Pacific Commercial Services, LLC v. LVI Environmental Services, Inc.; et al.
Filing
184
ORDER DENYING DEFENDANTS' MOTION FOR RECONSIDERATION, ECF NO. 172 . Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 10/24/2018. (afc) Order denies Defendants' Motion: "MOTION FOR RECONSIDERATION OF FINDINGS OF FACT AND CONCLUSIONS OF LAW"
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
PACIFIC COMMERCIAL SERVICES,
LLC, a Hawaii limited liability
company,
Civ. No. 16-00245 JMS-KJM
ORDER DENYING DEFENDANTS’
MOTION FOR
RECONSIDERATION, ECF NO. 172
Plaintiff,
vs.
LVI ENVIRONMENTAL SERVICES,
INC., nka NORTHSTAR
CONTRACTING GROUP, INC., ET
AL.,
Defendants.
ORDER DENYING DEFENDANTS’ MOTION FOR
RECONSIDERATION, ECF NO. 172
On August 27, 2018, Defendants LVI Environmental Services, Inc.,
nka Northstar Contracting Group, Inc., and Northstar Recovery Services, Inc.
(“Defendants” or “LVI”) filed a Motion for Reconsideration of Findings of Fact
and Conclusions of Law, ECF No. 172 (“Motion for Reconsideration”), seeking
amendment or modification of the court’s August 10, 2018 Findings of Fact and
Conclusions of Law (“FOFCOL”), ECF No. 170. The court construed the Motion
for Reconsideration as a timely-filed Motion under Federal Rules of Civil
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Procedure 52(b) and/or 59(e) to amend the FOFCOL and modify the Judgment.
ECF No. 173. Plaintiff Pacific Commercial Services, LLC (“Plaintiff” or “PCS”)
filed its Opposition on September 14, 2018, ECF No. 177, and LVI filed a Reply
on September 28, 2018, ECF No. 180. The court decides the Motion under Local
Rule 7.2(e) without an oral hearing. The Motion is DENIED.
LVI’s Motion raises two arguments for the court’s consideration. 1
First, LVI contends that the court manifestly erred in not addressing, and not
accepting, its argument that it partially cancelled the Subcontract between it and
PCS pursuant to Paragraph 1.59.A of the Prime Contract between it and Hawaiian
Electric (“HECO”). 2 (The FOFCOL addressed and rejected a similar argument
under Paragraphs 21(a) and 21(b) of the Terms and Conditions of the Subcontract,
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LVI faults PCS for failing to address LVI’s third argument (that because LVI prevailed
at summary judgment on Count V, PCS is not entitled to attorneys’ fees). See Defs.’ Reply at 2,
ECF No. 180 (“[T]hat issue has apparently been conceded by PCS based on its failure to respond
to LVI’s argument in the Motion.”). LVI, however, fails to recognize that this court already
addressed that specific argument, telling the parties that they “need not argue” the point further.
See Order Awarding Prejudgment Interest, Directing Entry of Judgment, and Addressing Motion
for Reconsideration at 2, ECF No. 173. In its Opposition, PCS was following the court’s
instructions. See id. at 3 (“To be clear, the further briefing on the Rule 52(b)/59(e) Motion
should focus on Defendants’ other two arguments[.]”). The court also stated, “Defendants may
make this argument in their Opposition to any subsequent motion or petition Plaintiff may file
seeking attorney’s fees and non-taxable expenses.” Id.
2
Paragraph 1.59.A of the Prime Contract provides: “The Owner [HECO] shall have the
right to terminate the Contract in whole or in part, at any time and for any reason, in the sole
discretion of the Owner. The termination shall be effected by giving the Contractor [LVI] two
(2) days prior written notice.” Ex. P-8 at 1-55 (NSC000971), ECF No. 141-11 at 67.
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but not under terms of the Prime Contract.) Second, it contends that PCS is not
entitled to prejudgment interest because PCS was responsible for an unreasonable
delay of “approximately 39 months or 3.25 years” in bringing this suit. ECF No.
172 at 17. The court addresses each argument in turn.
A.
LVI’s Argument Under Paragraph 1.59.A of the Prime Contract is
Barred, and Would Fail for Lack of Proof
The court agrees with PCS that LVI’s argument (that the Subcontract
was partially terminated under paragraph 1.59.A of the Prime Contract, which was
incorporated by reference into the Subcontract) is barred — it was not argued in
the trial briefs, was not specifically mentioned at trial, and was not discussed in
any substantive pretrial motion. See, e.g., Marlyn Nutraceuticals, Inc. v. Mucos
Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009) (“A motion for
reconsideration ‘may not be used to raise arguments or present evidence for the
first time when they could reasonably have been raised earlier in the litigation.’”)
(quoting Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000));
Wereb v. Maui Cty., 830 F. Supp. 2d 1026, 1031 (9th Cir. 2011) (reiterating that
“reconsideration may not be based on evidence and legal arguments that a movant
could have presented at the time of the challenged decision”) (citing Kona Enters.,
229 F.3d at 890).
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Even if the court were to consider it now, its resolution depends upon
facts that were not litigated and which were not developed in the trial record. LVI
argues that the Prime Contract’s terms were incorporated by reference into the
Subcontract, as it urged in its proposed Findings and Conclusions. According to
LVI, this incorporation-by-reference argument is a purely legal issue for which no
evidence was necessary at trial. Defs.’ Reply at 3, ECF No. 180. This is decidedly
not so.
To be sure, “whether material has been incorporated [by reference]
presents a question of law.” Safeway, Inc. v. Nordic PCL Constr., Inc., 130 Haw.
517, 527, 312 P.3d 1224, 1234 (Haw. Ct. App. 2013) (quoting 11 Richard A. Lord,
Williston on Contracts § 30:25, at 308 (4th ed. 2012) (other citations omitted)).
