Donenfeld v. County of Maui, et al.

Filing 32

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT ARAKAWA'S 11 MOTION FOR PARTIAL DISMISSAL OF FIRST AMENDED COMPLAINT. Signed by JUDGE DERRICK K. WATSON on 12/28/2016. - The Court GRANTS Defendant's Motion for P artial Dismissal of First Amended Complaint in all respects, except as to Count VI. (ecs, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAI`I

HARRY DONENFELD,
Plaintiff,
vs.
COUNTY OF MAUI; ALAN
ARAKAWA, in his official and
personal capacity; JOHN DOES 1-10,
JANE DOES 1-10, DOE
PARTNERSHIPS 1-10, DOE
CORPORATIONS 1-10, DOE
ENTITIES 2-10 and DOE
GOVERNMENTAL UNITS 1-10,

CIVIL NO. 16-00381 DKW-KJM
ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT
ARAKAWA’S MOTION FOR
PARTIAL DISMISSAL OF FIRST
AMENDED COMPLAINT

Defendants.

ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT ARAKAWA’S MOTION FOR PARTIAL DISMISSAL OF
FIRST AMENDED COMPLAINT
Plaintiff Harry Donenfeld alleges that he was wrongfully terminated as Maui
County Film Commissioner by the County of Maui and Mayor Alan Arakawa.
Mayor Arakawa, in his personal capacity, moves to dismiss seven of the ten claims
brought against him (Dkt. No. 11), four of which Donenfeld does not oppose. For
the reasons that follow, the Court GRANTS dismissal of six of the claims against

Mayor Arakawa, in his personal capacity, but DENIES dismissal of Donenfeld’s
interference with contractual relations claim.
BACKGROUND
I.

Factual Background1
This case stems from allegations that the County of Maui, by and through

Mayor Arakawa, wrongfully terminated Donenfeld after Mayor Arakawa was
requested to do so by his political supporter, Ryan Kavanaugh. First Amended
Complaint (“FAC”) ¶ 1. Kavanaugh is “a Hollywood ‘insider’ and film producer,”
and his relationship with Mayor Arakawa is summarized in the First Amended
Complaint as follows:
Kavanaugh is a long time financial backer of Mayor Arakawa’s
campaigns and self-named charity and has spent considerable
money lobbying legislation on behalf of the Mayor and the
County of Maui. Kavanaugh has also lent his name and
celebrity to the Mayor’s causes, and even offering tickets for
the Mayor and his wife to attend the Golden Globes awards
ceremony in Hollywood as Kavanaugh’s personal guests.
Id. ¶ 2.
On January 2, 2011, Mayor Arakawa appointed Donenfeld as the Maui
County Film Commissioner, effective on August 4, 2011. Id. ¶¶ 9, 26. Donenfeld
expected that his employment with the County entitled him to the rights and
benefits prescribed in the Maui County Employee Handbook. Id. ¶ 30.
1

The following statement of facts is drawn from the allegations in Donenfeld’s First Amended
Complaint, which the Court must accept as true for purposes of the Rule 12(b)(6) motion.

