Christopher Zyda, et al v. Four Seasons Hotels and Resorts, et al

Filing 226

ORDER GRANTING IN PART and DENYING IN PART Defendants' Motion to Dismiss Third Amended Complaint, For Damages and Declaratory Relief, Filed June 14, 2019 re 203 209 .On the basis of the foregoing, Defendants' June 26, 2019 Motion to D ismiss Third Amended Complaint, for Damages and Declaratory Relief, Filed June 14, 2019 [Dkt. 203], is HEREBY GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED insofar as the Third Amended Complaints request for punitive damages is dismissed, and the Motion is DENIED in all other respects. Defendants are ORDERED to file their answer to the Third Amended Complaint by August 20, 2019. Signed by JUDGE LESLIE E. KOBAYASHI on 8/8/2019. (cib)

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII

CHRISTOPHER ZYDA, ON BEHALF OF
HIMSELF AND ALL OTHERS SIMILARLY
SITUATED,

CIV. NO. 16-00591 LEK-RT

Plaintiffs,
vs.
FOUR SEASONS HOTELS AND RESORTS,
FOUR SEASONS HOLDINGS, INC.,
FOUR SEASONS HUALALAI RESORT,
HUALALAI RESIDENTIAL, LLC, (DBA
HUALALAI REALTY); HUALALAI
INVESTORS, LLC, KAUPULEHU MAKAI
VENTURE, HUALALAI DEVELOPMENT
COMPANY, HUALALAI VILLAS &
HOMES, HUALALAI INVESTORS, LLC,
HUALALAI RENTAL MANAGEMENT, LLC,
DOES 1-100,
Defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS’
MOTION TO DISMISS THIRD AMENDED COMPLAINT, FOR DAMAGES
AND DECLARATORY RELIEF, FILED JUNE 14, 2019 [DKT. 203]
On June 26, 2019, Defendants Hualalai Investors, LLC;
Hualalai Residential, LLC; Hualalai Rental Management, LLC; Four
Seasons Hotels Limited; and Four Seasons Holdings, Inc.
(“Defendants”) filed their Motion to Dismiss Third Amended
Complaint, for Damages and Declaratory Relief, Filed June 14,
2019 [Dkt. 203] (“Motion”).

[Dkt. no. 209.]

Pursuant to this

Court’s order, Defendants filed a supplemental memorandum on
July 12, 2019.

[Dkt. nos. 213 (entering order), 218.]

Plaintiff Christopher Zyda (“Zyda”), on behalf of himself and
all others similarly situated (collectively “Class”), filed his
memorandum in opposition on July 26, 2019.

[Dkt. no. 223.]

The

Court finds this matter suitable for disposition without a
hearing pursuant to Rule LR7.2(d) of the Local Rules of Practice
for the United States District Court for the District of Hawaii
(“Local Rules”).

Defendants’ Motion is granted as to the

request for punitive damages, and the Motion is denied in all
other respects.
BACKGROUND
The relevant factual background of this case is set
forth in the Order Granting in Part and Denying in Part
Defendants’ Motion for Partial Summary Judgment, filed on
[Dkt. no. 207.1]

June 24, 2019 (“6/24/19 Order”).

The operative

pleading when Defendants filed their Motion for Partial Summary
Judgment (“Summary Judgment Motion”) on April 3, 2019 was the
Second Amended Class Action Complaint for Damages, Declaratory,
and Injunctive Relief (“Second Amended Complaint”), filed on
April 30, 2018.

[Dkt. nos. 89 (Second Amended Complaint), 155

(6/24/19 Order).]

However, while the Summary Judgment Motion

was pending, the parties stipulated to allow the filing of the
Third Amended Class Action Complaint for Damages and Declaratory

1

The 6/24/19 Order is also available at 2019 WL 2583479.
2

Relief (“Third Amended Complaint”).

[Third Amended Complaint,

filed 6/14/19 (dkt. no. 203); stipulation & order, filed 6/14/19
(dkt. no. 204) (“6/14/19 Stipulation & Order”).]

