Burmeister et al v. Kaua'i, County of
Filing
88
ORDER DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT ON COUNTS I, II, X, AND XI re 42 Motion for Summary Judgment Signed by JUDGE LESLIE E. KOBAYASHI on 05/25/2018. (eps, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
KLAUS H. BURMEISTER AND
ULRIKE BURMEISTER, AS
TRUSTEES OF THE BURMEISTER
FAMILY TRUST DATED
JANUARY 21, 1994,
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Plaintiffs,
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vs.
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COUNTY OF KAUA`I, and DOES
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1-50,
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Defendants,
_____________________________ )
CIVIL 16-00402 LEK-KJM
ORDER DENYING PLAINTIFFS’ MOTION FOR
PARTIAL SUMMARY JUDGMENT ON COUNTS I, II, X, AND XI
On November 1, 2017, Plaintiffs Klaus H. Burmeister and
Ulrike Burmeister, as Trustees of the Burmeister Family Trust
Dated January 21, 1994 (collectively “Plaintiffs”) filed their
Motion for Partial Summary Judgment on Counts I, II, X, and XI
(“Motion”).
[Dkt. no. 42.]
Defendant County of Kaua`i
(“Defendant” or the “County”) filed its memorandum in opposition
on March 23, 2018, and Plaintiffs filed their reply on April 2,
2018.
[Dkt. nos. 82, 84.]
April 16, 2018.
This matter came on for hearing on
Plaintiffs’ Motion is hereby denied for the
reasons set forth below.
BACKGROUND
This action arises out of Plaintiffs’ ownership of real
property on the island of Kaua`i and the four residences on that
property (“Property”).
Plaintiffs originally asserted eleven
claims, including breach of contract (“Count I”) and trespass to
land (“Count III”) in their Complaint, filed on July 25, 2016.
[Dkt. no. 1.]
In its Order Granting In Part and Denying In Part
Defendant’s Motion For Summary Judgment On All Counts, filed on
May 2, 2018 (“5/2/18 Order”), this Court granted summary judgment
in favor of the County on all counts, except Count I and a
portion of Count III.
[Dkt. no. 87.1]
Therefore, the Motion is
denied as moot insofar as it seeks summary judgment on Counts II,
X, and XI, and the Motion is construed as seeking partial summary
judgment only as to Count I.
In a nutshell, Plaintiffs’ Count I claim arises out of
the Enforcement and Settlement Agreement (“Settlement
Agreement”), which the parties executed on January 7, 2008
(“Effective Date”).2
While the parties agree the Settlement
Agreement covers certain issues arising under the County’s
Comprehensive Zoning Ordinance (“CZO”), Plaintiffs contend the
1
The 5/2/18 Order is also available at 2018 WL 2050131.
2
The parties’ filings and exhibits variously refer to the
Property as containing four “residences,” “structures,”
“buildings,” and “cottages.” This Order follows the Settlement
Agreement, which uses the term “residences.” [Pltfs.’ Separate &
Concise Statement of Facts in Supp. of Motion (“Pltfs.’ CSOF”),
Decl. of Klaus H. Burmeister (“K. Burmeister Decl.”), Exh. 1
(Settlement Agreement); Def.’s Separate & Concise Statement of
Facts in Supp. of Motion (“Def.’s CSOF”), filed 3/23/18 (dkt.
no. 82), Decl. of Les Milnes (“Milnes Decl.”), Exh. 10
(Settlement Agreement).]
2
County breached this agreement when it undertook zoning and
building enforcement actions after the Effective Date.3
The
County, however, argues these actions were related to flood zone
compliance, which is outside the scope of the Settlement
Agreement.
In addition, at the hearing on the Motion, the County
argued that, although the flood zone violations at issue were
known at the of the Settlement Agreement, these violations were
not discussed in negotiations and reiterated that flood zone
compliance is outside the scope of the Settlement Agreement.
The parties are familiar with the facts which are set
forth in the Court’s prior order and therefore it will not repeat
those facts here, except as relevant to the instant Motion.
