3) when necessary to correct a clear
error or prevent manifest injustice.” Tierney v.
Alo, Civ. No. 12-00059 SOM/KSC, 2013 WL 1858585,
at *1 (D. Hawaii May 1, 2013) (citing School
District No. 1J v. ACandS, Inc., 5 F.3d 1255,
1262 (9th Cir. 1993)). . . .
Riley v. Nat’l Ass’n of Marine Surveyors, Inc., Civil No. 1400135 LEK-RLP, 2014 WL 4794003, at *1 (D. Hawai`i Sept. 25,
2014).

7

The Brusers appear to argue there is new evidence, and
state the Motion for Reconsideration is brought pursuant to
Local Rule 60.1.

However, Local Rule 60.1 is applicable to

reconsideration of interlocutory orders, while case-dispositive
orders are governed by Fed. R. Civ. P. 59 or 60.
LR60.1.

See Local Rule

Since Judgment has been entered in this case and the

Brusers seek reconsideration of this Court’s 11/23/18 Order, the
Court applies Fed. R. Civ. P. 60.

Cf. United States v. Liddell,

Civil No. 07–00310 SOM/KSC, 2007 WL 4841274, at *1 (D. Hawai`i
Aug. 28, 2007) (“Although Local Rule 60.1(a) normally applies
only to interlocutory orders, because judgment has not yet been
entered in this case, the court examines the motion for
reconsideration under Local Rule 60.1(a), rather than as a
motion seeking post-judgment relief.”).

Fed. R. Civ. P. 60(b)

provides in relevant part:

On motion and just terms, the court may relieve a
party or its legal representative from a final
judgment, order, or proceeding for the following
reasons:
. . . .
(2) newly
reasonable
discovered
under Rule

discovered evidence that, with
diligence, could not have been
in time to move for a new trial
59(b);

. . . .
(6)

any other reason that justifies relief
8

Whether a party moves for reconsideration under either
Local Rule 60.1 or Fed. R. Civ. P. 60(b)(2)
it makes no difference . . . because the
standards are essentially the same. Under Rule
60(b)(2),
[r]elief from judgment on the basis of newly
discovered evidence is warranted if (1) the
moving party can show the evidence relied on
in fact constitutes “newly discovered
evidence” within the meaning of Rule 60(b);
(2) the moving party exercised due [or
reasonable] diligence to discover this
evidence; and (3) the newly discovered
evidence must be of “such magnitude that
production of it earlier would have been
likely to change the disposition of the
case.”
Feature Realty, Inc. v. City of Spokane, 331 F.3d
1082, 1093 (9th Cir. 2003) (quoting Coastal
Transfer Co. v. Toyota Motor Sales, U.S.A., Inc.,
833 F.2d 208, 211 (9th Cir. 1987)). Rule
60(b)(2), as amended in 2007, requires
“reasonable diligence” (instead of “due
diligence”) for newly discovered evidence. The
change, however, was “intended to be stylistic
only.” See Cole v. Hawaii, 2008 WL 508075, at *1
n.2 (D. Haw. Feb. 26, 2008).
Tagupa v. Vipdesk, Inc., CIV. No. 13-00428 JMS-KSC, 2016 WL
236210, at *2 n.2 (D. Hawai`i Jan. 19, 2016) (some alterations
in Tagupa).

In addition, this district court “has denied

motions seeking reconsideration of orders based on evidence
and/or legal arguments that the party seeking reconsideration
could have raised in connection with an original motion.”

See,

e.g., Streamline Consulting Grp. LLC v. Legacy Carbon LLC, CIVIL

9

NO. 15-00318 SOM/KSC, 2016 WL 1064444, at *1 (D. Hawai`i
Mar. 16, 2016) (citing Barker v. Gottlieb, 2015 WL 181776
(D. Haw. Jan. 14, 2015)).

“Whether or not to grant

reconsideration is committed to the sound discretion of the
court.”

Navajo Nation v. Confederated Tribes and Bands of the

Yakama Indian Nation, 331 F.3d 1041, 1046 (9th Cir. 2003)
(citation omitted).
DISCUSSION
The Brusers appear to argue the Hawai`i Supreme Court
is likely to overturn the ICA Opinion affirming the increased
Trustee Fee; therefore, it is premature for this Court to
appoint a temporary receiver to collect payment pursuant to the
11/23/18 Order.

[Dubin Decl. at ¶¶ 7-9.]

The Brusers point

exclusively to the Hawai`i Supreme Court’s November 29, 2018
Order Accepting Application For Writ of Certiorari as the basis
for the Motion for Reconsideration.

[Dubin Decl., Exh. A.]

The

Motion for Reconsideration is unaccompanied by any memorandum in
support of motion, or legal authority that demonstrates why the
Court should reconsider its 11/23/18 Order.
This Court recognizes that the Hawai`i Supreme Court’s
decision to accept certiorari is information that was not
available prior to the 11/23/18 Order.

However, the Brusers’

new evidence is not of such “a strongly convincing nature to

10

induce the court to reverse its prior decision.”

