Bruser v. Bank of Hawaii

Filing 242

AMENDED 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.On the basis of the foregoing, BOH's Motion for Appointment of a Temporary Receiver, filed July 31, 2018, is HEREBY GRANTED, and AOAO's Joinder in BOH's Motion, filed August 7, 2018, is HERE BY GRANTED IN PART AND DENIED IN PART. The Joinder is GRANTED with respect to the appointment of a temporary receiver and DENIED as to all other issues. The Court ORDERS BOH to prepare an Order of Appointment for this Court's review and approval. The proposed order shall be submitted by February 11, 2019. Signed by JUDGE LESLIE E. KOBAYASHI on 2/7/2019. (cib, )

IN THE UNITED STATES DISTRICT COURT
FOR THE 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;
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,
_____________________________
vs.
JULIE G. HENDERSON, as
Trustee of the Julie G.
Henderson Irrevocable Trust,
and as Trustee of the Jean K.
Gowans Irrevocable Trust, and
as Trustee of the Louis L.
Gowans, Jr. Irrevocable
Trust; RICHARD L. GOWANS, as
Trustee of the Richard L.
Gowans Irrevocable Trust;
KEVIN I. YOKOHAMA;
ASSOCIATION OF APARTMENT
OWNERS DISCOVERY BAY; SUSAN

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CIVIL 14-00387 LEK-RLP

SHEETZ; and PATRICIA SHEETZ
BOW,
Intervening Defendants.
_____________________________
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,
Counterclaim Plaintiff,
vs.
MICHAEL DAVID BRUSER and LYNN
BRUSER, Trustees under that
certain unrecorded Revocable
Living Trust Agreement dated
July 11, 1988, as amended,
doing business as Discovery
Bay Center,
Counterclaim Defendants.
_____________________________

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AMENDED 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
On July 31, 2018, Defendant/Counterclaim Plaintiff Bank
of Hawaii, as Trustee (“BOH”), filed its Motion for Appointment
of a Temporary Receiver (“Motion”).

[Dkt. no. 221.]

Intervenor

Defendant/Counterclaim Plaintiff Association of Apartment Owners
of Discovery Bay (“AOAO”) filed a substantive joinder in the
Motion on August 7, 2018 (“Joinder”).

[Dkt. no. 223.]

On

August 28, 2018, BOH filed its supplemental memorandum in support
of the Motion (“Supplemental Memorandum”), and
Plaintiffs/Counterclaim Defendants Michael David Bruser and
Lynn Bruser (“the Brusers”) filed their memorandum in opposition
to the Motion.

[Dkt. nos. 227, 228.]

On September 4, 2018, AOAO

filed a supplemental memorandum regarding the Motion and the
Joinder,1 and BOH filed its reply memorandum.
230.]

[Dkt. nos. 229,

The Court finds these matters suitable for disposition

without a hearing pursuant to Rule LR7.2(d) of the Local Rules of
Practice of the United States District Court for the District of
Hawaii (“Local Rules”).

BOH’s Motion is hereby granted, and

AOAO’s Joinder is hereby granted in part and denied in part, for
the reasons set forth below.
BACKGROUND
A detailed history of this case is set forth in this
Court’s June 28, 2016 Findings of Fact and Conclusions of Law and
Order (“6/28/16 FOF/COL”).

[Dkt. no. 192.2]

The Court will

include only those facts relevant to the instant matter.

This

case arose out of a contract dispute regarding liability for

1

The Court construes AOAO’s supplemental memorandum filed
on September 4, 2018 as a reply memorandum. Compare EO: Court
Order Requiring a Supplemental Memorandum, filed 8/14/18 (dkt.
no. 224) (requiring BOH and AOAO to file supplemental memoranda
by August 28, 2018), with EO: Court Order Granting Plaintiff’s Ex
Parte Request for Extension of Time, filed 8/15/18 (dkt. no. 226)
(extending reply deadlines to September 4, 2018).
2

The 6/28/16 FOF/COL is also available at 2016 WL 3580612.
3

payment of trustee’s fees (“Trustee Fee” or “Fee”).

