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

Filing 304

ORDER GRANTING PLAINTIFFS' MOTION FOR RECONSIDERATION OF THE ORDER GRANTING SUMMARY JUDGMENT OF THEIR HAWAII UNFAIR DECEPTIVE PRACTICES ACT CLAIM re 292 , 303 - Signed by JUDGE LESLIE E. KOBAYASHI on 9/24/2020. On the basis of the foregoing, Plaintiffs' Motion for Reconsideration of the Order Granting Summary Judgment of Their Hawaii Unfair Deceptive Practices Act Claim, filed June 23, 2020, is HEREBY GRANTED. The portion of this Court's Decem ber 31, 2018 order granting summary judgment in favor of the AOAO as to Count III, Plaintiffs' UDAP claim, is VACATED and SUPERSEDED by this Order. The AOAO's January 24, 2018 Motion for Summary Judgment is DENIED as to Count III. All other rulings in the December 31, 2018 order are unaffected by this Order. (emt, )

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII

RUDY AKONI GALIMA, ROXANA
BEATRIZ GALIMA,

CIV. NO. 16-00023 LEK-RT

Plaintiffs,
vs.
ASSOCIATION OF APARTMENT OWNERS
OF PALM COURT, BY AND THROUGH
ITS BOARD OF DIRECTORS; DOE
DEFENDANTS 1-10, BRYSON CHOW,
Defendants.

ORDER GRANTING PLAINTIFFS’ MOTION FOR RECONSIDERATION
OF THE ORDER GRANTING SUMMARY JUDGMENT OF
THEIR HAWAII UNFAIR DECEPTIVE PRACTICES ACT CLAIM
On December 31, 2018 this Court issued its Order
Granting in Part and Denying in Part: Plaintiffs’ Motion for
Partial Summary Judgment; Defendant AOAO’s Motion for Summary
Judgment; and Defendant Chow’s Motion for Summary Judgment
(“12/31/18 Order”).

[Dkt. no. 173.1]

Before the Court is

Plaintiffs Rudy Akoni Galima and Roxana Beatriz Galima’s
(“Plaintiffs”) motion for partial reconsideration of the
12/31/18 Order (“Motion for Reconsideration”), filed June 23,
2020.

[Dkt. no. 292.]

On July 7, 2020, Defendant Association

of Apartment Owners of Palm Court (“AOAO”) filed its memorandum
in opposition to the Motion for Reconsideration, and Defendant

1

The 12/31/18 Order is also available at 2018 WL 6841818.

Bryson Chow (“Chow”) filed his joinder in the memorandum in
opposition.

[Dkt. nos. 296, 297.]

on July 20, 2020.

[Dkt. no. 302.]

Plaintiffs filed their reply
The Court has considered the

Motion for Reconsideration as a non-hearing matter pursuant to
Rule LR7.1(d) of the Local Rules of Practice for the United
States District Court for the District of Hawaii (“Local
Rules”).
On August 26, 2020, an entering order was issued
ruling on the Motion for Reconsideration.
Order supersedes that entering order.

[Dkt. no. 303.]

This

Plaintiffs’ Motion for

Reconsideration is hereby granted for the reasons set forth
below.
BACKGROUND
The factual and procedural background of this case is
set forth in the Court’s prior orders and will only be repeated
to the extent it is relevant to the Motion for Reconsideration.
This matter arises out of the foreclosure of Plaintiffs’
condominium unit by the AOAO, which was represented by Chow,
pursuant to the nonjudicial foreclosure procedure available at
that time within Chapter 667, Part I of the Hawai`i Revised
Statutes.2

The operative pleading is the Third Amended

2

Unless otherwise specified, all references to
“Chapter 667, Part I” in this case refer to the versions of Haw.
Rev. Stat. §§ 667-5 to 667-10 in effect at the time of the
(. . . continued)
2

Complaint, [filed 5/22/17 (dkt. no. 88),] which alleges the
following claims: wrongful foreclosure against the AOAO
(“Count I”); violation of the Fair Debt Collection Practices
Act, 15 U.S.C. § 1692(f), et seq., against Chow (“Count II”); a
Haw. Rev. Stat. Chapter 480 claim against the AOAO for unfair or
deceptive acts or practices (“UDAP” and “Count III”); a fraud
claim against the AOAO (“Count IV”); and a claim against the
AOAO for mental anguish and emotional distress, which has been
construed as a claim for intentional infliction of emotional
distress (“Count V”).
Relevant to the Motion for Reconsideration, the
12/31/18 Order granted the AOAO’s motion for summary judgment,
[filed 1/24/18 (dkt. no. 117) (“1/24/18 Summary Judgment
Motion”),] as to Count III.3
*12.

12/31/18 Order, 2018 WL 6841818, at

Plaintiffs argued there were genuine issues of material

fact as to whether their UDAP claim was timely because of the
application of equitable tolling.

