Auld-Susott v. Galindo

Filing 122

ORDER Granting Plaintiffs' Motion For Partial Summary Judgment and Denying Defendant's Motion For Summary Judgment re: 78 80 ."On the basis of the foregoing, Plaintiffs' Motion for Partial Summary Judgment, filed January 31, 2018, is HEREBY GRANTED. Defendant's Motion for Summary Judgment, also filed January 31, 2018, is HEREBY DENIED." Signed by JUDGE LESLIE E. KOBAYASHI on 6/27/2018. (cib, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
)
)
)
)
)
)
)
)
)
)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
LAURYN GALINDO,
)
)
Defendant.
_____________________________ )
EVAN AULD-SUSOTT, as Trustee
for (1) IRREVOCABLE LIEF
INSURANCE TRUST OF JOHN L.
SUSOTT AND KATHRYN C. SUSOTT
UAD 8/17/1988 AS RESTATED,
EXEMPT TRUST FBO DANIEL C.
SUSOTT, and (2) IRREVOCABLE
LIFE INSURANCE TRUST OF JOHN
L. SUSOTT AND KATHRYN C.
SUSOTT UAD 8/17/1988 AS
RESTATED, NON-EXEMPT TRUST
FBO DANIEL C. SUSOTT; and
JOHN L. SUSOTT,

CIVIL 16-00450 LEK-KJM

ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
On January 31, 2018, Defendant Lauryn Galindo
(“Defendant”) filed her Motion for Summary Judgment (“Defendant’s
Motion”).

[Dkt. no. 80.]

On April 2, 2018, Plaintiffs

Evan Auld-Susott (“E. Auld-Susott”), as Trustee for (1)
Irrevocable Life Insurance Trust of John L. Susott and Kathryn C.
Susott UAD 8/17/1988 as Restated, Exempt Trust FBO Daniel C.
Susott, and (2) Irrevocable Life Insurance Trust of John L.
Susott and Kathryn C. Susott UAD 8/17/1988 as Restated, NonExempt Trust FBO Daniel C. Susott (“the Trusts”); and John L.
Susott (“J. Susott” and collectively “Plaintiffs”) filed their

memorandum in opposition, and Defendant filed her reply on
April 19, 2018.

[Dkt. nos. 85, 95.]

Also on January 31, 2018,

Plaintiffs filed their Motion for Partial Summary Judgment
(“Plaintiffs’ Motion”).

[Dkt. no. 78.]

Defendant filed her

memorandum in opposition on April 12, 2018, and Plaintiffs filed
their reply on April 19, 2018.

[Dkt. nos. 92, 94.]

matters came on for hearing on May 21, 2018.

These

On June 12, 2018,

an entering order was issued ruling on Plaintiffs’ Motion and
Defendant’s Motion (collectively “Motions”).
The instant Order supersedes that ruling.

[Dkt. no. 103.]

Plaintiffs’ Motion is

hereby granted and Defendant’s Motion is hereby denied for the
reasons set forth below.
BACKGROUND
Plaintiffs filed their Complaint on August 10, 2016,
asserting diversity jurisdiction.
Plaintiffs allege:

[Dkt. no. 1 at ¶ 5.]

they are creditors of non-party Daniel C.

Susott (“D. Susott”); D. Susott conveyed certain real property in
Princeville, Hawai`i (“Property”) to Defendant for no
consideration; and the purpose of the conveyance was to prevent
Plaintiffs from recovering the Property to satisfy debts
D. Susott owes to Plaintiffs.
assert three claims:

[Id. at ¶¶ 8, 15-18.]

Plaintiffs

fraudulent conveyance pursuant to Haw. Rev.

Stat. § 651C-4(a)(1) (“Count I”); Unjust Enrichment (“Count II”);
and Constructive Trust (“Count III”).

2

In the instant Motions,

the parties seek partial summary judgment as to whether
Plaintiffs are creditors of D. Susott, and therefore have
standing to pursue their Count I claim against Defendant.
The following background facts, set forth by
Plaintiffs, are deemed admitted because they are uncontroverted
by Defendant’s concise statement.1

See Local Rule LR56.1(g).