2

After Donenfeld started working as Film Commissioner, Kavanaugh grew
dissatisfied with Donenfeld’s job performance. Id. ¶¶ 15, 37. The dissatisfaction
stemmed in part from the belief that Donenfeld had assisted Maui Film Studios
LLC (“MFS”). Id. ¶ 37. Kavanaugh believed that MFS threatened the likelihood
that the Movie Tax Bill, a piece of legislation that he had spent over $2 million
lobbying, would pass. Id. ¶¶ 25, 37. As such, Kavanaugh began sending emails
requesting Donenfeld’s termination as Film Commissioner. Id. ¶ 39. Mayor
Arakawa’s Executive Assistant, Jock Yamaguchi, assured Kavanaugh by email
that Donenfeld would be fired if he interfered with Kavanaugh’s plans concerning
film legislation. Id. ¶ 42.
On March 5, 2013, Mayor Arakawa held a meeting with several of his key
staff members, including Managing Director Keith Regan, Communications
Director Rod Antone, and Chief of Staff Herman Andaya, to confront Donenfeld
about the following issues: protecting Mayor Arakawa’s relationship with
Kavanaugh; preserving the Movie Tax Bill; and halting support for MFS because
MFS threatened Kavanaugh and the Movie Tax Bill. Id. ¶¶ 43-44.
After several months, Kavanaugh remained dissatisfied with Donenfeld’s
performance as Film Commissioner. As such, on August 21, 2013, a meeting was
held in the Mayor’s office with Mayor Arakawa, Kavanaugh, Chief of Staff
Andaya, Director of the Office of Economic Development Teena Rasmussen,
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Executive Assistant Yamaguchi, and Donenfeld, among others. Id. ¶¶ 46-47. At
this meeting, Kavanaugh reaffirmed his prior positions and continued his criticism
of Donenfeld. Id. ¶ 48. At the conclusion of this meeting, OED Director
Rasmussen told Donenfeld that he had to be at his desk every morning by 7:45
a.m. or he would be fired. Id. ¶ 49.
On or about September 6, 2013, Donenfeld was terminated as Film
Commissioner. Id. ¶ 50. Although OED Director Rasmussen terminated
Donenfeld’s employment, she allegedly lacked the unilateral authority to do so and
provided no reason for the decision. Id. ¶¶ 51-52. According to a letter in
Donenfeld’s employment file, dated November 11, 2013, Maui County reported:
(1) “there was no final incident and no prior warnings” before
Donenfeld’s termination; [(2)] there “is insufficient evidence to
show that [Donenfeld’s] discharge was due to willful or
deliberate disregard of the employer’s best interests”; (3)
“[Donenfeld] was discharged for reasons other than misconduct
connected with work”; and (4) Donenfeld was discharged
because he was “incompatible for the position.”
Id. ¶ 63 (some brackets added).
II.

Procedural Background
On July 8, 2016, Donenfeld filed a Complaint against Maui County and

Mayor Arakawa. Dkt. No. 1. On July 12, 2016, Donenfeld filed a First Amended
Complaint against Maui County and Mayor Arakawa, in his personal and official
capacity, alleging: (1) wrongful termination (Count I); (2) defamation (Count II);
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(3) privacy violations (Count III); (4) denial of constitutional and civil rights
(Count IV); (5) breach of contract (Count V); (6) interference with contractual
relations (Count VI); (7) breach of implied covenant of good faith and fair dealing
(Count VII); (8) promissory estoppel (Count VIII); (9) negligence (Count IX); and
(10) punitive damages (Count X). Dkt. No. 5.
On August 15, 2016, Mayor Arakawa, in his personal capacity, filed a
Motion for Partial Dismissal of First Amended Complaint (“Motion”), seeking
dismissal of Counts I, III, V, VI, VII, VIII, and X. Dkt. No. 11.2 Donenfeld
responded to the Motion, conceding the dismissal of Counts I, III, and V against
Mayor Arakawa in his personal capacity, but opposing the dismissal Counts VI,
VII, VIII, and X. Dkt. No. 26.
On October 28, 2016, the Court held a hearing on the Motion, and thereafter,
asked the parties to submit supplemental briefing on the following two issues
relating to Counts VI (interference with contractual relations) and VIII (promissory
estoppel), respectively:
(1) whether Maui County Mayor Arakawa, in his personal
capacity, can interfere, as a matter of law, with a contract
between Maui County and a Maui County employee; and
(2) whether a promissory estoppel claim can lie, as a matter of
law, against Arakawa in his personal capacity, given that any
2

On October 7, 2016, Mayor Arakawa, in his official capacity, filed a joinder to the Motion.
Counsel for Mayor Arakawa, in his official capacity, subsequently acknowledged at the hearing
on the Motion that the joinder was not timely filed.