See
5/2/18 Order, 2018 WL 2050131.
In 2002, Plaintiffs purchased the Property and operated
the four residences as transient vacation rentals (“TVRs”).
[Pltfs.’ CSOF at ¶ 7; Def.’s CSOF at ¶ 7.]
On June 24, 2004, the
County Planning Department (“Planning”) issued a Zoning
Compliance Notice (“June 2004 ZCN”), and cited Plaintiffs under
the CZO for unpermitted construction and alteration of the
residences.
[Milnes Decl., Exh. 5 at 1-2.]
between the parties.
Disputes ensued
After more than three years, the parties
executed the Settlement Agreement.
3
[Pltfs.’ CSOF at ¶ 16; Def.’s
The CZO and the flood ordinance are located in Chapters 8
and 15, respectively, of the Kaua`i County Code. The Kaua`i
County Code is available at https://qcode.us/codes/kauaicounty/
3
CSOF at ¶ 16.]
Pertinent to the issues at hand, the Settlement
Agreement’s terms provide that:
-“Zoning permits and Special Management Area permits shall be
issued” for the residences and the fence, “and the same shall
thereafter be deemed in full compliance with County zoning
requirements”; [Settlement Agreement at ¶ 2;]
-“Residence #4 shall be permitted to remain in its present
location until the crest of the active beach berm fronting
Residence #4 reaches any portion of Residence #4, at which time
Residence #4 shall at the Owners’ expense be removed . . . .
Until [such time, Residence #4] shall not be enlarged or
reconfigured”; [id. at ¶ 3;]
-Under various scenarios in which some of the residences are
destroyed, the parties agree as to how many residences may be
rebuilt; [id. at ¶ 4;]
-A sideyard setback issue pertaining to the laundry building is
resolved; [id. at ¶ 5;]
-“Except as otherwise set forth herein, the Owners shall not be
required to obtain any other permits from the County for all
existing structures and improvements”; [id. at ¶ 6;]
-“Compliance with the foregoing requirements . . . shall cure any
and all outstanding building or zoning violations at this time as
to any and all structures currently existing on [the Property]”;
[id. at ¶ 7].
On February 15, 2008, a month after the Settlement
Agreement’s Effective Date, Planning issued a Special Management
Area (“SMA”) permit to Plaintiffs, which recognized Residence #4
as a nonconforming use.
at ¶¶ 26-27.]
[Pltfs.’ CSOF at ¶¶ 26-27; Def.’s CSOF
On March 19, 2008, the County Department of Public
Works (“DPW”) denied Plaintiffs’ building permit application
#06-783 for Residence #4 due to violation of flood zone
requirements.
[Def.’s CSOF, Decl. of Stanford Iwamoto (“Iwamoto
4
Decl.”), Exh. 17 at 3.]
In 2009, after an inspection, Planning
issued TVR certificates for all four residences.
[Pltfs.’ CSOF
at ¶ 28; Def.’s CSOF at ¶ 28.]
On September 30, 2010, DPW issued Plaintiffs a Notice
of Apparent Violation (“NOAV” and specifically “September 2010
NOAV”) because Residence #4 is not “elevated above the base flood
elevation.”
[K. Burmeister Decl., Exh. 5 at 1.]
Plaintiffs
contested the citation based on the Settlement Agreement.
[Pltfs.’ CSOF at ¶ 30; Def.’s CSOF at ¶ 30.]
On July 10, 2015,
DPW issued Plaintiffs a NOAV (“July 2015 NOAV”) for violation of
flood zone requirements.
[K. Burmeister Decl., Exh. 6.]
Specifically, DPW cited Residence #4 for failure to obtain a
building permit and an occupancy certificate required in special
flood hazard areas.
[Id. at 1.]
On June 14, 2016, Plaintiffs applied to Planning for
renewal of Residence #4’s TVR certificate (“TVR Renewal
Application”).
[Pltfs.’ CSOF at ¶ 28; Def.’s CSOF at ¶ 28.]