E. Auld-Susott is suing only in his capacity as trustee of the
Trusts.

The Trusts were funded by E. Auld-Susott’s grandparents,

non-parties Kathryn C. Susott and John L. Susott, Sr.
CSOF at ¶ 2.]

[Pltfs.’

J. Susott, who is suing only in his individual

capacity, is E. Auld-Susott’s father.
brother and E. Auld-Susott’s uncle.

D. Susott is J. Susott’s

[Id. at ¶ 6.]

D. Susott is

the income beneficiary of the Trusts, and E. Auld-Susott is the
remainder beneficiary.

[Id. at ¶ 7.]

In August 2009, D. Susott

became the trustee of the Trusts, and by November 2009, he had
withdrawn almost all the trust’s principal, approximately
$1,000,000.

[Id. at ¶ 10.]

Litigation ensued.

1

The numbered paragraphs in Defendant’s concise statement
appear to be an independent recitation of the facts contained in
her memorandum in opposition to Plaintiffs’ Motion, and do not
respond to the corresponding numbered paragraphs in Plaintiffs’
concise statement. Compare Separate and Concise Statement of
Material Facts in Support of Pltfs.’ Motion (“Pltfs.’ CSOF”),
filed 1/31/18 (dkt. no. 79) with Def.’s Separate and Concise
Statement of Material Facts in Supp. of Her Mem. in Opp. (“Def.’s
Responsive CSOF”), filed 4/12/18 (dkt. no. 93). This Court has
only deemed admitted Plaintiffs’ facts that are not controverted
when considering Defendant’s Responsive CSOF together as a whole.
3

On November 13, 2012, the Superior Court of Monterey
County, California (“California state court”) issued an order:
removing D. Susott as trustee; appointing E. Auld-Susott as
successor trustee; surcharging D. Susott $1,500,917 for breach of
trust and fiduciary duties; and authorizing E. Auld-Susott, as
successor trustee, to take collection actions against D. Susott
(“Surcharge Order”).2

[Id. at 13.]

In partial satisfaction of

the Surcharge Order, the Trusts levied against $48,680.52 in
D. Susott’s brokerage account on April 4, 2013, and levied
against D. Susott’s interest in the Susott Family Limited
Partnership (“SFLP”) on March 22, 2013.

[E. Auld-Susott Decl.,

Exh. 2 (E. Auld-Susott’s Surcharge Order satisfaction ledger).]
On April 17, 2013, E. Auld-Susott filed a Trustee
Status Report with the California state court regarding
D. Susott’s balance owing on the Surcharge Order (“Trustee
Report”).

[Pltfs.’ CSOF, Decl. of Peter Knapman, Esq. (“Knapman

Decl.”), Exh. A (Decl. of E. Auld-Susott), Exh. A1 (Trustee
Report).]

The Trusts applied a thirty percent discount to the

value of the SFLP units to reflect their illiquidity, based on
the reasoning of the Internal Revenue Service’s (“IRS”) Revenue
Ruling 93-12.

[Id. at 2-3.]

D. Susott received credit for the

2

The Surcharge Order, issued in In re: ILIT of Susott, Case
No. MP20193 (“MP20193”), is attached to Plaintiffs’ CSOF as
Exhibit 1 to the Declaration of Evan Auld-Susott (“E. Auld-Susott
Declaration”).
4

discounted value of the SFLP units, i.e., seventy percent of
their full value.

[Id. at 3.]

On May 15, 2013, also in MP20193,

the California state court questioned the propriety of crediting
D. Susott with only the discounted value of the SFLP units, but
issued no ruling on that issue.

[Def.’s Responsive CSOF, Decl.

of Wayson W. S. Wong (“Wong Responsive Decl.”), Exh. 11 (trans.
of 5/15/13 hearing) at 2, 5.]
On April 17, 2013, in Susott v. Susott, Case No.
M115348 (“M115348”), the California state court issued J. Susott
a judgment against D. Susott in the amount of $1,624,125.07,
which J. Susott filed in Hawai`i state court on October 24,
2015.3

[E. Auld-Susott Decl., Exh. 3 (Exemplified Foreign

Judgment (“J. Susott’s Judgment”)).]