The parties

stipulated that the Summary Judgment Motion applied to the Third
Amended Complaint “since it is not materially different from the
Second Amended Complaint for purpose of the motion.”

[6/14/19

Stipulation & Order at ¶ 3.]
Summary judgment was granted as to Count IV
(promissory estoppel/detrimental reliance), Count V (violation
of the duty of good faith and fair dealing), Count VI (negligent
misrepresentation), Count VII (estoppel), and Count VIII (unjust
enrichment).

The Summary Judgment Motion was denied as to the

portion of Count III alleging an unfair or deceptive acts or
practices (“UDAP”) claim.
*1, *8.2

6/24/19 Order, 2019 WL 2583479, at

Defendants did not move for summary judgment as to the

portion of Count III alleging an unfair methods of competition
(“UMOC”) claim.

Id. at *2.

Thus, the only claims remaining in

the Third Amended Complaint are the UDAP claim and the UMOC
claim, both of which are brought pursuant to Haw. Rev. Stat.
Chapter 480.

2

The Third Amended Complaint identifies, but does not
reallege, Counts I, II, IX, and X because they were previously
disposed of. See 6/24/19 Order, 2019 WL 2583479, at *1 n.2.
3

In the instant Motion, Defendants seek the dismissal
of: 1) the Class’s prayer for disgorgement, punitive damages,
and rescission; and 2) Zyda’s UDAP claim.
DISCUSSION
By the time Defendants filed the instant Motion, the
dispositive motions deadline had passed.

See Rule 16 Scheduling

Order, filed 4/11/18 (dkt. no. 84), at ¶ 7 (stating the deadline
was 4/3/19).

Thus, before the merits of the Motion can be

considered, Defendants must establish good cause to amend the
scheduling order.

See Fed. R. Civ. P. 16(b)(4).

This district

court has stated:
The Rule 16(b) good cause inquiry focuses on
the diligence of the party seeking to modify the
scheduling order. Zivkovic v. S. Cal. Edison
Co., 302 F.3d 1080, 1087 (9th Cir. 2002). The
pretrial schedule may be modified if the deadline
could not have been reasonably met despite the
diligence of the party seeking the extension.
Id. (citing Johnson v. Mammoth Recreations, Inc.,
975 F.2d 604, 609 (9th Cir. 1992)) (internal
quotation marks and citations omitted).
. . . .
. . . Rule 16 is designed to prevent parties
from benefitting from carelessness,
unreasonability, or gamesmanship. In re Cathode
Ray Tube Antitrust Litigation, 2014 WL 4954634,
*2 (N.D. Cal. Oct. 1, 2014) (citing Orozco v.
Midland Credit Mgmt. Inc., 2013 WL 3941318, at *3
(E.D. Cal. July 30, 2013)). . . .
Diligence of the party seeking amendment is
the critical issue in the good cause
determination. The diligence required for a
showing of good cause has two parts:
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(1) diligence in discovering the basis for
amendment; and,
(2) diligence in seeking amendment once the
basis for amendment has been discovered.
Positive Techs., Inc. v. Sony Elecs., Inc., 2013
WL 322556, at *2 (N.D. Cal. Jan. 28, 2013).
Rigsbee v. City & Cty. of Honolulu, Civ. No. 17-00532 HG-RT,
2019 WL 984276, at *3-4 (D. Hawai`i Feb. 28, 2019).
Defendants argue good cause exists, in light of the
filing of the Third Amended Complaint and the 6/24/19 Order
after the dispositive motions deadline.

However, Defendants

stipulated to allow the filing of the Third Amended Complaint,
and they stipulated that there was no material difference
between the Second Amended Complaint and the Third Amended
Complaint, for purposes of the Summary Judgment Motion.
[6/14/19 Stipulation & Order at ¶ 3.]

Nothing in the parties’

stipulation indicated Defendants intended to file a motion to
dismiss.