5

promises that were made by Arakawa during employment
negotiations with Donenfeld would have taken place with
Arakawa acting in his official capacity on behalf of Maui
County.
Dkt. No. 29.
The parties timely filed their respective supplemental briefs. See Dkt. Nos.
30, 31. Donenfeld’s supplemental brief conceded the dismissal of his promissory
estoppel claim (Count VIII), but maintained the viability of his interference with
contractual relations claim (Count VI).
STANDARD OF REVIEW
Federal Rule of Civil Procedure 12(b)(6) permits a motion to dismiss for
failure to state a claim upon which relief can be granted. Pursuant to Ashcroft v.
Iqbal, “[t]o survive a motion to dismiss, a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
555 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 554,
570 (2007)). “[T]he tenet that a court must accept as true all of the allegations
contained in a complaint is inapplicable to legal conclusions.” Id.
Under Rule 12(b)(6), review is generally limited to the contents of the
complaint. Sprewell v. Golden State Warriors, 266 F.3d 979, 988 (9th Cir. 2001);
Campanelli v. Bockrath, 100 F.3d 1476, 1479 (9th Cir. 1996). However, courts
may “consider certain materials—documents attached to the complaint, documents
incorporated by reference in the complaint, or matters of judicial notice—without
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converting the motion to dismiss into a motion for summary judgment.” United
States v. Ritchie, 342 F.3d 903, 908 (9th Cir. 2003).
DISCUSSION
I.

Counts I, III, V, and VIII Against Arakawa In His Personal Capacity
Are Dismissed
Because Donenfeld does not oppose the dismissal of Counts I, III, V, and

VIII against Mayor Arakawa in his personal capacity, the Court finds it
unnecessary to discuss these claims in any detail.3 Accordingly, the Court
GRANTS the dismissal of these claims against Mayor Arakawa in his personal
capacity with prejudice.
II.

Count VI (Interference With Contractual Relations)
Count VI alleges that Mayor Arakawa interfered with Donenfeld’s contract

with Maui County. The elements of a claim for tortious interference with
contractual relations are as follows:
1) a contract between the plaintiff and a third party; 2) the
defendant’s knowledge of the contract; 3) the defendant’s
intentional inducement of the third party to breach the contract;
4) the absence of justification on the defendant’s part; 5) the
subsequent breach of the contract by the third party; and 6)
damages to the plaintiff. It is of the essence in an action for
wrongful interference with contractual relationships that the
3

Donenfeld conceded the dismissal of Counts I, III, and V in his opposition brief (Dkt. No. 26 at
13). As to Count VIII, Donenfeld conceded that, “if Arakawa’s promises were made solely in
his official capacity, promissory estoppel is not actionable against Arakawa in his personal
capacity.” Dkt. No. 30 at 3. The Court finds that the allegations in the First Amended
Complaint can only be read in such a manner, and thus, deems the dismissal of Count VIII to be
unopposed.

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plaintiff suffer damages as a consequence of the defendant’s
conduct, and these damages cannot be speculative or
conjectural losses.
Meridian Mortg., Inc. v. First Hawaiian Bank, 109 Hawai‘i 35, 44, 122 P.3d 1133,
1142 (App. 2005) (ellipsis and brackets omitted) (quoting Weinberg v. Mauch, 78
Hawai‘i 40, 50, 890 P.2d 277, 287 (1995)).
As set forth below, Mayor Arakawa offers several arguments in support of
the dismissal of this claim, none of which the Court finds persuasive.
A.

Donenfeld’s At-Will Contract Can Form the Basis of the Claim

Mayor Arakawa contends that Count VI should be dismissed because
Donenfeld fails to establish the first element of the cause of action, the existence of
a contract between Donenfeld and a third party. The Court finds that the factual
allegations sufficiently allege an at-will employment contract between Donenfeld
and Maui County, which was modified and/or supplemented by the Employee
Handbook.4
The Complaint alleges in relevant part:


“Plaintiff Donenfeld was appointed to be the Maui
County Film Commissioner by Mayor Arakawa and
started work on or about August 4, 2011.” FAC ¶ 26;

4

As Mayor Arakawa’s reply brief states, the Complaint contains allegations implying that
Donenfeld had contracts with both Maui County and Mayor Arakawa, in his official and
individual capacity. However, Donenfeld’s opposition brief focuses solely on the allegation that
Donenfeld had an at-will contract with Maui County. See Dkt. No. 26 at 8.