On
June 21, 2016, Planning issued Plaintiffs a Notice of Violation
(“June 2016 NOV”), and demanded they “complete the building
permit process or remove” Residence #4.
Exh. 7 at 2.]
[K. Burmeister Decl.,
On July 18, 2016, Planning withheld approval of
the TVR Renewal Application based on the June 2016 NOV, and
demanded Plaintiffs cease and desist using Residence #4 as a TVR.
[Pltfs.’ CSOF, Decl. of Counsel (“McAneeley Decl.”), Exh. 14.]
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On July 27, 2016, Planning rescinded the June 2016 NOV, and
refused to approve the TVR Renewal Application because Plaintiffs
had not resolved the July 2015 NOAV.
[McAneeley Decl., Exh. 15
at 1-2.]
The County’s enforcement actions were motivated, at
least in part, because the Federal Emergency Management Agency
(“FEMA”) identified violations of National Flood Insurance
Program (“NFIP”) regulations at the Property.
Resolving NFIP
violations would enable Kaua`i to gain acceptance into the
Community Rating System (“CRS”) and obtain preferential rates for
flood insurance premiums.
[Pltfs.’ CSOF at ¶¶ 39-40; Def.’s CSOF
at ¶¶ 39-40 (admitting Pltfs.’ ¶¶ 39-40 in pertinent part, and
adding that the County acted to prevent disqualification from
NFIP and to enforce compliance with the law).]
On September 23, 2016, DPW issued a letter to FEMA
(“9/23/16 Letter”), stating the County Attorney had concluded the
Settlement Agreement functions as a deed restriction running with
the land, and resolves the apparent NFIP violation at the
Property.
[McAneeley Decl., Exh. 18 at 2.]
DPW requested FEMA
determine whether it agrees the Settlement Agreement “fulfill[s]
the intent and purpose of the [NFIP] by ensuring compliance with
NFIP standards to the ‘maximum extent possible.’”
October 7, 2016, FEMA agreed.
[Id.]
[McAneeley Decl., Exh. 19.]
October 13, 2016, the County rescinded the July 2015 NOAV.
6
On
On
[Iwamoto Decl., Exh. 27.]
Also on October 13, 2016, the County
granted the TVR Renewal Application.
[Milnes Decl., Exh. 16.]
STANDARD
Pursuant to Federal Rule of Civil Procedure 56(a), a
party is entitled to summary judgment “if the movant shows that
there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
This
district court has stated:
Summary judgment must be granted against a
party that fails to demonstrate facts to establish
what will be an essential element at trial. See
Celotex [Corp. v. Catrett], 477 U.S. [317,] 323
[(1986)]. A moving party has both the initial
burden of production and the ultimate burden of
persuasion on a motion for summary judgment.
Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210
F.3d 1099, 1102 (9th Cir. 2000). The burden
initially falls on the moving party to identify
for the court “those portions of the materials on
file that it believes demonstrate the absence of
any genuine issue of material fact.” T.W. Elec.
Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809
F.2d 626, 630 (9th Cir. 1987) (citing Celotex
Corp., 477 U.S. at 323). “A fact is material if it
could affect the outcome of the suit under the
governing substantive law.” Miller [v. Glenn
Miller Prods., Inc.], 454 F.3d [975,] 987 [(9th
Cir. 2006)].
When the moving party fails to carry its
initial burden of production, “the nonmoving party
has no obligation to produce anything.” In such a
case, the nonmoving party may defeat the motion
for summary judgment without producing anything.
Nissan Fire, 210 F.3d at 1102-03. On the other
hand, when the moving party meets its initial
burden on a summary judgment motion, the “burden
then shifts to the nonmoving party to establish,
beyond the pleadings, that there is a genuine
issue for trial.” Miller, 454 F.3d at 987. This
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means that the nonmoving party “must do more than
simply show that there is some metaphysical doubt
as to the material facts.” Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586 (1986) (footnote omitted). The nonmoving
party may not rely on the mere allegations in the
pleadings and instead “must set forth specific
facts showing that there is a genuine issue for
trial.” Porter v. Cal. Dep’t of Corr., 419 F.3d
885, 891 (9th Cir. 2005) (quoting Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256 (1986)).
