Puana v. Kealoha

Filing 172

ORDER: GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS AND GRANTING LEAVE TO FILE A SECOND AMENDED COMPLAINT; AND DENYING PLAINTIFFS' MOTION FOR PARTIAL SUMMARY JUDGMENT re 136 , 147 , 148 - Signed by JUDGE LESL IE E. KOBAYASHI on 6/4/2021. For the foregoing reasons, the City's Motion to Dismiss First Amended Complaint Filed on September 3, 2020, filed April 12, 2021, is HEREBY GRANTED IN PART AND DENIED IN PART. The Motion is GRANTED WITH PREJUDICE to the extent that the First Amended Complaint is dismissed with respect to any claim for punitive damages against the City, and to the extent that the remainder of the claims against the City are dismissed. However, the Motion is DENIED to the extent that the First Amended Complaint is dismissed WITHOUT PREJUDICE to all claims against the City other than those for punitive damages. To the extent the portion of Plaintiffs Memorandum in Opposition constitutes a motion for partial summary judgment, it is DENIED AS MOOT WITHOUT PREJUDICE. Plaintiffs are hereby ordered to file their second amended Complaint by August 4, 2021. (emt, )

UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
GERARD K. PUANA, RICKY L.
HARTSELL, AS TRUSTEE OF THE
FLORENCE M. PUANA TRUST;

CIV. NO. 16-00659 LEK-WRP

Plaintiffs,
vs.
KATHERINE P. KEALOHA, LOUIS M.
KEALOHA, MINH-HUNG NGUYEN, MINHHUNG "BOBBY" NGUYEN; DANIEL
SELLERS, NIALL SILVA, WALTER
CALISTRO, DRU AKAGI, JOHN
AND/OR JANE DOES 1-50, DEREK
WAYNE HAHN,
Defendants.

ORDER: GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION TO DISMISS AND GRANTING LEAVE
TO FILE A SECOND AMENDED COMPLAINT; AND DENYING
PLAINTIFFS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
On September 3, 2020, Plaintiffs Gerard K. Puana
(“Puana”) and Ricky L. Hartsell as Trustee of the Florence M.
Puana Trust (“Hartsell”) (collectively “Plaintiffs”) filed their
First Amended Complaint against Defendants Katherine P. Kealoha
(“Katherine”), Louis M. Kealoha (“Louis”), Donna Leong
(“Leong”), Minh-Hung “Bobby” Nguyen (“Nguyen”), Daniel Sellers
(“Sellers”), Derek Wayne Hahn (“Hahn”), Niall Silva (“Silva”),
Walter Calistro (“Calistro”), Dru Akagi (“Akagi”) and Doe
Defendants (collectively “Defendants”).

[First Amended

Complaint, filed 9/3/20 (dkt. no. 80).]

Plaintiffs allege

violations of the “Fourth, Fifth, and Fourteenth Amendments to
the Constitution of the United States, . . ., Article I,
Sections 2, 5, 6, and 7 of the Constitution of the State of
Hawai`i, . . . , and 42 U.S.C. Section 1983, . . . .”
Amended Complaint at 2.]
causes of action:

[First

Specifically, Plaintiffs state four

(1) violation of 42 U.S.C. §1983 (“1983

Claim”); (2) violation of 18 U.S.C. §1962(c) (“RICO Claim”);
3) intentional infliction of emotional distress (“IIED Claim”);
and (4) defamation (“Defamation Claim”).

[Id. at pgs. 27-30.]

Plaintiffs seek general, special, treble and punitive damages,
reimbursement of fees and costs, and additional relief as
determined by the Court.

[Id. at pgs. 30-31.]

On February 17, 2021, the parties filed their
stipulation and agreed that the City and County of Honolulu
(“the City”) “is the proper party for the official capacity
claims and official capacity claims against the Individual
Defendants be dismissed with prejudice and Donna Leong be
dismissed from the lawsuit,” and the “claims against the
Individual Defendants in their individual capacities, and
Plaintiffs’ 42 U.S.C. §1983 claim against the City remain.”
[Stipulation to Substitute City and County of Honolulu as
Defendant for Official Capacity Claims and Dismiss Official

2

Capacity Claims Against Individual Defendants with Prejudice,
filed 2/17/21 (dkt. no. 118) at 3.]
The City, in its Motion to Dismiss First Amended
Complaint Filed on September 3, 2020, filed on April 12, 2021
(“Motion”), [dkt. no. 136,] seeks dismissal of the First Amended
Complaint for failure to state a claim of municipal liability on
the basis that the claims made against the individual defendants
in their official capacity are barred by the statute of
limitations; and municipal liability is not sufficiently
pleaded.