On

August 29, 2014, the Brusers filed their Complaint for
Declaratory Judgment (“Complaint”) against BOH.

[Dkt. no. 1.]

BOH filed its counterclaims against the Brusers on January 28,
2015 (“BOH Counterclaim”).

[Dkt. no. 34.]

While the Brusers’ Complaint was filed against a single
defendant (that is, BOH), several parties sought permission to
intervene as defendants and, upon being granted intervention,
they filed their own respective counterclaims, including AOAO.3
See Order Granting Proposed Intervenor Association of Apartment
Owners of Discovery Bay’s Motion to Intervene Filed December 30,
2014, filed 3/27/15 (dkt. no. 45).
The Complaint sought declaratory judgment that the
Brusers were, inter alia: not liable for the payment of the
Trustee Fee under the Trust Agreement dated June 6, 1974 (“Trust
Agreement”); or, in the alternative, only liable for the actual

3

A number of other parties were also permitted to
intervene, including: 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”); [dkt. no. 41 (order permitting
Henderson/Gowans to intervene);] Defendants/Counterclaim
Plaintiffs Kevin I. Yokoyama, Trustee of the Kevin I. Yokoyama
Trust and the Irvine K. Yokoyama, Jr. Trust (collectively
“Yokoyama”); [dkt. no. 43 (order permitting Yokoyama to
intervene);] and Defendants/Counterclaim Plaintiffs Susan Sheetz
and Patricia Sheetz Bow (collectively “Sheetz Bow”) [dkt. no. 44
(allowing Sheetz Bow to intervene)].
4

percentage of their undivided interest or only reasonable fees as
determined at trial.

[Complaint at ¶¶ 23(a)-(b).]

They also

sought additional relief such as an accounting, and reasonable
attorneys’ fees and costs.

[Id. at ¶¶ E-F.]

The BOH Counterclaim had five claims: (1) a claim for a
declaratory judgment that, pursuant to the Condominium Conveyance
Document, dated December 1, 1976 (“CCD”), the Brusers were
obligated to pay the Trustee Fee as determined under the Trust
Agreement; (2) breach of contract under the CCD; (3) breach of
contract under the Trust Agreement; (4) breach of the covenant of
good faith and fair dealing; and (5) recovery of attorneys’ fees
and costs incurred as a result of enforcing the CCD pursuant to
the terms of the Trust Agreement.
The AOAO Counterclaim contained four claims: (1) a
claim for declaratory judgement that the Brusers were obligated
to pay the Trustee Fee as determined under the Trust Agreement
and/or the CCD; (2) breach of contract under the CCD; (3) breach
of contract under the Trust Agreement; and (4) breach of the
covenant of good faith and fair dealing.
On April 16, 2015, BOH filed its motion for partial
summary judgment as to its first counterclaim against the
Brusers.

[Dkt. no. 50.]

This Court granted BOH’s motion,

stating “the plain language of the CCD requires payment of fees
under the Trust Agreement, which includes the Trustee Fee.”

5

Bruser v. Bank of Hawaii, Civil No. 14-00387 LEK-KSC, 2015 WL
4469850, at *4 (D. Hawai`i July 21, 2015).

The Court declined to

address the amount of the Trustee Fee, or any matters of
interpretation of the Trust Agreement.

Id. at *4 n.15.

The Court held a bench trial on February 2, 2016 on the
remaining claims.4

[Minutes, filed 2/2/16 (dkt. no. 177).]