“A genuine dispute arises if the evidence is such
that a reasonable jury could return a verdict for
the nonmoving party.” California v. Campbell, 319
F.3d 1161, 1166 (9th Cir. 2003); Addisu v. Fred
Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir. 2000)
(“There must be enough doubt for a ‘reasonable
trier of fact’ to find for plaintiffs in order to
defeat the summary judgment motion.”).
On a summary judgment motion, “the nonmoving
party’s evidence is to be believed, and all
justifiable inferences are to be drawn in that
party’s favor.” Miller, 454 F.3d at 988
(quotations and brackets omitted).
Rodriguez v. Gen. Dynamics Armament & Technical Prods., Inc., 696
F. Supp. 2d 1163, 1176 (D. Hawai`i 2010) (some citations
omitted).
Put another way, in determining whether there is a
genuine issue of material fact, a court must view the record in
the light most favorable to the non-moving parties.
Crowley v.
Bannister, 734 F.3d 967, 976 (9th Cir. 2013).
DISCUSSION
I.
Equitable and Judicial Estoppel
Plaintiffs argue the County should be estopped from
arguing the Settlement Agreement does not cover flood zone
violations.
Plaintiffs contend equitable estoppel applies
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because, in its 9/23/16 Letter to FEMA, the County relied on the
Settlement Agreement to obtain the benefit of resolving an NFIP
violation.
Plaintiffs are mistaken.
They conflate two things -
their argument that flood zone violations are covered by the
terms of the Settlement Agreement and thus released by the County
with the County’s submission of the Settlement Agreement to FEMA
seeking the latter’s approval that the actions taken satisfy NFIP
standards.
These are two different contexts in which the
Settlement Agreement’s terms were considered.
At any rate, equitable estoppel is inapplicable to the
9/23/16 Letter.
“[I]n order to invoke [equitable] estoppel
against the government, ‘one must show that he or she has
detrimentally relied on the representation or conduct of the
person sought to be estopped and that such reliance was
reasonable.’”
Turner v. Chandler, 87 Hawai`i 330, 333-34, 955
P.2d 1062, 1065-66 (Ct. App. 1998) (emphasis and citation
omitted) (quoting Doherty v. Hartford Ins. Group, 58 Haw. 570,
573, 574 P.2d 132, 134–35 (1978)).
Plaintiffs were not sent, nor
did they reasonably and detrimentally rely upon the 9/23/16
Letter.
Equitable estoppel therefore does not apply.
Plaintiffs argue judicial estoppel is appropriate
because the County has strategically changed its position in this
litigation.
The County had argued its “presumption in 2008 that
Building #4 was exempt from compliance with flood zone
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requirements was . . . a mistake, rendering the 2008 Agreement
voidable as to Building #4.”
[Mem. in Supp. of Motion for
Summary Judgment on All Counts, filed 10/3/17 (dkt. no. 37-1), at
16-17.]
The County no longer asserts mutual mistake.
Opp. at 20.]
[Mem. in
Plaintiffs argue the County’s prior position is an
admission that the Settlement Agreement, if enforceable, covers
Residence #4’s noncompliance with flood zone requirements.
The Hawai`i Supreme Court has stated:
the doctrine of judicial estoppel does not apply
unless the changed argument prejudices the
opposing party. . . . [The doctrine of judicial
estoppel does not preclude] inconsistent claims or
defenses within a single action, but . . .
[precludes] subsequently repudiating a theory of
action that has been accepted and acted upon by
the court or that has otherwise detrimentally
affected the opposing party.
Roxas v. Marcos, 89 Hawai`i 91, 124 n.19, 969 P.2d 1209, 1242
n.19 (1998) (emphases in Roxas) (internal citations, quotations
marks, and brackets omitted).
Judicial estoppel does not apply
because the County’s prior argument was not accepted and acted
upon by the Court.