[Mem. in Supp. of Motion at 2-3.]

It does not seek

dismissal of the RICO Claim, IIED Claim and the Defamation Claim
presumably because these are alleged only as against the
individual defendants in their personal capacity.
The Court finds this matter suitable for disposition
without a hearing pursuant to Rule LR7.1(c) of the Local Rules
of Practice for the United States District Court for the
District of Hawaii (“Local Rules”).

On May 12, 2021, this Court

issued an entering order informing the parties of its ruling.
This Order supersedes that entering order.

As set forth below,

the Motion is granted with prejudice as to any claim for relief
of punitive damages against the City because it would be futile
to permit any amendment of any claim seeking this relief.

The

Motion is granted without prejudice as to all other claims
against the City with leave to file a second amended complaint
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because it is not clear that the complaint cannot be saved by
any amendment.

For the § 1983 Fourth Amendment claim for false

arrest or malicious prosecution arising out of Puana’s state
criminal charge, the Motion is moot because Plaintiffs
affirmatively represent that they do not make this claim.
Plaintiffs shall file their Second Amended Complaint by
August 4, 2021.
DISCUSSION
Rule 12(b)(6), Fed. R. Civ. P.,
authorizes the Court to dismiss a complaint that
fails “to state a claim upon which relief can be
granted.” Rule 12(b)(6) is read in conjunction
with Rule 8(a), which requires only “a short and
plain statement of the claim showing that the
pleader is entitled to relief.” Fed. R. Civ.
P. 8(a)(2). The Court may dismiss a complaint
either because it lacks a cognizable legal theory
or because it lacks sufficient factual
allegations to support a cognizable legal theory.
Balistreri v. Pacifica Police Dep’t, 901 F.2d
696, 699 (9th Cir. 1988).
In resolving a Rule 12(b)(6) motion, the
Court must accept all well-pleaded factual
allegations as true and construe them in the
light most favorable to the plaintiff. Sateriale
v. R.J. Reynolds Tobacco Co., 697 F.3d 777, 783
(9th Cir. 2012). The complaint “must contain
sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678,
129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929
(2007)). Mere conclusory statements in a
complaint or “formulaic recitation[s] of the
elements of a cause of action” are not
sufficient. Twombly, 550 U.S. at 555, 127 S. Ct.
4

1955. Thus, the Court discounts conclusory
statements, which are not entitled to a
presumption of truth, before determining whether
a claim is plausible. Iqbal, 556 U.S. at 678,
129 S. Ct. 1937. However, “[d]ismissal with
prejudice and without leave to amend is not
appropriate unless it is clear . . . that the
complaint could not be saved by amendment.”
Harris v. Cty. of Orange, 682 F.3d 1126, 1131
(9th Cir. 2012) (citation omitted).
Avila v. Sheet Metal Workers Loc. Union No. 293, 400 F. Supp. 3d
1044, 1054 (D. Hawai`i 2019) (alterations in Avila) (emphasis
added).
I.

Statute of Limitations
The relevant statute of limitations for claims brought

under § 1983 is the forum state’s statute of limitations for
personal injury actions.

Bird v. Dep’t of Hum. Servs., 935 F.3d

738, 743 (9th Cir. 2019) (citation omitted), cert. denied sub
nom. Bird v. Hawaii, 140 S. Ct. 899, 205 L. Ed. 2d 468 (2020)
(citations omitted).

The Hawai`i statute of limitations for

personal injury actions is two years.

Haw. Rev. Stat. § 657-7.

Although Hawai`i law determines the limitations period, federal
law determines when a civil rights claim accrues.

Bird, 935

F.3d 743 (quoting Knox v. Davis, 260 F.3d 1009, 1013 (9th Cir.
2001)).

Under federal law, the “discovery rule” typically

governs the accrual of § 1983 claims so that a claim accrues
when the plaintiff knows or has reason to know of the injury
upon which the action is based.

Id. (citations omitted)).
5

The City submits that Plaintiffs’ 1983 Claim on behalf
of the Trust of Florence M. Puana (“Trust”) is time-barred
because it arises out of a 2009 reverse mortgage.
Supp. of Motion at 5.]

[Mem. in

Plaintiffs respond, in their opposition

memorandum, that Florence M. Puana was unaware of the harm done
to her until after Katherine and Louis were convicted in federal
court, and after she obtained, on October 30, 2019, “a written
order on the basis that the judgment [obtained by Katherine
against Florence M. Puana and Puana] was obtained through a
fraud on the court . . . .” and “was set aside.”
at 12-13.]

[Mem. in Opp.