The document names

J. Susott, and no other person or entity, as the holder of the
judgment.

[Id.]

In M115348, according to the Summary of Case

for Default Prove-up Against Defendant Daniel C. Susott, filed
December 9, 2011, in California state court, D. Susott had
committed financial elder abuse against his mother.
Responsive Decl., Exh. 10.]

[Wong

The plaintiffs were J. Susott

personally, J. Susott in his capacity as executor of his mother’s
estate, and J. Susott in his capacity as trustee of two marital
trusts.

[Id.]

3

J. Susott filed an exemplified copy of the judgment,
issued in M115348, pursuant to the Uniform Enforcement of Foreign
Judgments Act, Haw. Rev. Stat. Chapter 636C.
5

On August 1, 2016, Plaintiffs, D. Susott, and other
persons, not including Defendant, executed a Settlement Agreement
and Mutual Release of Claims (“Settlement Agreement”), which
covered both MP20193 and M115348.
5.]

[Wong Responsive Decl., Exh.

The other parties to the Settlement Agreement were J. Susott

in his capacity as executor of his mother’s estate; J. Susott in
his capacity as trustee of certain trusts;4 J. Susott in his
capacity as limited partner in the SFLP; and other parties not
relevant to the instant Motions.

[Id. at pg. 1.]

Under the

Settlement Agreement, D. Susott promised to end litigation
challenging the Surcharge Order and J. Susott’s Judgment, and to
disclaim any right to any Susott Family Trusts or Partnerships,
including the Trusts and the SFLP.

[Id. at ¶ 2.]

E. Auld-Susott

and J. Susott promised that they would not execute the Surcharge
Order or J. Susott’s Judgment against D. Susott’s residence at
3645 Woodlawn Terrace Place. (“D. Susott’s Residence”) for the
duration of D. Susott’s natural life.

Further, the Trusts

promised to pay D. Susott $30,000 annually, beginning August 15,
2016.

[Id. at ¶ 3.]

from all other claims.

The parties generally released each other
[Id. at ¶ 7.]

4

The Settlement Agreement

J. Susott is a party to the Settlement Agreement as
trustee of the following trusts: 1) The Kathryn C. Susott Living
Trust under Agreement dated May 2, 1997; 2) John L. Susott NonExempt Marital Trust under Agreement dated May 27, 1985; 3) and
as co-trustee of the John L. Susott Exempt Residuary Trust II FBO
John L. Susott, Jr. [Settlement Agreement at pg. 1.]
6

excludes from the general release the then-contemplated action to
recover the Property, and further provides that any such action
will not seek affirmative relief or judgment against D. Susott,
and that any recovery will be credited to the Surcharge Order.
[Id. at ¶ 12.]

In addition, D. Susott promised not to challenge

Plaintiffs’ liens on D. Susott’s Residence, and agreed that those
liens are not part of any partial satisfaction of judgment until
D. Susott’s Residence is foreclosed upon.

[Id. at ¶ 13.]

In deposition testimony taken October 31, 2017,
J. Susott stated D. Susott does not owe J. Susott, personally,
any money; the money is owed to other entities.

[Def.’s Concise

Statement of Facts for her Motion (“Def.’s CSOF”), filed 1/31/18
(dkt. no. 81), Decl. of Wayson W. S. Wong, Exh. 2 (excerpt of
trans. of 8/31/17 deposition of J. Susott (“J. Susott Depo.”)) at
189.]

On December 7, 2017, that testimony was corrected so that

J. Susott stated:

D. Susott “owes money to me as I am entitled

to money from those entities.”5

[Separate and Concise Statement

of Material Facts in Supp.t of Pltfs.’ Opp. to Def.’s Concise
Statement and Motion (“Pltfs.’ Responsive CSOF”), filed 4/2/18
(dkt. no. 86), (Decl. of Peter Knapman, Esq. (“Knapman Responsive
Decl.”), Exh. A (Witness Correction Sheet) at 2-3).]