See 5/2/18 Order, 2018 WL 2050131, at *8
(denying the County’s motion for summary judgment as to Count I).
II.
Breach of Contract
The crux of the parties’ dispute is whether the
Settlement Agreement covers flood zone violations.
The 5/2/18
Order ruled the scope of the Settlement Agreement is ambiguous:
Under the Settlement Agreement, Plaintiffs are
granted some relief from having to “obtain any
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other permits from the County,” but which
“permits” and “outstanding issues” the parties
intended the Settlement Agreement to reach cannot
be determined from within its four corners.
Resort to parol evidence is therefore appropriate
to determine the construction the parties
intended.
Id. at *4 (internal citation omitted) (citing Settlement
Agreement at ¶¶ 6-7).]
Resolving the ambiguity as to the scope
of the Settlement Agreement depends on “the parties’ intent,
which is a question of fact.”
See Wittig v. Allianz, A.G., 112
Hawai`i 195, 201–02, 145 P.3d 738, 744–45 (Ct. App. 2006)
(citation omitted) (citing Found. Int’l, Inc. v. E.T. Ige
Construction, Inc., 102 Hawai`i 487, 497, 78 P.3d 23, 33 (2003)).
As the moving party, Plaintiffs must show there is no genuine
dispute the parties intended the Settlement Agreement to cover
the flood zone violations at issue.
Plaintiffs argue the Settlement Agreement unambiguously
covers flood zone violations.
Plaintiffs present one argument
not considered in the 5/2/18 Order:
because flood zone
violations are building code violations, any construction
excluding flood zone violations erroneously rejects as surplusage
the word “building” in Paragraph 7.
See Settlement Agreement at
¶ 7 (stating the agreement cures “all outstanding building or
zoning violations at this time as to any and all structures”
(emphasis added)).
This Court has recognized that, “[u]nder
Hawai`i law, courts interpreting a contract should, to the extent
11
possible, give every term of a contract effect.”
Baqui v.
Burlington Ins. Co., Civil No. 10-00774 LEK-BMK, 2011 WL 1254084,
at *8 (D. Hawai`i Mar. 31, 2011) (citing Stanford Carr Dev. Corp.
v. Unity House, Inc., 111 Hawai`i 286, 297–98, 141 P.3d 459,
470–71 (2006)).
The rule against surplusage offers no support.
The word “building” is given effect insofar as the Settlement
Agreement addresses certain building violations, as well as
certain zoning violations.
At the same time, as recognized in
the 5/2/18 Order, the Settlement Agreement is ambiguous as to
which violations were “outstanding” and therefore within the
ambit of the agreement.
2018 WL 2050131, at *4.
At the hearing on the Motion, Plaintiffs asserted DPW
and Planning knew of Residence #4’s noncompliance with the flood
ordinance prior to the execution of the Settlement Agreement.
In
support, Plaintiffs sought to rely on exhibits attached to their
reply memorandum.
Those exhibits fail to comply with the Local
Rules and were not considered.
See LR56.1(h) (“[a]ffidavits or
declarations setting forth facts and/or authenticating exhibits,
as well as exhibits themselves, shall only be attached to the
concise statement.
Supplemental affidavits and declarations may
only be submitted with leave of court.”).
Plaintiffs contend the parties contemplated addressing
flood zone violations as part of the Settlement Agreement.
support, Plaintiffs point to the June 2004 ZCN.
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In
The June 2004
ZCN details certain violations under the CZO, and concludes by
advising of the interests of other agencies:
Also, the Department of Public Works,
Engineering has specific flood plain management
requirements that will need to be addressed should
any of the structures be within the VE flood zone.
Please be advised that the State Department
of Health have [sic] specific wastewater
management requirements that will have to be
addressed with regard to the kitchens and full
baths that exist within the illegal Dwelling
Units.
[June 2004 ZCN at 3.]
Plaintiffs additionally rely on Pancakes of Hawaii,
Inc. v. Pomare Properties Corp. and argue the parties must have
intended the Settlement Agreement to cure flood zone violations
under the rule of reasonable construction.