See Davis,

2014 WL 2468348, at *2.
First, the Brusers previously argued this very point
in their memorandum in opposition to the Receiver Motion.

See

11/23/18 Order, 2018 WL 6161978, at *5 (noting the Brusers
“oppose the appointment of a temporary receiver, arguing that:
. . . appointment would be premature and wasteful given the
Ninth Circuit Appeal and Hawai`i Supreme Court Appeal”).
Second, in the 11/23/18 Order, this Court: acknowledged the
Bruser’s intent to apply for a writ of certiorari from the ICA
Opinion; see id. at *3; took judicial notice on its own that an
application for certiorari review of the ICA Opinion had been
filed; id. at *3 n.6; and expressly considered this, as well as
the Ninth Circuit Appeal, as factors in reaching its decision to
grant the Receiver Motion.

This Court explained:

Over the objections of the Brusers, the
Court finds it appropriate to grant BOH’s Motion
and appoint a temporary receiver. The Brusers
have both failed to satisfy the amounts owed
under the Judgment and abide by its terms for
over two years. See FOF/COL, 2016 WL 3580612, at
*7-8. The Brusers are also actively pursuing
appeals in both state and federal court seeking
redress for the amount of the Trustee Fee, and
the Brusers’ liability to pay it. Thus, it is
questionable whether the Brusers have any intent
to satisfy the Judgment in the near future.
11/23/18 Order, 2018 WL 6161978, at *5 (emphasis added).

11

The fact that the Hawai`i Supreme Court granted
certiorari review does not change this Court’s analysis.

Nor

does this Court consider the assertions in the Dubin Declaration
that the Hawai`i Supreme Court’s decision to dispense with oral
argument means that “reversal is assured.”
¶ 7.]

[Dubin Decl. at

This statement by counsel represents neither an actual

change in law, or proof of manifest error of law to warrant
reconsideration.

The Brusers essentially disagree with this

Court’s decision, which alone, does not warrant reconsideration
of the Court’s order.

See Davis, 2014 WL 2468348, at *3 n.4

(“Mere disagreement with a previous order is an insufficient
basis for reconsideration.” (citations and internal quotation
marks omitted)).

For these reasons, the Brusers’ Motion for

Reconsideration is DENIED as to their request that this Court
withdraw, reconsider, or stay the 11/23/18 Order until the
conclusion of the Brusers’ appeal from the ICA Opinion.
The Brusers have also pointed out that this Court’s
11/23/18 Order incorrectly stated the AOAO had applied for a
writ of certiorari to the Hawai`i Supreme Court.

The 11/23/18

Order provides in pertinent part: “The Court takes judicial
notice pursuant to Federal Rules of Evidence 201 that, on or
about October 2, 2018, AOAO has applied for a writ of certiorari
to the Hawai`i Supreme Court to appeal the ICA Opinion.
6161978, at *3 n.6.

2018 WL

The Brusers assert “the Hawaii Supreme
12

Court granted the Plaintiffs’ request for certiorari review,”
and that “[n]o other parties sought certiorari review by the
Hawaii Supreme Court.”

[Dubin Decl. at ¶¶ 5-6.]

Further, the

Order Accepting Application For Writ of Certiorari indicates
Michael David Bruser and Lynn Bruser are the
“Petitioners/Interested Parties-Appellants”.
None of the parties contest this issue.

[Id., Exh. A.]

The Court hereby GRANTS

the Motion for Reconsideration, insofar as this Court’s 11/23/18
Order shall be revised at page three, footnote six, to reflect
the following: “The Court takes judicial notice pursuant to
Federal Rules of Evidence 201 that, on or about October 2, 2018,
the Brusers have applied for a writ of certiorari to the Hawai`i
Supreme Court to appeal the ICA Opinion.”

The Court will issue

an amended order reflecting this change.
Even with this factual change, however, this Court
CONCLUDES that the Brusers have not established grounds which
require this Court to reconsider its finding that appointment of
a temporary receiver is necessary, pending the conclusion of the
Ninth Circuit Appeal and Trust Litigation Appeal.
CONCLUSION
On the basis of the foregoing, the Brusers’ Motion for
Reconsideration, filed November 30, 2018, is HEREBY GRANTED IN
PART and DENIED IN PART.

The Motion for Reconsideration is

13

GRANTED insofar as the amendments noted herein, and DENIED in
all other respects.
The Court ORDERS BOH to submit an amended Order of
Appointment for this Court’s review and approval, which shall
reflect any revisions made necessary by this Order.

The

proposed amended order shall be submitted by February 11, 2019.
If there are no changes to the original proposed Order of
Appointment, the Court ORDERS BOH to resubmit the original
proposed Order of Appointment by February 11, 2019.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAI`I, January 31, 2019.

MICHAEL DAVID BRUSER, ET AL. VS. BANK OF HAWAI`I, ET AL; CV 1400387 LEK-RLP; ORDER GRANTING IN PART AND DENYING IN PART
PLAINTIFFS' MOTION FOR RECONSIDERATION

14