5

The parties have not discussed or identified the unnamed
entities referred to in J. Susott’s deposition testimony.
7

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.”

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.
Cir. 2013).

Crowley v. Bannister, 734 F.3d 967, 976 (9th

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,
8

beyond the pleadings, that there is a genuine
issue for trial.” Miller, 454 F.3d at 987. This
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).
DISCUSSION
I.

Affirmative Defense
Plaintiffs contend lack of standing is an affirmative

defense and is therefore waived because Defendant failed to
assert it in her First Amended Answer to Complaint Filed
August 10, 2016, filed May 31, 2017 (“First Amended Answer”).

9

[Dkt. no. 26.]

This Court disagrees.

This district court has

stated:
“A defense which demonstrates that plaintiff has
not met its burden of proof is not an affirmative
defense.” Zivkovic v. S. Cal. Edison Co., 302
F.3d 1080, 1088 (9th Cir. 2002) (citing
Flav–O–Rich v. Rawson Food Serv., Inc., 846 F.2d
1343, 1349 (11th Cir. 1988)). Defenses that
negate an element of the plaintiffs’ prima facie
case “are excluded from the definition of
affirmative defense in Federal Rule of Civil
Procedure 8(c).” Flav–O–Rich, 846 F.2d at 1349
(citing Ford Motor Co. v. Trans. Indem. Co., 795
F.2d 538, 546 (6th Cir. 1986)).
Walker-Cook v. Integrated Health Res., LLC, Civil No. 12-00146
ACK-RLP, 2012 WL 4461159, at *2 (D. Hawai`i Aug. 10, 2012),
report and recommendation adopted, 2012 WL 4461414 (Sept. 25,
2012).
In the instant Motions, the parties seek a ruling on
whether Plaintiffs are creditors of D. Susott, and thus, have
standing to pursue their Count I claim under the Hawai`i Uniform
Fraudulent Transfer Act (“HUFTA”), Haw. Rev. Stat. § 651C-1, et
seq.

Plaintiffs are only entitled to relief on their HUFTA claim

if they are presently creditors of D. Susott.
Stat. § 651C-7.

See Haw. Rev.

The statute defines “creditor” as “a person who

has a claim against a debtor.”

§ 651C-1.

“‘Claim’ means a right

to payment, whether or not the right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured, or unsecured.”
Id.

Because creditor status is an element of Plaintiffs’ prima
10

facie case, it is excluded from affirmative defenses under
Rule 8(c).

Defendant has not waived challenging Plaintiffs’

creditor status.

This Court therefore turns to the merits of the

Motions.
II.

Effect of the Settlement Agreement
Defendant argues the Settlement Agreement deprived

Plaintiffs of their creditor status because, under its terms,
Plaintiffs gave up any right to payment from D. Susott during his
natural life.

See Settlement Agreement at ¶¶ 4-7.

Defendant

does not address Plaintiffs’ right to payment from D. Susott’s
estate, including the right to foreclose on D. Susott’s
Residence.

See id. at ¶¶ 12-13.

The Hawai`i Intermediate Court

of Appeals has stated that HUFTA has expanded the definition of
“creditors” eligible to bring a fraudulent transfer claim by
“‘abrogat[ing] the common law distinction between pre-existing
creditors and subsequent creditors.’”

Schmidt v. HSC, Inc., 136

Hawai`i 158, 171, 358 P.3d 727, 740 (Ct. App. 2015) (quoting
Sherry v. Ross, 846 F. Supp. 1424, 1429 n. 4 (D. Haw. 1994)).
Defendant cites no authority in support of the proposition that,
under HUFTA, a creditor must have a right to collect payment
during the debtor’s natural life.

In the absence of supporting

authority, this Court declines to adopt such a rule because it
would impermissibly narrow the field of eligible creditors, given
the legislature’s intention to expand the definition of eligible

11

creditors.