See 85 Hawai`i 286,
296 n.6, 944 P.2d 83, 93 n.6 (Ct. App. 1997).
In support,
Plaintiffs point to their promise under the Settlement Agreement
not to enlarge or reconfigure Residence #4 because flood zone
compliance would require elevating Residence #4 above the base
flood elevation, such change would necessarily require Plaintiffs
to renege on their obligation not to reconfigure.
Further,
Plaintiffs contend their expectation that the Settlement
Agreement allows Residence #4 to remain in its present location
is nullified if the agreement’s scope is construed to allow DPW
to demand its removal.
13
The County asserts, however, the parties did not
contemplate that the Settlement Agreement would encompass flood
zone violations.
Ian Costa states that, in negotiations, the
parties discussed the resolution of CZO violations, but never
addressed resolving flood zone violations.
of Ian Costa (“Costa Decl.”) at ¶¶ 4-5.4]
[Def.’s CSOF, Decl.
County records show
DPW began its review of Residence #4 on February 26, 2008, and
asserted a flood zone violation on March 19, 2008.
Both actions
took place after the Settlement Agreement was executed (and not
before).
[Iwamoto Decl., Exh. 17 at 1.]
Nor does the current
record show DPW issuing citations for any flood zone violation
before the parties executed the Settlement Agreement on
January 7, 2008.
Viewing the record in the light most favorable to the
County, there is a genuine dispute of fact as to whether the
parties contemplated settling flood zone violations as part of
the Settlement Agreement.
The June 2004 ZCN does not show the
parties were aware of any particular flood zone violations.
As
pertinent to the intention of the parties, Plaintiffs’ reasons to
prefer a settlement also covering flood zone violations supports
the claim Plaintiffs raised the issue in negotiations.
However,
the County’s evidence creates a genuine dispute as to whether the
4
During the relevant times, Mr. Costa was the Director of
Planning and was personally involved in negotiating the
Settlement Agreement. [Costa Decl. at ¶¶ 1,3.]
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parties discussed or contemplated settling flood zone violations
as part of the Settlement Agreement.
In light of this ruling, Plaintiffs’ reliance on
Pancakes and the rule of reasonable construction is inapposite.
See 85 Hawai`i at 296 n.6, 944 P.2d at 93 n.6.
Under the rule of
reasonable construction, when a contract is “susceptible of two
constructions . . . the interpretation [that] makes it a rational
and probable agreement must be preferred” over an interpretation
that “makes it inequitable, unusual or such as reasonable men [or
women] would not be likely to enter into.”
Id. (alterations in
Pancakes) (citation and internal quotation marks omitted).
Construing a contract based on speculation that the parties would
have intended a broader scope, if they had contemplated the
issue, would be inconsistent with the “principal objective” of
contract construction, which is “to ascertain and effectuate the
intention of the parties.”
See Brown v. KFC Nat’l Mgmt. Co., 82
Hawai`i 226, 240, 921 P.2d 146, 160 (1996); see also Restatement
(Second) of Contracts § 203 cmt. c (1981) (“[p]arties are free to
make agreements which seem unreasonable to others . . . .
The
search is for the manifested intention of the parties.”).
Because there is a genuine dispute as to whether or not
the parties contemplated settling flood zone violations, there is
a genuine dispute as to the parties intent in the Settlement
Agreement.
Thus, whether the County’s flood zone enforcement
15
actions breached the Settlement Agreement depends on disputed
issues of material fact.
Plaintiffs are not entitled to judgment
as a matter of law on Count I.
CONCLUSION
On the basis of the foregoing, Plaintiffs’ Motion for
Partial Summary Judgment on Counts I, II, X, and XI, filed
November 1, 2017, is HEREBY DENIED.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, May 25, 2018.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
KLAUS H. BURMEISTER, ET AL. VS. COUNTY OF KAUA`I; CIVIL 16-00402
LEK-KJM; ORDER DENYING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT ON COUNTS I, II, X AND XI
16
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