Moreover, the parties did not request, and this Court

did not approve, the reopening of the dispositive motions
deadline in light of the filing of the Third Amended Complaint.
The argument that the Class is not entitled to the
remedies of disgorgement, punitive damages, and rescission could
have been raised in the Summary Judgment Motion.

The instant

Motion asserts those remedies are no longer available because
only Chapter 480 claims remain.

In the Summary Judgment Motion,
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Defendants sought summary judgment as to all claims, except for
the UMOC claim.

6/24/19 Order, 2019 WL 2583479, at *2.

Thus,

if the Summary Judgment Motion had been granted in its entirety,
only a Chapter 480 claim would have remained.

Defendants could

have argued in the Summary Judgment Motion that they were
entitled to summary judgment as to the requests for
disgorgement, punitive damages, and rescission.

Defendants have

therefore failed to establish good cause to raise the first
argument in the instant Motion after the dispositive motions
deadline.
This Court also rejects the Motion’s good cause
argument as to the requested dismissal of Zyda’s UDAP claim.
Although Kaupulehu Makai Venture (“KMV”), the entity that Zyda
purchased his lot from, was removed as a defendant in the Third
Amended Complaint, Zyda’s UDAP claim is not based only upon
conduct associated with the purchase of his lot.

See 6/24/19

Order, 2019 WL 2583479, at *2-5 (discussing the UDAP claim).
Further, the Third Amended Complaint alleges Defendants are
liable both as the current owners and developers of the Hualalai
Resort (“Resort”) and as the successors in interest to prior
owners and developers.

See Third Amended Complaint at ¶ 3.

Thus, the filing of the Third Amended Complaint does not
constitute good cause to seek the dismissal of Zyda’s UDAP
claim.

Further, to the extent Defendants now contend KMV’s
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presence in this action is necessary to litigate Zyda’s UDAP
claim, Defendants could have raised that argument prior to the
instant Motion because KMV has not appeared in this action, nor
is there any indication that KMV has been served.

Defendants

have therefore failed to establish good cause to raise the
second argument in the Motion after the dispositive motions
deadline.
Because Defendants have failed to establish good cause
to amend the operative scheduling order, this Court declines to
address the merits of the Motion.

However, in light of Zyda’s

concession that punitive damages are not available as to the
remaining claims, [Mem. in opp. at 9,] the Motion is granted as
to the request for punitive damages.

See Zanakis-Pico v. Cutter

Dodge, Inc., 98 Hawai`i 309, 319, 47 P.3d 1222, 1232 (2002)
(“[Haw. Rev. Stat.] § 480–13(b) enumerates the specific damages
that a consumer may recover under the chapter — the greater of
$1,000.00 or treble damages — and makes no provision for
punitive damages.” (citations omitted)).

The Motion is denied

in all other respects.3

3

Any further limitations
and the Class can be addressed
dismissal. These include, but
limine, jury instructions, and

on the remedies available to Zyda
through other means besides
are not limited to, motions in
the special jury verdict form.
7

CONCLUSION
On the basis of the foregoing, Defendants’ June 26,
2019 Motion to Dismiss Third Amended Complaint, for Damages and
Declaratory Relief, Filed June 14, 2019 [Dkt. 203], is HEREBY
GRANTED IN PART AND DENIED IN PART.

The Motion is GRANTED

insofar as the Third Amended Complaint’s request for punitive
damages is dismissed, and the Motion is DENIED in all other
respects.

Defendants are ORDERED to file their answer to the

Third Amended Complaint by August 20, 2019.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAI`I, August 8, 2019.

CHRISTOPHER ZYDA VS. FOUR SEASONS HOTELS LTD., ET AL; CV 1600591 LEK-RTM; ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANTS' MOTION TO DISMISS THIRD AMENDED COMPLAINT, FOR
DAMAGES AND DECLARATORY RELIEF, FILED JUNE 14, 2019 [DKT. 203]

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