Galima et al v. Association of Apartment Owners of Palm Court

Filing 161

ORDER DENYING DEFENDANT BRYSON CHOW'S MOTION TO STAY PROCEEDINGS re 93 , 139 - Signed by JUDGE LESLIE E. KOBAYASHI on 6/8/2018. (emt, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
RUDY AKONI GALIMA and ROXANA
BEATRIZ GALIMA,

)
)
)
)
Plaintiffs,
)
vs.
)
)
ASSOCIATION OF APARTMENT
)
OWNERS OF PALM COURT, by and )
through its Board of
)
Directors; DOE DEFENDANTS 1- )
)
10,
)
)
Defendants.
_____________________________ )

CIVIL 16-00023 LEK-KSC

ORDER DENYING DEFENDANT BRYSON CHOW’S MOTION TO STAY PROCEEDINGS
Before the Court is Defendant Bryson Chow’s (“Chow”)
Motion to Stay Proceedings (“Motion”), filed on November 3, 2017.
[Dkt. no. 93.]

Plaintiffs Rudy Akoni Galima and Roxana Beatriz

Galima (“Plaintiffs”) filed their memorandum in opposition on
January 30, 2018, and Chow filed his reply on April 16, 2018.
[Dkt. nos. 127, 137.]
April 30, 2018.

This matter came on for hearing on

On May 4, 2018, this Court issued an entering

order ruling on the Motion.

[Dkt. no. 139.]

supersedes that entering order.

The instant Order

Chow’s Motion is hereby denied

for the reasons set forth below.
BACKGROUND
The relevant factual and procedural background is set
forth in this Court’s March 30, 2017 Order Denying Defendant
Association of Apartment Owners of Palm Court’s Amended Motion to

Dismiss Second Amended Complaint [Dkt 34]; and Granting in Part
and Denying in Part Defendant Bryson Chow’s Motion to Dismiss
[Dkt. 34] Second Amended Complaint (“3/30/17 Order”).

[Dkt.

no. 79.1]
Plaintiffs originally filed this case in state court,
and Defendant Association of Apartment Owners of Palm Court, by
and through its Board of Directors (“AOAO”), removed it on
January 22, 2016 because of Plaintiffs’ claim under the Fair Debt
Collections Practices Act (“FDCPA”), 15 U.S.C. § 1692, et seq.,
and because of issues related to Plaintiff Rudy Akoni Galima’s
military service.

[Notice of Removal at ¶ 3; id., Decl. of

David R. Major, Exh. A (First Amended Complaint, filed 1/15/16).]
The instant case challenges the AOAO’s foreclosure on
Plaintiff’s unit in the condominium project known as Palm Court,
Increment IC (“the Unit”) and raises the issue of whether the
version of Haw. Rev. Stat. § 514B-146(a) that was in effect at
the time of the challenged foreclosure allowed a condominium
association to use either Haw. Rev. Stat. Chapter 667, Part I or
Part II,2 regardless of whether the association had an agreement

1

The 3/30/17 Order is also available at 2017 WL 1240181.

2

During the relevant period, Chapter 667, Part consisted of
§§ 667-5 to 667-10. Sections 667-5, 667-5.7, 667-6, 667-7, and
667-8, which were in effect in 2010, were repealed in 2012. 2012
Sess. Law. Act 182, §§ 50-54. Act 182 also added a new § 667-1,
setting forth the chapter’s definitions, and made § 667-1 the
only statute in the current Part I of Chapter 667. Id. at § 3.
(continued...)
2

with the condominium owner which contained a power of sale
provision.

In the 3/30/17 Order, this Court stated:
Having examined the relevant statutes, their
legislative history, and instructive case law
regarding the foreclosure of mortgages, this Court
PREDICTS that the Hawai`i Supreme Court would
reject Defendants’ proposed interpretation of
§ 514B-146(a) (2010) and would agree with
Plaintiffs’ proposed interpretation. Thus, this
Court CONCLUDES that, because § 514B-146(a) (2010)
required a condominium association to foreclose
upon its lien “in like manner as a mortgage of
real property,” an association could only use the
Chapter 667, Part I foreclosure procedure if it
had an agreement with the condominium owner
providing for a power of sale. . . .

2017 WL 1240181, at *9 (emphasis in original).

This Court

ultimately concluded all of Plaintiffs’ counts against the AOAO,
as well as Plaintiffs’ count against Chow alleging FDCPA
violations, stated plausible claims for relief.3

Id. at *21.