Thus, Plaintiffs argue, their claim on behalf of the

Trust was filed on September 3, 2021, “well within two years of
the judgment in Civil No. 13-1-0686-03 (VLC) being set aside.”
[Id.]
The City also argues that Plaintiffs’ 1983 Claim
“stemming from [Puana’s] 2011 arrest for [a state criminal
offense], and an unlawful seizure claim stemming from the 2013
[federal criminal charge]” is time-barred.
Motion at 7 (citations omitted).]

[Mem. in Supp. of

Plaintiffs, however, submit

that they are not making “a malicious prosecution” claim for his
2011 arrest but rather claiming an abuse of position by
Katherine in order to “influence the outcome of the 2013 State
civil case” brought against her by Puana and Florence M. Puana.
[Mem. in Opp. at 18.]

As to the federal criminal charge against
6

Puana, Plaintiffs argue Puana was “maliciously prosecuted under
color of law based on lies and evidence hidden and fabricated”
by Louis, Katherine, and others, and that the 1983 Claim did not
accrue until “the charges were terminated in his favor” on
December 16, 2014 (“12/16 Dismissal”) and that he timely filed
within two years of that dismissal.

[Id. at 18-19.]

Plaintiffs

argue Puana timely filed within the two-year statute of
limitations or, in the alternative, that there is equitable
tolling “based on Defendants’ fraud and concealment of acts
giving rise to liability.”

[Id. at 19.]

The original complaint in this action was filed by
Puana only on December 14, 2016 for damages based on his
contention that “he was wrongfully seized, denied his liberty,
and maliciously prosecuted due to the acts of
Defendants . . . .”
¶ 2.]

[Complaint, filed 12/14/16 (dkt. no. 1) at

Puana’s claims arising out of his federal criminal charge

were therefore timely filed within the two-year statute of
limitations.

For this reason, the Motion is denied as to these

claims.
Except for the claim arising out of the 12/16
Dismissal, the instant action was filed more than two years
after the seminal events occurred and therefore these claims
might ordinarily be time-barred.

However,

7

there are two doctrines which may apply to extend
the limitations period or preclude a defendant
from asserting the defense—equitable tolling and
equitable estoppel. The federal version of these
doctrines is concisely explained in Johnson v.
Henderson, 314 F.3d 409 (9th Cir. 2002).
“Equitable tolling” focuses on “whether there was
excusable delay by the plaintiff: If a reasonable
plaintiff would not have known of the existence
of a possible claim within the limitations
period, then equitable tolling will serve to
extend the statute of limitations for filing suit
until the plaintiff can gather what information
he needs.” Id. at 414 (quotation omitted).
Equitable estoppel, on the other hand, focuses
primarily on actions taken by the defendant to
prevent a plaintiff from filing suit, sometimes
referred to as “fraudulent concealment.” Id.
(citing Cada v. Baxter Healthcare Corp. 920 F.2d
446, 450–51 (7th Cir. 1990)).
Lukovsky v. City & Cty. of San Francisco, 535 F.3d 1044, 1051
(9th Cir. 2008) (emphasis in Lukovsky).

This Court has observed

that:
Fraudulent concealment, also termed
“equitable estoppel,” tolls the statute of
limitations when there is “active conduct by
a defendant, above and beyond the wrongdoing
upon which the plaintiff’s claim is filed,
to prevent the plaintiff from suing in
time.” Guerrero v. Gates, 442 F.3d 697, 706
(9th Cir. 2006) (internal citation and
quotation marks omitted). Where equitable
tolling is based on fraudulent concealment
(i.e., equitable estoppel), the conduct
constituting fraudulent concealment must be
plead with the particularity required by
Federal Rule of Civil Procedure 9(b). Id.;
see also Stejic v. Aurora Loan Services,
LLC, 2009 WL 4730734, at *4 (D. Ariz. 2009).
To meet the pleading standard required
by Rule 9(b), a plaintiff “must state the
time, place and specific content of the
false representations as well as the
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identities of the parties to the
misrepresentation.” Alan Neuman
Productions, Inc. v. Albright, 862 F.2d
1388, 1393 (9th Cir. 1988) (internal
citation omitted).
. . . .
Angel v. BAC Home Loan Servicing, LP, Civ. No.
10–00240 HG–LEK, 2010 WL 4386775, at *4–5 (D.
Hawai`i Oct. 26, 2010) (footnote omitted).
Molina v. OneWest Bank, FSH, 903 F. Supp. 2d 1008, 1023 (D.
Hawai`i 2012).
The statute of limitations for Plaintiffs’ claims
arising out of the 2009 reverse mortgage and resulting civil
judgment might be tolled until the civil judgment was set aside
on October 30, 2019, but Plaintiffs’ First Amended Complaint
does not plead the conduct constituting fraudulent concealment
with the particularity required by law.