Plaintiffs’ position was that

the AOAO fraudulently concealed its illegal action by repeatedly

nonjudicial foreclosure on Plaintiffs’ condominium unit. See,
e.g., Galima v. Ass’n of Apartment Owners of Palm Court,
CIVIL 16-00023 LEK-KSC, 2017 WL 1240181, at *2 & n.3 (D. Hawai`i
Mar. 30, 2017). Sections 667–5, 667–5.7, 667-6, 667–7, and 667–
8, which were in effect in 2010, were repealed in 2012. 2012
Haw. Sess. Laws Act 182, §§ 50-54 at 684.
3

The other rulings in the 12/31/18 Order are not at issue
in the Motion for Reconsideration.
3

representing that the foreclosure of Plaintiffs’ unit was
authorized under Chapter 667, Part I.

Id. at *11.

This Court

noted that, in a similar case alleging the wrongful foreclosure
of a condominium unit, the Hawai`i Intermediate Court of Appeals
(“ICA”) held that, where there was no allegation that the
condominium association concealed its reliance on the version of
§ 667-5 in effect at the time, the homeowners’ “‘laterdeveloped, but cognizable and ultimately successful, legal
theory’” did not constitute fraudulent concealment by the
association.

12/31/18 Order, 2018 WL 6841818, at *11 (quoting

Malabe v. Ass’n of Apartment Owners of Exec. Ctr., NO. CAAP-170000145, 2018 WL 6258564, at *4 (Hawai`i Ct. App. Nov. 29,
2018)).

Because this Court predicted that the Hawai`i Supreme

Court would follow the ICA’s analysis in Malabe, this Court
adopted the ICA’s analysis in this case and rejected Plaintiffs’
fraudulent concealment argument.

Id. at *12.

The Hawai`i Supreme Court subsequently issued its
decision in Malabe.

147 Hawai`i 330, 465 P.3d 777 (2020).

The

supreme court vacated the ICA’s judgment on appeal as to the
Malabes’ UDAP claim, holding that the circuit court erred in
dismissing the claim.

Id. at 358, 465 P.3d at 805-06.

Here,

Plaintiffs’ Motion for Reconsideration asserts the ruling on
their UDAP claim in the 12/31/18 Order should be reconsidered in
light of the supreme court’s opinion in Malabe.
4

STANDARD
Because the 12/31/18 Order was not a case-dispositive
order, Local Rule 60.1 applies.

It states, in pertinent part:

Motions for reconsideration of interlocutory
orders may be brought only upon the following
grounds:
(a) Discovery of new material facts not
previously available;
(b)

Intervening change in law; and/or

(c)

Manifest error of law or fact.

Motions asserted under subsection (c) of this
rule must be filed and served within fourteen
(14) days after the court’s order is issued.
Because Plaintiffs bring the instant Motion for Reconsideration
based on an intervening change in the law, the fourteen-day
filing deadline does not apply.
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). . . . “Mere
disagreement with a previous order is an
insufficient basis for reconsideration.” Davis,
2014 WL 2468348, at *3 n.4 (citations and
internal quotation marks omitted).

5

Lake v. Ohana Mil. Cmtys., LLC, CIV. NO. 16-00555 LEK, 2019 WL
2476728, at *2 (D. Hawai`i June 13, 2019) (alteration in Lake)
(some citations omitted).
DISCUSSION
The decision that was reviewed by the appellate courts
in Malabe was the circuit court’s dismissal of the UDAP claim
for failure to state a claim upon which relief could be granted.
See, e.g., Malabe, 147 Hawai`i at 336, 465 P.3d at 783.

In

contrast, the 12/31/18 Order granted summary judgment in favor
of the AOAO as to Plaintiffs’ UDAP claim.
*12.

2018 WL 6841818, at

The supreme court’s opinion relied heavily upon the notice

pleading standard applicable in Hawai`i state courts, which is
not the same as the pleading standard under federal law.

See

Malabe, 147 Hawai`i at 358 n.36, 465 P.3d at 805 n.36 (“We . . .
strongly disagree with the dissent’s imposition of federal court
pleading standards for fraudulent concealment onto our state
courts.”); id. (noting the “‘plausibility’ pleading standards”
established by Bell Atlantic Corp. v. Twombly, 550 U.S. 544
(2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), were
“expressly rejected” in Bank of America, N.A. v. Reyes-Toledo,
143 Hawai`i 249, 252, 428 P.3d 761, 764 (2018), in which the
supreme court “reaffirmed that [Hawai`i state] courts are
governed by ‘notice’ pleading standards”).

6

The supreme court took the Malabes’ allegations in
their complaint as true and noted it was required to “view the
complaint in the light most favorable to the Malabes.”