After the filing of the 3/30/17 Order, the magistrate
judge granted Plaintiffs leave to file a third amended complaint.
[Minutes, filed 5/17/17 (dkt. no. 87).]

Plaintiffs filed their

2

(...continued)
All references to “Chapter 667, Part I” in the instant Order
refer to the version of Part I in effect at the time of the
nonjudicial foreclosure of Plaintiffs’ Unit.
3

Plaintiffs’ claims against the AOAO were: wrongful
foreclosure; unfair or deceptive acts or practices (“UDAP”) under
Haw. Rev. Stat. § 480-2; fraud; and intentional infliction of
emotional distress (“IIED”). 3/30/17 Order, 2017 WL 1240181, at
*3. Plaintiffs also alleged these claims against Chow, but the
claims were dismissed with prejudice. Id. at *3, *21. The
counts that this Court ruled stated plausible claims for relief
are realleged in Plaintiffs’ Third Amended Complaint.
3

Third Amended Complaint on May 22, 2017.

[Dkt. no. 88.]

The

AOAO and Chow each filed an answer to the Third Amended Complaint
on June 5, 2017.

[Dkt. nos. 89, 90.]

In the instant Motion, Chow asks this Court to stay the
instant case pending the outcome of the appeal in Malabe v.
Association of Apartment Owners of Executive Centre, Civil
No. 16-1-2256-12 RAN, which is currently pending before the
Hawai`i Intermediate Court of Appeals (“ICA”).

Gilbert V. Malabe

and Daisy D. Malabe (“the Malabes”) filed their Complaint
(“Malabe Complaint”) in a state circuit court on December 13,
2016.

The Malabes alleged a wrongful foreclosure claim and a

UDAP claim against the Association of Apartment Owners of
Executive Centre, by and through its Board of Directors
(“Executive Centre AOAO”).

[Motion, Decl. of Peter W. Olson

(“Olson Decl.”), Exh. 1 (Malabe Complaint).]

The Malabes are

represented by the same law firm that is local counsel for
Plaintiffs.

See id. at 1.

According to Chow, the Malabes

“asserted, as the Galimas assert in this case, that the AOAO did
not hold a mortgage with a power of sale and, thus, were
prohibited from utilizing [Chapter 667,] Part I.”

[Motion at 1

(citing Malabe Complaint at ¶¶ 12, 13, 27, 33).]

The Executive

Centre AOAO moved to dismiss the Malabe Complaint, arguing, inter
alia, that it properly foreclosed on the Malabes’ unit pursuant
to Chapter 667, Part I.

[Olson Decl., Exh. 2 (Executive Centre

4

AOAO’s motion to dismiss, filed 1/11/17 (“Executive Centre Motion
to Dismiss”)), mem. in supp. at 5-7.]

On February 17, 2017, the

state court granted the Executive Centre Motion to Dismiss,
dismissed the Malabe Complaint with prejudice, and entered a
final judgment.

[Id., Exh. 3 (order granting motion), Exh. 4

(judgment).]
The Malabes filed an appeal.

[Id., Exh. 5 (Notice of

Appeal, filed with the ICA on 3/9/17 and filed in the state
circuit court on 3/16/17).]

The appeal has been fully briefed.4

[Id., Exh. 8 (Malabes’ Opening Brief, filed 5/30/17), Exh. 9
(Executive Centre AOAO’s Answering Brief, filed 8/9/17), Exh. 10
(Malabes’ Reply Brief, filed 8/22/17).]

The Malabes’ counsel

identified the following as related cases to the Malabe appeal:
the instant case; Brown, et al. v. Porter, McGuire, Kiakona &
Chow, LLP, et al., CV 16-00448 LEK-KSC;5 and three other state
court actions.

[Id., Exh. 11 (Statement of Related Cases, filed

4

One of the defense counsel present at the April 30, 2018
hearing on Chow’s Motion – who also represents the Executive
Centre AOAO in Malabe – stated the Malabe appeal has been
assigned to an ICA panel, but the parties were still waiting for
an oral argument date. According to the case’s docket sheet on
the Judiciary Information Management System, there has been no
change in the Malabe appeal docket since the April 30, 2018
hearing.
5

On November 3, 2017, the magistrate judge issued an order
severing Plaintiff Benita J. Brown’s claims – which are now in
CV 17-00554 LEK-KSC – from Plaintiffs Craig Connelly and Kristine
Connelly’s claims – which remain in CV 16-00448 LEK-KSC.
[Connelly, dkt. no. 106.]
5

5/30/17).]