8



“At the time he was appointed by Arakawa, and
throughout his tenure as Film Commissioner, Donenfeld
had a reasonable expectation that he would hold his
position for the entire duration of Mayor Arakawa’s term
as Maui County Mayor.” Id. ¶ 27;



“Donenfeld was also hired with the expectation he would
have the rights and benefits mandated in [the Employee
Handbook].” Id. ¶ 30; and



“Donenfeld’s employment agreement (‘Contract’) with
Maui County to be the Maui County Film Commissioner
was a valid and enforceable contract.” Id. ¶ 101

Donenfeld argues, and the Court agrees, that based on these averments, a
valid and enforceable at-will employment contract existed between Donenfeld and
Maui County under Hawaii law. Dkt. No. 26 at 8. Moreover, the Hawaii Supreme
Court has previously held that the right of any employer to terminate an at-will
employee “can be contractually modified and, thus, qualified by statements
contained in employee policy manuals or handbooks issued by employers to their
employees.’” Shoppe v. Gucci Am., 94 Hawai‘i 368, 383, 14 P.3d 1049, 1064
(2000) (quoting Kinoshita v. Pacific Airlines, 68 Hawai‘i 594, 601, 724 P.2d 110,
115-16 (1986)). Accordingly, the Court rejects Mayor Arakawa’s attempt to
dismiss Count VI on the basis that the first element has not been met.
Mayor Arakawa further argues that, even if the Court recognizes the
existence of an at-will employment contract between Donenfeld and Maui County,
Count VI nevertheless fails because there is no viable cause of action when the
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employment is at-will. Dkt. No. 27 at 5-6. There is a jurisdictional split as to
whether a claim for tortious interference with an at-will employment contract is
viable. Compare Hennessy v. Santiago, 708 A.2d 1269, 1279 (Pa. Super. Ct. 1998)
(“[A]n action for intentional interference with performance of a contract in the
employment context applies only to interference with a prospective employment
relation whether at-will or not, not a presently existing at-will employment
relationship.”) with Levens v. Campbell, 733 So.2d 753, 760 (Miss. 1999)
(concluding that a claim for tortious interference with at-will contracts of
employment is viable in Mississippi). The Hawaii Supreme Court has recognized
that at-will employees are protected from outside interference in their employment.
See Minton v. Quintal, 131 Hawai‘i 167, 188, 317 P.3d 1, 22 (2013) (“At-will
employees are protected from ‘outside interference in their employment, and this
right provides a constitutional cause of action when a government agent unlawfully
interferes with the employment relation.’” (quoting Chernin v. Lyng, 874 P.2d 501,
505 (8th Cir. 1989)); see also Haddle v. Garrison, 525 U.S. 121, 126 (1998) (“The
fact that the employment is at the will of the parties, respectively, does not make it
at the will of others. The employee has manifest interest in the freedom of the
employer to exercise his judgment without illegal interference or compulsion and,
by the weight of authority, the unjustified interference of third persons is

10

actionable although the employment is at-will.”) (quoting Truax v. Raich, 239 U.S.
33, 38 (1915)).
Given the foregoing authority, the Court finds that Donenfeld’s status as an
at-will employee does not preclude him from asserting a claim for tortious
interference with contractual relations.
B.

The Claim is Not Barred by the Statue of Frauds

Alternatively, Mayor Arakawa asserts that the Statute of Frauds bars
Donenfeld’s claim because any alleged contract between Donenfeld and Maui
County was not in writing. The Court disagrees.
Hawaii’s Statute of Frauds provides in relevant part:
No action shall be brought and maintained . . . [u]pon an
agreement that is not to be performed within one year from the
making thereof . . . unless the promise, contract, or agreement,
upon which the action is brought, or some memorandum or note
thereof, is in writing, and is signed by the party to be charged
therewith, or by some person thereunto by the party in writing
lawfully authorized.
Hawaii Revised Statutes (“HRS”) § 656-1(5). “The test for determining the
applicability of subsection (5) of HRS § 656-1 . . . is not how long the performance
will take, but when it will be complete.” Credit Assocs. of Maui, Ltd. v. Carlbom,
98 Hawai‘i 462, 468, 50 P.3d 431, 437 (App. 2002) (citations and internal
quotation marks omitted). “It is well settled that oral contracts invalidated by the
HRS § 656-1(5) because they are not to be performed within a year include only
11