The Motion therefore

must be granted as to these claims but, because amendment may be
possible, the dismissal is without prejudice.
Plaintiffs’ claims regarding Puana’s 2011 arrest that
resulted in his conviction for a state criminal charge are,
frankly, as clear as mud.

To the extent that Puana is alleging

claims arising out of his 2011 arrest for a state criminal
charge that are independent of any claims regarding the civil
judgment that was set aside on October 30, 2019, Plaintiffs do
not plead the conduct constituting fraudulent concealment with
the particularity required by law.
9

The Motion therefore must be

granted as to these claims but, because amendment may be
possible, the dismissal is without prejudice.
II.

Municipal Liability
There are three ways in which a plaintiff can show

that a municipality is liable under § 1983, the plaintiff may
prove that:

(1) “a city employee committed the alleged

constitutional violation pursuant to a formal governmental
policy or a longstanding practice or custom which constitutes
the standard operating procedure of the local governmental
entity”; (2) “the individual who committed the constitutional
tort was an official with final policy-making authority and that
the challenged action itself thus constituted an act of official
government policy”; or (3) “an official with final policy-making
authority ratified a subordinate’s unconstitutional decision or
action and the basis for it.”

Gillette v. Delmore, 979 F.2d

1342, 1346–47 (9th Cir. 1992) (internal quotation marks and
citations omitted).

Plaintiffs here generally allege that

police officers, including the chief of police, and a deputy
prosecuting attorney used their official positions to deprive
them of property and personal liberty.

Plaintiffs are required

to sufficiently allege that:
(1) they were deprived of their constitutional
rights by defendants and their employees acting
under color of state law; (2) that the defendants
have customs or policies which “‘amount[ ] to
10

deliberate indifference’” to their constitutional
rights; and (3) that these policies are the
“‘moving force behind the constitutional
violation[s].’” Oviatt [v. Pearce], 954 F.2d
[1479,] 1473, 1477 (9th Cir. 1992) (quoting City
of Canton [v. Harris], 489 U.S. [378,] 389–91,
109 S. Ct. 1197 [(1989)].
Lee v. City of Los Angeles, 250 F.3d 668, 681–82 (9th Cir. 2001)
(some alterations in Lee).
The City argues that Plaintiffs fail to plead a
municipal policy, custom or practice that caused constitutional
deprivation.

This is correct.

Absent from the First Amended

Complaint is the identification of any such City policy, custom
or practice.

Likewise, there are no facts sufficiently pleaded

that any of the named individual defendants was an official with
final policy-making authority or that a final policy-making
official ratified any wrongful conduct by the individual
defendants that resulted in constitutional deprivation.

The

Motion therefore must be granted as to the municipal liability
claims but, because amendment may be possible, the dismissal is
without prejudice.
III. Puana’s § 1983 Fourth Amendment Claim
Puana affirmatively states that he is not seeking a
§ 1983 Fourth Amendment claim for false arrest or malicious
prosecution arising out of his state criminal charge.
Opp. at 30.]

[Mem. in

The Motion is therefore moot as to any § 1983
11

Fourth Amendment claim for false arrest or malicious prosecution
arising out of Puana’s state criminal charge.
IV.

Plaintiffs’ § 1983 Fifth Amendment Due Process Claim
Plaintiffs affirmatively state that they “are not

bringing equal protection claims under the Due Process Clause of
the Fifth Amendment[]” but “are bringing adequate, effective,
and meaningful access to the courts claims under the Fifth and
Fourteenth Amendments due process protections.”
at 33 (citations omitted).]

[Mem. in Opp.

Such a claim however is not

sufficiently stated in the First Amended Complaint and thus the
Motion must be granted, but because amendment may be possible,
the dismissal is without prejudice.
V.

Fourteenth Amendment Substantive Due Process Claim
The City submits that Plaintiffs cannot bring a

malicious prosecution case under the Fourteenth Amendment
substantive due process protections and that Plaintiffs have
conceded this point, [Reply at 19,] and Plaintiffs argue that
the City misunderstands their claim and that they have alleged a
Fourth Amendment malicious prosecution claim, [Mem. in Opp. at
34].