The Malabes argued the “central issue in th[e] case

is whether [the Executive Centre AOAO] committed a wrongful
foreclosure by using Part I of Chapter 667 . . . instead of the
alternate nonjudicial foreclosure process contained in Part II to
foreclose its lien for unpaid common expenses.”

[Id., Exh. 8 at

1.]
Chow argues a stay of the instant case pending the
resolution of the Malabe appeal is necessary to “avoid
inconsistent decisions on a controlling question of state law”
and to “conserve the Court and the parties’ resources.”
at 2.]

[Motion

Further, he contends a stay “would promote the

comprehensive disposition of litigation.”

[Id.]

DISCUSSION
Chow argues a stay is warranted under the doctrine
established by Colorado River Water Conservation District v.
United States, 424 U.S. 800 (1976), and its progeny.

However,

this Court concludes the more appropriate analysis is whether
this Court should stay the instant case under its inherent
authority.

Thus, the following standard applies to the Motion:
“[T]he power to stay proceedings is
incidental to the power inherent in every court to
control disposition of the cases on its docket
with economy of time and effort for itself, for
counsel, and for litigants.” Landis v. N. Am.
Co., 299 U.S. 248, 254 (1936). “The exertion of
this power calls for the exercise of sound
discretion.” CMAX, Inc. v. Hall, 300 F.2d 265,
268 (9th Cir. 1962).

6

When a stay is requested because of pending
proceedings that bear on the case, the Court may
grant a stay in the interests of the efficiency of
its own docket and fairness to the parties. See
Leyva v. Certified Grocers of Cal. Ltd., 593 F.2d
857, 863 (9th Cir. 1979). The Ninth Circuit set
out the following framework for analyzing motions
to stay pending resolution of related matters:
Where it is proposed that a pending
proceeding be stayed, the competing interests
which will be affected by the granting or
refusal to grant a stay must be weighed.
Among those competing interests are the
possible damage which may result from the
granting of a stay, the hardship or inequity
which a party may suffer in being required to
go forward, and the orderly course of justice
measured in terms of the simplifying or
complicating of issues, proof, and questions
of law which could be expected to result from
a stay.
Lockyer [v. Mirant Corp.], 398 F.3d [1098,] 1110
(9th Cir. 2005) (quoting CMAX, 300 F.2d at 268).
See also Dependable Highway Express v. Navigators
Ins. Co., 498 F.3d 1059, 1066-67 (9th Cir. 2007)
(In determining the propriety of a stay, courts
consider the possible effects of judicial economy
as well as the potential harm to the parties and
the public interest.)[.]
The party seeking to stay the proceedings
carries “the burden of establishing its need.”
Clinton [v. Jones], 520 U.S. [681,] 708 [(1997)]
(citing Landis, 299 U.S. at 255).
Grindling v. Shibao, CV. NO. 16-00426 DKW-RLP, 2017 WL 2661630,
at *1-2 (D. Hawai`i June 20, 2017) (some alterations in
Grindling) (some citations omitted).
This Court recognizes the Malabe appeal raises the same
legal issue that is at the core of the instant case: whether a
condominium association – without a mortgage or other agreement
7

containing a power of sale provision – could use the former
Chapter 667, Part I to foreclose upon a lien for unpaid
condominium assessments.

While the cases are not identical – for

example, Malabe does not involve a FDCPA claim – they have
significant similarities, and therefore staying the instant case
until the Malabe appeal is resolved is likely to simplify the
“issues, proof, and questions of law” in the instant case.
Lockyer, 398 F.3d at 1110.

See

Requiring the parties to proceed with

the instant case without the state appellate courts’ guidance in
Malabe is arguably inefficient and may lead to unnecessary
proceedings, if the state court’s ruling in Malabe is affirmed.
Thus, Chow may be prejudiced without a stay because he may be
required to spend unnecessary time and resources in this case.
However, Plaintiffs filed the instant case over two
years ago.

Trial is currently scheduled for July 9, 2019.

[Third Amended Rule 16 Scheduling Order, filed 5/14/18 (dkt.
no. 144), at 1.]

Staying the case pending the resolution of the

Malabe appeal will significantly delay the trial of Plaintiffs’
claims.