But “it is [also] clear that whether one agreement has incorporated another has
factual components[.]” Id. That is, “[r]emaining to be resolved . . . is whether the
parties assented to incorporation of those conditions, and it is here that the inquiry
shifts from a matter of law to a matter of fact.” Id. at 529, 312 P.3d at 1236
(citations omitted). In “look[ing] to the surrounding circumstances of the case . . .
assent is a factual inquiry.” Id.
As LVI’s memorandum acknowledges, “in order to uphold the
validity of terms incorporated by reference it must be clear that the parties to the
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agreement had knowledge of and assented to the incorporated terms.” Servco Pac.,
Inc. v. SkyBridge Glob., Inc., 2016 WL 6996987, at *5 (D. Haw. Nov. 29, 2016)
(quoting Safeway, 130 Haw. at 527, 312 P.3d at 1234). “Determining whether
there is mutual assent is not confined solely to the contractual terms, but ‘in
combination with the surrounding circumstances presented in the case.’” Id.
(quoting Douglass v. Pflueger Haw., Inc., 110 Haw. 520, 532, 135 P.3d 129, 141
(2006)). It is an “exacting standard.” Id.
And whether the parties “had knowledge of and assented to the
incorporated terms,” Safeway, 130 Haw. at 527, 312 P.3d at 1234, raises entirely
new factual questions in this case regarding § 1.59A of the Prime Contract —
questions that were not litigated or briefed, and for which there is no evidence.
The record contains no evidence of intent, one way or the other — thus, even if the
court considered the question, LVI’s argument would fail for lack of proof.
Without such evidence, the court could not make findings regarding PCS’s or
LVI’s “knowledge of and assent” to the terms of the Prime Contract between
HECO and LVI, even if LVI had raised the point earlier or even if it would have
done so orally at a post-trial hearing (as it claims it was planning to do).
///
///
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B.
PCS Did Not Unreasonably Delay Bringing Suit
LVI argues that, because PCS waited “3.25 years” to bring suit, the
court abused its discretion in awarding prejudgment interest. In response, PCS has
established that it did not unreasonably delay filing suit — thus, an award of
prejudgment interest is appropriate. See, e.g., Roxas v. Marcos, 89 Haw. 91, 153,
969 P.2d 1209, 1271 (1998) (explaining factors courts consider in making the
discretionary decision to award or deny prejudgment interest).3 In particular, PCS
has established that it attempted at length to obtain a non-judicial resolution of the
dispute before filing this action, and when those attempts failed, made a timely
claim with LVI’s bonding company in July 2015. See Chang Decl. (Sept. 14,
2018) ¶¶ 3, 4, ECF No. 177-1; Lam Decl. (Sept. 14, 2018) ¶¶ 4 to 13, ECF No.
177-2. This suit was first brought in state court on April 19, 2016 — well within
the six-year statute of limitations for contract claims, and less than a month after
LVI’s bonding company denied PCS’s claim on March 21, 2016. See Pl.’s Ex. 11,
ECF No. 177-13.
3
Hawaii Revised Statutes (“HRS”) § 636-16 provides: “In awarding interest in civil
cases, the judge is authorized to designate the commencement date to conform with the
circumstances of each case, provided that the earliest commencement date in cases arising in tort,
may be the date when the injury first occurred and in cases arising by breach of contract, it may
be the date when the breach first occurred.”
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The court also agrees with PCS that it is misleading for LVI to
suggest a 3.25 year “across the board” delay in bringing suit — that time period is
measured from February 5, 2013, which is when LVI first confirmed to PCS its
decision to use another contractor for asbestos containing material. See Ex. P-24,
ECF No. 141-27. But LVI continued to breach the Subcontract through March 5,
2015. See Ex. P-65A at 6; ECF No. 146-7. And the related dispute between the
parties regarding the per-drum or per-ton charge for disposal of hazardous solid
waste (involving the “small font” provision of line item 4 of the HECO
Subcontract) was continuing throughout (when the parties still had an ongoing
relationship working on aspects of the HECO and Kahuku Projects). At that point,
refraining from litigation was not unreasonable or dilatory.
HRS § 636-16 “vests the trial judge with broad discretion to award
interest in conformity ‘with the circumstances of each case.’” In re Asbestos
Cases, 847 F.2d 523, 527 (9th Cir. 1988) (quoting the statute). “[T]he clear weight
of authority establishes that an award of interest is compensatory in nature and
therefore appropriate, where as here, the plaintiff must wait a substantial period
between the time of injury and compensation.” Id. (citations omitted). “Under
Hawaii law, ‘[p]rejudgment interest is an element of complete compensation.
Prejudgment interest serves to compensate for the loss of use of money due as
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damages from the time the claim accrues until judgment is entered, thereby
achieving full compensation for the injury those damages are intended to redress.’”
In re Maui Indus. Loan & Fin. Co., 2013 WL 2897792, at *10 (D. Haw. June 13,
2013) (quoting Kalawaia v. AIG Haw. Ins. Co., 90 Haw. 167, 172, 977 P.2d 175,
180 (1999)) (other citations omitted). Here, the award of prejudgment interest —
although substantial — serves as compensation and as damages based on
Defendants’ breaches set forth in the court’s August 10, 2018 FOFCOL.
For the foregoing reasons, Defendants’ Motion for Reconsideration is
DENIED. That is, the request to amend the Findings and/or to modify the
Judgment is DENIED.
IT IS SO ORDERED.
DATED, Honolulu, Hawaii, October 24, 2018.
/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge
Pac. Commercial Servs., LLC v. LVI Envt’l Servs, Inc., Civ. No. 16-00245 JMS-KJM, Order
Denying Defendants’ Motion for Reconsideration, ECF No. 172
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