Malabe,

147 Hawai`i at 358, 465 P.3d at 805.
The Malabes’ complaint pled that the AOAO had
fraudulently concealed the wrongfulness of the
foreclosure proceedings by implying, stating,
and/or misrepresenting that it held a mortgage
with a power of sale when it did not, or that it
was authorized to use HRS § 667-5 when it could
not, that they relied on the false statements and
representations of the AOAO concerning the AOAO’s
right to conduct a public sale pursuant to HRS
§ 667-5, and that they were entitled to so rely
because they were members of the AOAO, because of
the AOAO’s trustee-like relationship with them,
and because the AOAO was acting as an agent or
attorney on their behalf.
Id. at 358 n.36, 465 P.3d at 805 n.36.

In its fraudulent

concealment analysis, the supreme court held that “the Malabes’
allegations are not insufficient as a matter of law,” and “it
cannot be said ‘they can prove no set of facts in support of
their claim that would entitle them to relief.”

Id. at 358 &

n.36, 465 P.3d at 805 & n.36 (brackets omitted).
Similarly, in the present case, when the evidence on
summary judgment was viewed in the light most favorable to
Plaintiffs,4 there was evidence that the AOAO represented to
Plaintiffs that it had the authority to conduct a nonjudicial

4

In considering the AOAO’s 1/24/18 Summary Judgment Motion,
the record was viewed in the light most favorable to Plaintiffs.
12/31/18 Order, 2018 WL 6841818, at *11-12.
7

foreclosure of their unit, pursuant to Chapter 667, Part I.
12/31/18 Order, 2018 WL 6841818, at *3-4.

See

There was also

evidence that an attorney who represented the AOAO before it was
represented by Chow sent a letter to his condominium association
clients in November 2010 warning them that Hawai`i courts may
hold that Part I nonjudicial foreclosures were illegal.

Thus,

there was a genuine issue of fact as to whether the AOAO
received similar advice.

See id. at *11.

Further, there was

evidence that Plaintiffs believed the foreclosure of their unit
was proper because of the statements and representations that
the AOAO had made throughout the demand and foreclosure process.
Id. at *5.

Although the procedural postures of the two cases

were different, the evidence in the summary judgment record in
the instant case was similar to the factual allegations pled in
Malabe.

Just as the Hawai`i Supreme Court held that the factual

allegations in Malabe were sufficient to state a claim upon
which relief could be granted, this Court concludes that the
record at the summary judgment stage was sufficient to preclude
judgment as a matter of law.
This Court therefore concludes that the Hawai`i
Supreme Court’s opinion in Malabe constitutes an intervening
change in the law that requires reconsideration of the 12/31/18
Order’s analysis of Plaintiffs’ UDAP claim.

That portion of the

12/31/18 Order must be vacated, and the AOAO’s 1/24/18 Summary
8

Judgment Motion must be denied as to Plaintiffs’ UDAP claim.
Thus, Count III, Plaintiffs’ UDAP claim, and the AOAO’s defenses
thereto, will proceed to trial, along with:
1) the AOAO’s defenses as to Count I; 2) if
Plaintiffs prevail on the AOAO’s asserted
defenses to Count I, Plaintiffs’ damages arising
from the wrongful foreclosure;[5] 3) all of the
parties’ asserted issues related to Counts II and
V, except for Plaintiffs’ argument that the
statute of limitations for each of those claims
was tolled based on fraudulent concealment.
See 12/31/18 Order, 2018 WL 6841818, at *18.
CONCLUSION
On the basis of the foregoing, Plaintiffs’ Motion for
Reconsideration of the Order Granting Summary Judgment of Their
Hawaii Unfair Deceptive Practices Act Claim, filed June 23,
2020, is HEREBY GRANTED.

The portion of this Court’s

December 31, 2018 order granting summary judgment in favor of
the AOAO as to Count III, Plaintiffs’ UDAP claim, is VACATED and
SUPERSEDED by this Order.

The AOAO’s January 24, 2018 Motion

for Summary Judgment is DENIED as to Count III.

All other

rulings in the December 31, 2018 order are unaffected by this
Order.
IT IS SO ORDERED.

5

Plaintiffs’ damages would be limited as set forth in the
May 3, 2019 Order Granting in Part and Denying in Part
Defendants’ Motions for Summary Judgment Regarding Damages.
[Dkt. no. 246.]
9

DATED AT HONOLULU, HAWAI`I, September 24, 2020.

RUDY AKONI GALIMA, ET AL. VS. AOAO PALM COURT, ET AL; CV 1600023 LEK-RT; ORDER GRANTING PLAINTIFFS' MOTION FOR
RECONSIDERATION OF THE ORDER GRANTING SUMMARY JUDGMENT OF THEIR
HAWAI`I UNFAIR DECEPTIVE PRACTICES ACT CLAIM

10