What is clear is that Plaintiffs must state separately and

specifically what claims they are alleging, because:
In this circuit, nothing prevents Awabdy from
bringing both malicious prosecution and direct

12

First and Fourteenth Amendment claims in the same
§ 1983 action.
In Poppell [v. City of San Diego], for
instance, we analyzed the adult business
operator’s claim of malicious prosecution with
the intent to deprive him of specific
constitutional rights separately from his claim
that he was prosecuted “on account of his
exercise of the same rights he invoked in his
malicious prosecution theory.” 149 F.3d [951,]
961 [(9th Cir. 1998)]. And in Freeman [v. City
of Santa Ana], the plaintiff’s failure to prevail
on her § 1983 claim of malicious prosecution did
not serve to bar her claim that she was
prosecuted in violation of her Fourteenth
Amendment equal protection rights and in
retaliation for exercising her First Amendment
“associational” rights. 68 F.3d [1180,] 1185–88
[(9th Cir. 1995)]. Instead, as in Poppell, we
analyzed each claim on its own merits.
Accordingly, we remand to the district court
with instructions to permit Awabdy to amend his
complaint to state separately and specifically
the various claims he intends to assert, i.e., a
direct First Amendment claim, a direct Fourteenth
Amendment claim, and/or a § 1983 malicious
prosecution claim.
Awabdy v. City of Adelanto, 368 F.3d 1062, 1072 (9th Cir.
2004) (emphasis in Awabdy).

Because Plaintiffs have not

sufficiently and specifically stated the claim that they are
alleging as to the malicious prosecution allegation, the Motion
must be granted, but because amendment may be possible, the
dismissal is without prejudice.

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VI.

Punitive Damages Against Municipality
Plaintiffs concede that punitive damages cannot be

awarded against the City, [Mem. in Opp. at 35,] and thus the
Motion must be granted as to this relief sought with prejudice.
VII. Plaintiffs’ Motion for Summary Judgment
Embedded within Plaintiffs’ Memorandum in Opposition
is a section titled “IV. Motion for Partial Summary Judgment.”
[Mem. in Opp. at 35 (emphasis omitted).]

Given that the Motion

is granted in part such that the claims in the First Amended
Complaint are dismissed as detailed above and Plaintiffs have
leave to file a second amended complaint, to the extent this
portion of Plaintiffs’ Memorandum in Opposition constitutes a
motion for partial summary judgment, it is denied as moot
without prejudice.
In sum, the Motion is granted with prejudice as to any
claim for relief of punitive damages against the City because it
would be futile to permit any amendment of any claim seeking
this relief.

The Motion is granted without prejudice as to all

other claims against the City with leave to amend and file a
second amended complaint because it is not clear that the
complaint cannot be saved by any amendment.

Plaintiffs are

ordered to file their second amended complaint by August 4,
2021.

The portion of Plaintiffs’ Memorandum in Opposition

14

titled as a motion for partial summary judgment is denied as
moot without prejudice.
Plaintiffs are cautioned that their second amended
complaint must state all of their claims as well as all of the
factual allegations, exhibits, and legal theories that these
claims rely upon.

Plaintiffs cannot rely upon or incorporate by

reference any portion of the original complaint or First Amended
Complaint.

This Court will not consider Plaintiffs’ second

amended complaint collectively with the prior filings in this
case.

Further, Plaintiffs are not allowed to add any new

claims, parties, or theories of liability in the second amended
complaint.

If they wish to do so, they must file a motion for

leave to amend, and that motion will be considered by the
magistrate judge.

If Plaintiffs do not file a second amended

complaint by August 4, 2021, the case will proceed on only the
claims not included in the Motion.
CONCLUSION
For the foregoing reasons, the City’s Motion to
Dismiss First Amended Complaint Filed on September 3, 2020,
filed April 12, 2021, is HEREBY GRANTED IN PART AND DENIED IN
PART.

The Motion is GRANTED WITH PREJUDICE to the extent that

the First Amended Complaint is dismissed with respect to any
claim for punitive damages against the City, and to the extent
that the remainder of the claims against the City are dismissed.
15

However, the Motion is DENIED to the extent that the First
Amended Complaint is dismissed WITHOUT PREJUDICE to all claims
against the City other than those for punitive damages.

To the

extent the portion of Plaintiffs’ Memorandum in Opposition
constitutes a motion for partial summary judgment, it is DENIED
AS MOOT WITHOUT PREJUDICE.

Plaintiffs are hereby ordered to

file their second amended Complaint by August 4, 2021.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 4, 2021.

GERARD K. PUANA, ET AL. VS. KATHERINE P. KEALOHA, ET AL.; CV 1600659 LEK-WRP; ORDER GRANTING IN PART AND DENYING IN PART
DEFENDANT’S MOTION TO DISMISS AND GRANTING LEAVE TO FILE A
SECOND AMENDED COMPLAINT; AND DENYING PLAINTIFFS’ MOTION FOR
PARTIAL SUMMARY JUDGMENT

16