Although the Malabes filed their notice of appeal in

March 2017 and the briefing in Malabe was completed in
August 2017, the appeal has not yet been scheduled for oral
argument.6

Further, even after the ICA issues its opinion, it is

6

The Malabes could have applied to have their appeal
transferred to the Hawai`i Supreme Court, see, e.g., Stores v.
(continued...)
8

a virtual certainty that at least one party will apply for a writ
of certiorari from the Hawai`i Supreme Court.

If the supreme

court accepts the application, there will be further briefing,
and a substantial amount of time will pass before the supreme
court issues its opinion.

Thus, the Malabe appeal may not be

resolved until as much as another three and half or four years
from today.

See, e.g., Pasco v. Bd. of Trs. of the Emps.’ Ret.

Sys., SCWC-13-0003629, 2018 WL 2322986, at *4 (Hawai`i May 22,
2018) (notice of appeal filed on September 27, 2013 and the ICA
opinion issued was issued June 17, 2016); Nakamoto v. Kawauchi,
No. SCWC-13-0004947, 2018 WL 2111228, at *6 (Hawai`i May 8, 2018)
(circuit court judgment entered on October 3, 2013), affirming in
part and vacating in part, NO. CAAP-13-0004947, 2017 WL 986008
(Hawai`i Ct. App. Mar. 15, 2017).

Granting a stay pending the

resolution of the Malabe appeal could result in a 2022 or 2023
trial date in the instant case.

This would be prejudicial to

Plaintiffs because witnesses and other evidence may be
unavailable or less reliable because of the passage of time,

6

(...continued)
State Dep’t of Taxation, SCAP-15-0000861, 2018 WL 2275077, at *5
(Hawai`i May 18, 2018) (noting the supreme court accepted the
appellant’s application for transfer), but the Malabes apparently
did not do so.
9

particularly because the majority of the events at issue in this
case occurred in 2010.7
This Court finds there is prejudice on both sides of
Chow’s Motion.

Plaintiffs will likely be prejudiced if this

Court grants a stay; and Chow and the AOAO – which is arguably
similarly situated to Chow – will likely be prejudiced if this
Court does not grant the stay.

In addition, the interests of

judicial economy weigh in favor of a stay because of the
significant overlapping issues between the instant case and
Malabe.

Finally, this Court finds that the public interest is

neutral.

The public has an interest in seeing a resolution to

the issue of when condominium associations could use the former
Chapter 667, Part I.

However, that interest is limited because

many of the statutes that were within the former Part I –
including Haw. Rev. Stat. § 667-5, which the AOAO relied upon in
the foreclosure of Plaintiffs’ Unit – have been repealed.

See

2012 Haw. Sess. Laws Act 182, §§ 50-54.
Plaintiffs’ prejudice concerns harm to their ability to
present their case, whereas Defendants’ prejudice concerns
primarily the preservation of money.

7

In the exercise of its

The Court acknowledges it was Plaintiffs’ decision to file
this case in 2016, over five years after the foreclosure on their
Unit, and that fact may have contributed to any unavailability of
evidence. However, this Order is only concerned with the fact
that it will be more difficult for Plaintiffs to prove their case
in 2022 or 2023 than it would be in 2019.
10

discretion, this Court concludes Defendants’ interests and the
interests of judicial economy must yield to Plaintiffs’
interests.

A stay pending the resolution of the Malabe appeal is

not warranted at this time.

Chow’s Motion is therefore denied.

Any party may file a new motion for a stay, if there is
a significant change in the status of the Malabe appeal,
including, but not limited to, the issuance of an ICA opinion or
a decision by the Hawai`i Supreme Court to consider Malabe after
transfer.

This Court expresses no inclination as to how it would

rule on a new motion for stay.
CONCLUSION
On the basis of the foregoing, Defendant Bryson Chow’s
Motion to Stay Proceedings, filed November 3, 2017, is HEREBY
DENIED WITHOUT PREJUDICE to the filing of a new motion to stay
under the circumstances described in this Order.
IT IS SO ORDERED.

11

DATED AT HONOLULU, HAWAII, June 8, 2018.

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

RUDY AKONI GALIMA, ET AL. VS. AOAO PALM COURT, ET AL; CV 16-00023
LEK-KSC; ORDER DENYING DEFENDANT BRYSON CHOW’S MOTION TO SAY
PROCEEDINGS

12