those which absolutely cannot be performed within that period.” Estate of Tahilan
v. Friendly Care Home Health Servs., Inc., 731 F. Supp. 2d 1000, 1008 (D. Haw.
2010) (citing Credit Assocs. of Maui, Ltd., 98 Hawai‘i at 467, 50 P.3d at 436). In
other words, “[a] promise which is not likely to be performed within a year, and
which in fact is not performed within a year, is not within the Statute if at the time
the contract was made there was a possibility in law and in fact that full
performance could be completed before the expiration of a year.” Id.
In the instant case, Donenfeld alleges that he started working as the Film
Commissioner on or around August 4, 2011, and that he “had a reasonable
expectation that he would hold his position for the entire duration of Mayor
Arakawa’s term as Maui County Mayor.” FAC ¶¶ 26-27. At first blush, it
appears that performance of the contract would have exceeded one year because
the contract would have been for at least several years to equal the “entire
duration” of Mayor Arakawa’s elected term. However, it is possible that
Donenfeld’s employment contract could have been completed within one year
because Mayor Arakawa’s term as mayor could have concluded within one year
for any number of reasons, however unlikely or improbable. See Estate of Tahilan,
731 F. Supp. 2d at 1008 (“If by its terms, performance is possible within one year,
however unlikely or improbable that may be, the agreement or promise is not
within the subdivision of the Statute of Frauds. It is immaterial whether or not the
12

actual period of performance exceeded one year.” (citing Credit Assocs. of Maui,
Ltd., 98 Hawai‘i at 467, 50 P.3d at 436)).
The Court finds that Donenfeld’s alleged at-will employment contract does
not fall within the Statute of Frauds because, at the time of its making,
performance was possible within one year.
C.

Mayor Arakawa, In His Personal Capacity, Can Interfere, As a
Matter of Law, With a Contract Between Maui County and a
Maui County Employee

Lastly, the Court examines the issue that was raised at the hearing and
addressed by the parties in supplemental briefing: whether Mayor Arakawa, in his
personal capacity, can interfere, as a matter of law, with a contract between Maui
County and a Maui County employee. The parties agree that such a claim can lie
as a matter of law, but disagree over whether the factual allegations state a cause of
action. As set forth below, the Court finds that the allegations are sufficient to
survive a motion to dismiss.
As a preliminary matter, the parties agree that Donenfeld’s claim could
survive dismissal if there are allegations that Mayor Arakawa: (1) acted outside of
his capacity as mayor when he allegedly interfered with Donenfeld’s contract with
Maui County; (2) personally benefited through the interference, with no benefit to
Maui County; or (3) acted in bad faith. See Dkt. No. 31 at 4-7 (citing Kahala
Royal Corp. v. Goodsill Anderson Quinn & Stifel, 113 Hawai‘i 251, 273-74, 151
13

P.3d 732, 754-55 (2007)); Dkt. No. 30 at 6-7 (citing Burgess v. Arita, 5 Haw. App.
581, 704 P.2d 930 (1985)). The relevant inquiry, then, is whether any of these
types of factual allegations appear in the First Amended Complaint.
It is apparent that the gravamen of Donenfeld’s interference with contractual
relations claim is that Mayor Arakawa caused Donenfeld’s termination for selfinterested reasons--namely, in order to maintain his close personal ties with and
funding from Kavanaugh. The First Amended Complaint alleges that Mayor
Arakawa has a close personal relationship with Kavanaugh (FAC ¶ 15); that
Kavanaugh regularly contributes to both the mayor’s political campaigns and his
self-named charitable organization, the Mayor Arakawa Kokua Fund (id. ¶¶ 1722); and that Kavanaugh was critical of Donenfeld’s job performance as Film
Commissioner and urged his termination (id. ¶¶ 36-37, 39). In other words,
Kavanaugh lent his support to Mayor Arakawa in ways that extended beyond his
role as mayor, i.e., beyond his official capacity, and threatened to withdraw that
support if Donenfeld was not terminated. One prominent example is Kavanaugh’s
substantial support of Mayor Arakawa’s charitable organization, the Kokua Fund,
which is not affiliated with the mayor’s office. Kavanaugh threatened to withdraw
his financial and other support of the Kokua Fund if Donenfeld was allowed to
continue in his role as Film Commissioner. See, e.g., FAC ¶¶ 40-41 (“I cannot be