The

6/28/16 FOF/COL followed and the Clerk’s Office entered Judgment
on June 28, 2016, finding (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 on their
claims for declaratory relief and 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”); (4) awarding attorneys’ fees and

4

The Brusers filed a Notice of Withdrawal of Jury Trial
Demand on January 20, 2016, that was unopposed by
Henderson/Gowans, AOAO, Yokoyama, BOH, and Sheetz Bow. [Dkt.
nos. 145-50.] In an Entering Order filed on January 25, 2016,
and pursuant to Federal Rules of Civil Procedure 38(d) and
39(a)(1), the Court withdrew the Brusers’ jury demand. [Dkt.
no. 152.] On February 2, 2016, the parties filed a stipulation
(“Stipulation”) that: BOH would dismiss its third and fourth
counterclaims without prejudice; AOAO would dismiss its second,
third, and fourth counterclaims without prejudice; and
Henderson/Gowans, Yokoyama, and Sheetz Bow would dismiss their
claims for declaratory relief that the Brusers breached the Trust
Agreement without prejudice. [Dkt. no. 179.] The only remaining
claims were: BOH’s second counterclaim for breach of contract
under the CCD; and Henderson/Gowans, AOAO, Yokoyama, and Sheetz
Bow’s claim for declaratory relief that, by failing to pay the
Trustee Fee, the Brusers breached the CCD.
6

costs to BOH.

2016 WL 3580612, at *7-8.

The Brusers filed an

appeal on July 28, 2016, which is currently pending before the
Ninth Circuit (“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 (“Trust Litigation” and “ICA Opinion”).5
3199232.

See 2018 WL

The ICA reviewed, inter alia, the Probate Court’s

ruling to increase the Trustee Fee in favor of BOH to $9,850 for
a five-year period beginning October 2014.

Id. at *10.

The ICA

affirmed the Probate Court’s decision, stating the increase was
“authorized and reasonable.”

Id. at *14.

The ICA remanded the

matter to the Probate Court for further proceedings.

Id. at *21.

The Brusers represent they will timely file a petition
for writ of certiorari to have the Hawai`i Supreme Court review
the ICA Opinion (“Hawai`i Supreme Court Appeal”),6 [Mem. in Opp.

5

The ICA Opinion is also available at 2018 WL 3199232. The
opinion sets forth the relevant procedural and factual background
of the proceedings of the Trust Litigation. BOH originally
petitioned the Circuit Court of the First Circuit, State of
Hawai`i (“Probate Court”), to resign as trustee. See ICA
Opinion, 2018 WL 3199232, at *5. BOH later filed a petition to
increase the Trustee Fee. On April 17, 2015, the Probate Court
approved the increase in the Trustee Fee and ordered the Trustee
Fee to be withheld from distributions to the beneficiaries
pending the resolution of the instant case. Id. at *6.
6

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
(continued...)
7

at 8,] and that the Ninth Circuit Court of Appeals has heard oral
argument on October 12, 2018 on the appeal of the 6/28/16
FOF/COL.

[Id.]
STANDARD
Under federal law, appointing a “receiver is
an extraordinary equitable remedy,” which should
be applied with caution. Aviation Supply Corp.
[v. R.S.B.I. Aerospace, Inc.], 999 F.2d [314,] 316
[(8th Cir. 1993)]; 12 [Charles Alan] Wright,
[Arthur R.] Miller & [Richard L.] Marcus [Federal
Practice and Procedure] § 2983, at 24 [(2d ed.
1997)]. However, there is “no precise formula for
determining when a receiver may be appointed.”
Aviation Supply Corp., 999 F.2d at 316. Rather,
federal courts consider a variety of factors in
making this determination, including, for example:
(1) “whether [the party] seeking the appointment
has a valid claim”; (2) “whether there is
fraudulent conduct or the probability of
fraudulent conduct,” by the defendant; (3) whether
the property is in imminent danger of “being lost,
concealed, injured, diminished in value, or
squandered”; (4) whether legal remedies are
inadequate; (5) whether the harm to plaintiff by
denial of the appointment would outweigh injury to
the party opposing appointment; (6) “the
plaintiff’s probable success in the action and the
possibility of irreparable injury to plaintiff’s
interest in the property”; and, (7) “whether [the]
plaintiff’s interests sought to be protected will
in fact be well-served by receivership.” [13
James Wm. Moore, et al.,] Moore’s [Federal
Practice], § 66.04[2][b] [(3d ed. 2008)]; New
York Life Ins. Co. [v. Watt West Inv. Corp.], 755