Plaintiffs’ right to payment from D. Susott’s estate

is sufficient to establish their creditor status under HUFTA.
In addition, the Settlement Agreement does not deprive
Plaintiffs of their creditor status under HUFTA because its terms
expressly preserved Plaintiffs’ claim, i.e., a right to payment.
Defendant’s argument appears to conflate “claims” in this action,
i.e., causes of action including fraudulent conveyance, with
“claims” under HUFTA.

Under the Settlement Agreement, Plaintiffs

give up causes of action against D. Susott, but not their right
to payment from D. Susott.

Defendant emphasizes that, under the

Settlement Agreement, D. Susott is promised relief from further
collection efforts during his natural life and as well as to
receive annual payments of $30,000.

These promises, however, do

not destroy Plaintiffs’ creditor status under HUFTA.

The

Settlement Agreement specifically preserves Plaintiffs’ right to
payment by:

1) foreclosing on D. Susott’s Residence following

his death; and 2) by asserting a claim to avoid D. Sussot’s
allegedly fraudulent transfer of the Property to Defendant.
Therefore, the Settlement Agreement does not deprive Plaintiffs
of their creditor status under § 651C-1.

See id. at 171-72, 358

P.3d at 740-41 (discussing the broad the definition of “claim”
under HUFTA); see also Hoffman v. AmericaHomekey, Inc., CIVIL
ACTION NO. 3:12-CV-3806-B, 2015 WL 12698389 (N.D. Tex. July 17,
2015) (following settlement agreement in which the plaintiff

12

released all claims at law against the debtor and accepted a
consent judgment, the unsatisfied consent judgment sufficed to
establish the plaintiffs’ creditor status, under the materially
similar Texas Uniform Fraudulent Transfer Act, to maintain an
action against an alleged fraudulent transferee).
III. Creditor Status of J. Susott
As to whether J. Susott is a creditor of D. Susott,
Plaintiffs point to an exemplified foreign judgment stating
J. Susott holds a judgment against D. Susott in the amount of
$1,624,125.07.

[J. Susott’s Judgment at 1.]

Defendant does not

argue J. Susott’s Judgment has been satisfied or invalidated.
Defendant points to J. Susott’s statement in his
deposition testimony that he, personally, is not the holder of
J. Susott’s Judgment.

[J. Susott Depo. at 189.]

First, it is

the terms of J. Susott’s Judgment which controls who may enforce
it.

Opinions or thoughts about the Judgment cannot, standing

alone, vary its terms.

See Hawaiian Ass’n of Seventh-Day

Adventists v. Wong, 130 Hawai`i 36, 45, 305 P.3d 452, 461 (2013)
(under the parol evidence rule, extrinsic evidence is
inadmissible to vary the meaning of an unambiguous writing).
Second, J. Susott’s testimony is inadmissible under the best
evidence rule.

“The best evidence rule provides that the

original of a ‘writing, recording, or photograph’ is required to
prove the contents thereof.”

United States v. Bennett, 363 F.3d

13

947, 953 (9th Cir. 2004) (quoting Fed. R. Evid. 1002).

“The

rule’s application turns on ‘whether contents are sought to be
proved.’”
note).

Id. (quoting Fed. R. Evid. 1002 Advisory Committee’s

“The animating purpose of the best evidence rule”

includes prohibiting “oral testimony purporting to give the terms
of a writing from memory [because that] is probably subject to a
greater risk of error than oral testimony concerning other
situations generally.”

United States v. Diaz-Lopez, 625 F.3d

1198, 1201 (9th Cir. 2010) (citation and internal quotation marks
omitted).

J. Susott’s testimony is therefore inadmissible to

describe the contents of J. Susott’s Judgment, including which
persons or entities are hold the judgment, because the writing is
available.

This Court therefore does not consider that

testimony.6

See Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773

(9th Cir. 2002) (only admissible evidence may be considered in
deciding a motion for summary judgment).
There being no genuine dispute of material fact,
Plaintiffs are entitled to judgment as a matter of law that
J. Susott is a creditor of D. Susott.

6

See Rule 56(a).