14

at the [Mayor Arakawa Kokua Ball] this weekend or continue to support the
[Movie Tax] bill if Harry is involved[.]”).
To be sure, the First Amended Complaint does not explicitly reference the
terms “self-interest,” “outside the scope of employment,” “personally benefit,” or
“bad faith.” The Court finds, however, that the foregoing allegations essentially
describe these terms, and, thus, their absence is not the death knell of the claim.
Taking these allegations as true, as the Court must at this stage, Donenfeld has
alleged sufficient facts to state a plausible interference with contractual relations
claim. Namely, that Mayor Arakawa, in his personal capacity, acted with selfinterest, and not in furtherance of Maui County’s interests, when he allegedly
caused the termination of Donenfeld.
Accordingly, Mayor Arakawa’s motion to dismiss Count VI is DENIED.
III.

Count VII (Breach of the Implied Covenant of Good Faith and Fair
Dealing)
Count VII alleges breach of the implied covenant of good faith and fair

dealing. Mayor Arakawa argues that this claim should be dismissed because “it is
an attempt to assert the claim of bad faith, which has generally not been recognized
by Hawaii courts outside of the insurance context.” Dkt. No. 11-1 at 19. The
Court agrees.
Under Hawaii law, “every contract contains an implied covenant of good
faith and fair dealing that neither party will do anything that will deprive the other
15

of benefits of the agreement.” Best Place, Inc. v. Penn Am. Ins. Co., 82 Hawai‘i
120, 920 P.2d 334, 337-38 (1996). This district court has noted that the tort of
breach of the covenant of good faith and fair dealing has not been recognized in
Hawaii outside of the insurance context. See Phillips v. Bank of America, Civil
No. 10-00551 JMS-KSC, 2011 WL 240813, at *5 (D. Haw. Jan. 21, 2011).
Because no insurance contract is at issue here, Donenfeld has no basis for the type
of breach of the covenant claim asserted.
Accordingly, Mayor Arakawa’s Motion is GRANTED as to Count VII.
Because amendment would be futile, dismissal of Count VII is without leave to
amend.
IV.

Count X (Punitive Damages)
Count X alleges punitive damages as a separate cause of action. Mayor

Arakawa argues that punitive damages is a remedy, not a separate cause of action.
The Court agrees.
It is well-established in this jurisdiction that a claim for punitive damages is
not an independent tort, but a remedy that is incidental to another cause of action.
See Kang v. Harrington, 59 Haw. 652, 660, 587 P.2d 285, 291 (1978) (“An award
of punitive damages is purely incidental to the cause of action.”); see also United
States ex rel. Lockyer v. Haw. Pac. Health, 490 F. Supp. 2d 1062, 1088–89 (D.
Haw. 2007) (holding that, to the extent the complaint could be read to allege a
16

separate and independent cause of action for punitive damages, the defendant
would be entitled to summary judgment on that count); Hale v. Hawaii Publs.,
Inc., 468 F. Supp. 2d 1210, 1233 (D. Haw. 2006) (granting motion for summary
judgment as to a separate claim for punitive damages, but noting that the plaintiff
could seek punitive damages as part of prayer for relief).
Accordingly, Mayor Arakawa’s Motion is GRANTED as to Count X. While
punitive damages may not be plead as a separate claim, punitive damages may be
available as a remedy for violations of other Counts.
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s Motion for
Partial Dismissal of First Amended Complaint in all respects, except as to Count
VI.
IT IS SO ORDERED.
DATED: December 28, 2016 at Honolulu, Hawai‘i.

Donenfeld v. County of Maui, et al.; CV 16-00381 DKW-KJM; ORDER GRANTING IN
PART AND DENYING IN PART DEFENDANT ARAKAWA’S MOTION FOR
PARTIAL DISMISSAL OF FIRST AMENDED COMPLAINT

17