6

(...continued)
Court to appeal the ICA Opinion. The Brusers’ application for
writ of certiorari has been accepted and is now pending before
the Hawai`i Supreme Court; however, for the purposes of this
Motion, neither the acceptance of the application for writ of
certiorari nor the pending appeal affects the Court’s analysis
herein.
8

F. Supp. [287,] 292 [(E.D. Cal. 1991)] (citing 12
Wright, Miller & Marcus § 2983).
Can. Life Assur. Co. v. LaPeter, 563 F.3d 837, 844 (9th Cir.
2009) (some alterations in Can. Life).

Although these factors

provide the basic framework, the Ninth Circuit also considers
whether a property is of insufficient value to guarantee payment,
and whether the defendant is of “doubtful financial standing.”
See id. (citing View Crest Garden Apartments, Inc. v. United
States, 281 F.2d 844, 847 (9th Cir. 1960)).

Notwithstanding the

foregoing factors, courts have the authority to appoint a
receiver where, “[e]ven if inadequacy of the security and
insolvency of the debtor did not appear, consideration of other
circumstances [may] disclose[] . . . reasons for appointing . . .
a receiver.”

Id. (citing View Crest, 281 F.2d at 847).

Put

differently, the Ninth Circuit concluded that “the district court
has broad discretion in appointing a receiver, that it may
consider a host of relevant factors, and that no one factor is
dispositive.”

Id.
DISCUSSION

I.

Preliminary Matters
The Court first examines whether the instant Motion is

properly before this Court due to its partial overlap with the
Trust Litigation and the current appeals pending before both the
Hawai`i Supreme Court and the Ninth Circuit Court of Appeals.
The Court answers in the affirmative for the following reasons.
9

“Once a notice of appeal is filed, the district court
is divested of jurisdiction over the matters being appealed.”
Nat. Res. Def. Counsel, Inc. v. Sw. Marine Inc., 242 F.3d 1163,
1166 (9th Cir. 2001) (citation omitted) (citing Griggs v.
Provident Consumer Discount Co., 459 U.S. 56, 58, 103 S. Ct. 400,
74 L. Ed. 2d 225 (1982) (per curiam), superseded by rule on other
grounds as stated in, Leader Nat’l Ins. Co. v. Indus. Indem. Ins.
Co., 19 F.3d 444, 444-45 (9th Cir. 1994)).

This rule promotes

judicial economy and reduces “‘the confusion and waste of time
that might flow from putting the same issues before two courts at
the same time.’”

Stein v. Wood, 127 F.3d 1187, 1189 (9th Cir.

1997) (quoting Kern Oil & Refining Co. v. Tenneco Oil Co., 840
F.2d 730, 734 (9th Cir. 1988)).

The rule does not stand upon

statute, and the Ninth Circuit has cautioned against its use to
“defeat its purposes [or] to induce needless paper shuffling.”
Id. (citations omitted).

However, a number of exceptions to the

general rule exist, and the district court may retain
jurisdiction to “correct clerical errors or clarify its judgment
pursuant to Fed. R. Civ. P. 60(a).”

Id. (citations omitted).

The district court may also retain jurisdiction when it has a
duty to “aid [in] execution of a judgment that has not been
superseded.”

Id. (citing In re Thorp, 655 F.2d 997, 998 (9th

Cir. 1976)); see also United States v. Queen’s Court Apartments,
Inc., 288 F.2d 253, 255 (9th Cir. 1961) (directing the district

10

court to appoint a receiver to collect rents, issues and profits
pending appeal of the district court’s decision).
A money judgment is traditionally enforced by a writ of
execution, “unless the courts direct otherwise.”
P. 69(a)(1).

Fed. R. Civ.

The procedure on execution and in other proceedings

“in aid of judgment[,]” must generally follow the procedures “of
the state where the court is located, but a federal statute
governs to the extent it applies.”