Even if Defendant had, hypothetically, presented evidence
showing J. Susott’s Judgement was only held by trusts for the
benefit of J. Susott, but not J. Susott personally, such evidence
is unhelpful to Defendant’s position. Under Hawai`i law, a trust
beneficiary holds equitable title to trust property. Coon v.
City & Cty. of Honolulu, 98 Hawai`i 233, 260, 47 P.3d 348, 375
(2002). Under HUFTA, “claims” include both legal and equitable
rights to payment. § 651C-1.
14

Defendant’s Motion is denied insofar as it seeks a ruling that
J. Susott is not a creditor of D. Susott.
IV.

Creditor Status of E. Auld-Susott, as Trustee of the Trusts
As to whether E. Auld-Susott is a creditor of

D. Susott, Plaintiffs point to: 1) the Surcharge Order; and 2) an
accounting, performed by E. Auld-Susott, as trustee of the
Trusts, showing that, as of January 31, 2017, D. Susott owes
$764,200.43 on the Surcharge Order.

[E. Auld-Susott Decl. at

¶¶ 25-27.]
Defendant argues the Surcharge Order is fully satisfied
because:

1) the thirty percent discount applied to D. Susott’s

SFLP units caused the SFLP units to be undervalued by
$599,108.43; and 2) from 2009 to 2016, “[a]rguably, [D. Susott]
could validly have claimed reasonable income from” the Trusts,
which, when combined with $599,108.43 from crediting the
undiscounted value of the SFLP units, would be sufficient to
fully satisfy the Surcharge Order.
Motion at 9.]

[Mem. in Opp. to Pltfs.’

In support, Defendant notes that “[o]n June 24,

2014, [D. Susott’s] attorney was contending to [E. Auld-Susott’s]
attorney that [D. Susott] should receive $78,000 per year in
income from [the Trusts.]”

[Id. at 9 n.9.]

The statements of

D. Susott’s attorney, offered for the truth of the matter
asserted, are inadmissible because they are prohibited by the

15

rule against hearsay and no exception to the hearsay rule
applies.

See Fed. R. Evid. 802.
Defendant’s speculation that D. Susott improperly

failed to receive credit for some unknown amount, but an amount
at least large enough to satisfy the remaining balance on the
Surcharge Order, is insufficient to create a genuine dispute of
material fact as to whether the Surcharge Order has been
satisfied.

See Porter, 419 F.3d at 891.

Defendant cites no

evidence showing D. Susott was not credited for any income
distributions from the Trusts, which he was entitled to receive,
but did not receive.
Even assuming D. Susott should have been credited an
additional $599,108.43 for the SFLP units, this amount is not
sufficient to satisfy the $764,200.43 balance D. Susott owes on
the Surcharge Order.

Under HUFTA, E. Auld-Susott would still be

a creditor of D. Susott.

Therefore, this Court need not

determine whether it was improper to credit D. Susott for the
discounted value of the SFLP units, rather than their full value.
The fact remains undisputed - E. Auld-Susott is a creditor of
D. Susott.
There being no genuine dispute of material fact,
Plaintiffs are entitled to judgment as a matter of law that
E. Auld-Susott, as trustee of the Trusts, is a creditor of

16

D. Susott.

Defendant’s Motion is denied insofar as it seeks a

ruling that the Surcharge Order has been fully satisfied.
Both E. Auld-Susott, as trustee of the Trusts, and
J. Susott are creditors of D. Susott under § 651C-1.

Plaintiffs

therefore have standing to pursue their Count I claim against
Defendant.
CONCLUSION
On the basis of the foregoing, Plaintiffs’ Motion for
Partial Summary Judgment, filed January 31, 2018, is HEREBY
GRANTED.

Defendant’s Motion for Summary Judgment, also filed

January 31, 2018, is HEREBY DENIED.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 27, 2018.

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

EVAN AULD-SUSOTT, ETC., ET AL VS. LAURYN GALINDO; CIVIL 16-00450
LEK-KJM; ORDER GRANTING PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY
JUDGMENT AND DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

17