Id.; see also Office Depot

Inc. v. Zuccarini, 596 F.3d 696, 701 (9th Cir. 2010).

Fed. R.

Civ. P. 66 pertains to the appointment of a receiver in federal
court.7

“The federal rules, including Rule 66, qualify as

federal statutes under Rule 69(a).”

Zuccarini, 596 F.3d at 701.

BOH argues the Probate Court cannot enforce the
Judgment against the Brusers because its jurisdiction is limited
to disputes “initiated by trustees and interested persons”
regarding the “internal affairs” of trusts, and other matters

7

Fed. R. Civ. P. 66 states,
These rules govern an action in which the
appointment of a receiver is sought or a receiver
sues or is sued. But the practice in
administering an estate by a receiver or a similar
court-appointed officer must accord with the
historical practice in federal courts or with a
local rule. An action in which a receiver has
been appointed may be dismissed only by court
order.
11

concerning trustees and beneficiaries of trusts.8

[Suppl. Mem.

in Supp. of Motion at 3 (citing Haw. Rev. Stat. § 560:7-201).]
AOAO appears to agree with the arguments set forth in BOH’s
supplemental memorandum.9

[Id. at 6.]

The Brusers argue,

without citing to any authority, that the Probate Court has broad
powers to declare matters “contested” and to assign any judge
within the First Circuit Court of the State of Hawai`i to preside
over the disputed appointment of a temporary receiver.
Opp. at 9.]

The Court disagrees.

[Mem. in

The instant Motion seeks

appointment of a temporary receiver to enforce a Judgment issued
by this district court.

Thus, the Court concludes that it

retains jurisdiction over this narrow issue.

See Rule 66;

Rule 69(a)(1); see also Zuccarini, 596 F.3d at 701; Queen’s
Court, 288 F.2d at 255.
II.

Appointment of Receiver
In its Motion, BOH asserts a temporary receiver is

necessary and appropriate under the circumstances, and requests
that Steve K. Sombrero of Cushman & Wakefield ChaneyBrooks be
appointed as the temporary receiver of the commercial unit at the

8

BOH argues that the Brusers are “judgment creditors” of
the Trust. This is incorrect as the 6/28/16 FOF/COL rendered the
Brusers liable for payment of Trustee Fee, which would turn the
Brusers into judgment debtors. See JUDGMENT DEBTOR, Black’s Law
Dictionary (10th ed. 2014) (“A person against whom a money
judgment has been entered but not yet satisfied.”).
9

The Court will address the appropriateness of the form of
the AOAO’s “Supplemental Memorandum” in greater detail below.
12

Discovery Bay Condominium, located at 1778 Ala Moana Boulevard,
Honolulu, Hawai`i 96815 (“Commercial Unit”), with the power to:
1) collect and hold proceeds from the Commercial Unit pending the
Ninth Circuit Appeal and any further appellate review of the ICA
Opinion; 2) apply the proceeds first to the reasonable and
necessary maintenance and operation expenses of the Commercial
Unit, the uncontested Trustee Fee, and maintenance fees and
assessments of the AOAO allocable to the Commercial Unit
(excluding the temporary receiver’s fees), and second, to any
current real property taxes; 3) to deposit the remaining
proceeds, if any, in an interest bearing account to hold until
BOH is paid in full under the terms of the Judgment; and 4) to
receive fees and costs for services rendered to be paid on a
monthly basis, or earlier, in an amount the Court deems
reasonable.

[Motion at 1-3.]

BOH asserts the Brusers have not

paid the $137,434.50 to BOH pursuant to the Judgment.
Supp. of Motion at 1.]

[Mem. in

Additionally, the Brusers have refused to

pay the full monthly fee of $9,850 plus GET determined as
“reasonable” in the underlying Trust Litigation and associated
ICA Opinion.10

[Id.]

BOH asserts the total amount of the

deficiency for the period of January 2016 through June 2018 is

10

BOH represents the Brusers have continued to pay the
“‘undisputed’ portion of the Trustee’s fee in the monthly amount
of $1,100 plus GET.” [Mem. in Supp. of Motion at 1 (footnote
omitted).]
13

approximately $276,020.83, with interest of $32,182.82.

[Motion,

Decl. of Denise Kersting (“Kersting Decl.”), Exh. 3 (calculation
of Trustee Fee).]

Further, BOH argues Mr. Sombrero is an

experienced real estate professional who is qualified and willing
to serve as a temporary receiver, for the proposed hourly rate of
$250.00, which is commensurate with his knowledge and experience.
[Mem. in Supp. of Motion at 8.]
The Brusers do not dispute that they have not made
payments.

Instead, they oppose the appointment of a temporary

receiver, arguing that: (1) state, not federal, courts must
enforce the Trustee Fees; (2) appointment would be premature and
wasteful given the Ninth Circuit Appeal and Hawai`i Supreme Court
Appeal; (3) a temporary receiver would waste the parties’ and the
Court’s resources for only temporary and nominal gain; (4) the
Brusers may seek a stay of the enforcement using the Property as
substitute security; and (5) a temporary receiver would
negatively impact business for the Commercial Unit.
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

14

Brusers’ liability to pay it.

Thus, it is questionable whether

the Brusers have any intent to satisfy the Judgment in the near
future.
In looking to the factors under Canada Life, this Court
also concludes that: BOH has a valid claim for payment based on
this Court’s 6/28/16 FOF/COL; no other legal remedy would satisfy
the execution of the Judgment short of the Brusers actually
paying BOH; appointment of a temporary receiver will ensure
timely payment of fees and taxes associated with the Commercial
Unit; and BOH has and continues to suffer harm where the Brusers
refused to pay the full amount of the Trustee Fee.

See Can.

Life, 563 F.3d at 844.
The Court rejects the Brusers’ argument that they are
entitled to a stay as a matter of right, with the posting of a
bond in the form of the Commercial Unit.

The Brusers filed their

Notice of Appeal on July 28, 2016, [dkt. no. 200,] over two years
ago and have had ample time to move the Court for a stay of
execution of judgment in order to maintain the status quo while
their appeal was pending.

There has been no application for this

Court’s approval of a supersedeas bond of the money judgment, or
any substitute form, and the Brusers have not met their burden in
demonstrating a stay is warranted, pending appeal.11

11

See Fed. R.

It is well settled that courts generally consider four
factors before issuing a stay of judgment pending appeal:
(continued...)
15

Civ. P. 62; see also Lair v. Bullock, 697 F.3d 1200, 1203 (9th
Cir. 2012) (citing Nken v. Holder, 556 U.S. 418, 433-34, 129
S. Ct. 1749 (2009)).

Moreover, the Brusers’ reliance upon

American Manufacturers Mutual Insurance Co. v. American
Broadcasting-Paramount Theatres, Inc., 87 S. Ct. 1, 3 (1966), and
Bass v. First Pacific Networks, Inc., 219 F.3d 1052 (9th Cir.
2000), for the proposition that they are entitled to a stay, is
misplaced.12

The rationale in both American Manufacturers and

Bass is that a stay is contingent upon the bond first being
accepted by the Court and posted, in accordance with Rule 62(d),
which the Brusers have not done.

Moreover, the Brusers’

assertion that the “substitute security” of the Commercial Unit
is appropriate does not automatically make it so, and this Court
is neither persuaded nor bound by Shanghai Investment Co. v.

11

(...continued)
“(1) whether the stay applicant has made a strong showing that he
is likely to succeed on the merits; (2) whether the applicant
will be irreparably injured absent a stay; (3) whether issuance
of the stay will substantially injure the other parties
interested in the proceeding; and (4) where the public interest
lies.” Nken v. Holder, 556 U.S. 418, 434 (2009) (quoting Hilton
v. Braunskill, 481 U.S. 770, 776 (1987)).
12

In Bass, the Ninth Circuit decided the issue of whether
attorneys’ fees were recoverable for enforcement of a supersedeas
bond, which was denied by the district court, and affirmed on
appeal. The Ninth Circuit held that federal, not state law,
governed the surety’s liability for attorneys’ fees in the
summary proceedings to enforce the supersedeas bond posted
pending appeal, and neither Fed. R. Civ. P. 65.1 nor Rule 62(d)
permitted a party to recover attorneys’ fees for such a
proceeding. Bass, 219 F.3d at 1054-56.
16

Alteka Co., 92 Hawai`i 482, 993 P.2d 516, 537, overruled on other
grounds, Blair v. Ing, 96 Hawai`i 327, 31 P.3d 184 (2001), cited
by the Brusers.

[Mem. in Opp. at 11-12.]

In Shanghai, the

Hawai`i Supreme Court held, inter alia, that the trial court
properly exercised its discretion in allowing the plaintiffappellant to provide substitute security in lieu of a supersedeas
bond.

92 Hawai`i at 504, 993 P.2d at 538.

However, Shanghai is

distinguishable since it dealt with Haw. R. Civ. P. 62(d) (1990),
and the trial court - after holding a hearing on the motion to
stay - granted the plaintiff-appellant leave to provide the
defendant-appellee with a judgment lien on the substitute
security (property with a tax assessed value of $15 million), and
$100,000 in a court-supervised interest-bearing account.

See id.

Moreover, this Court need not look to state procedural law in a
matter concerning a federal statute expressly governing
supersedeas bond approval and the effect thereof.

See Vacation

Vill., Inc. v. Clark Cty., Nev., 497 F.3d 902, 913-14 (9th Cir.
2007) (“‘[F]ederal courts are to apply state substantive law and
federal procedural law.’” (alteration in Vacation Vill.) (quoting
Hanna v. Plumer, 380 U.S. 460, 465, 85 S. Ct. 1136, 14
L. Ed. 2d 8 (1965))); Bass, 219 F.3d at 1055 (“Rule 62(d) is a
purely procedural mechanism to preserve the status quo during a
stay pending appeal of a district court decision and creates no
choice of law concerns.” (emphasis in Bass)).

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III. Joinder
In its Joinder, the AOAO agrees to the appointment of
the temporary receiver as described in the Motion, but argues
BOH’s continued practice of paying itself out of the Trust corpus
(of which the AOAO asserts it is a beneficiary) contravenes the
6/28/16 FOF/COL.

[Joinder at 6.]

AOAO states it has asked BOH

to cease payments made from the Trust corpus, return all monies
appropriated, and provide an accounting.

[Id., Decl. of

Andrew V. Beaman (“Beaman Decl.”) at ¶¶ 4-5.]

According to AOAO,

BOH agreed to suspend its withholding of the Trustee Fee from the
beneficiaries for six months, pending further Probate Court
proceedings, but did not respond to the AOAO’s other requests.
[Id.]
Insofar as AOAO has joined in the Motion and has agreed
to the appointment of a temporary receiver, the Joinder is
granted.

However, the Court denies all other requests therein as

they go beyond the scope of the Motion and are unsupported by any
legal authority.
CONCLUSION
On the basis of the foregoing, BOH’s Motion for
Appointment of a Temporary Receiver, filed July 31, 2018, is
HEREBY GRANTED, and AOAO’s Joinder in BOH’s Motion, filed
August 7, 2018, is HEREBY GRANTED IN PART AND DENIED IN PART.

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The Joinder is GRANTED with respect to the appointment of a
temporary receiver and DENIED as to all other issues.
The Court ORDERS BOH to prepare an Order of Appointment
for this Court’s review and approval.

The proposed order shall

be submitted by February 11, 2019.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, February 7, 2019.

/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge

MICHAEL DAVID BRUSER, ETC., ET AL. VS. BANK OF HAWAII, ETC.; CV
14-00387 LEK-RLP; AMENDED 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

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