Hawaii Masons' Pension Trust Fund v. Global Stone Hawaii, Inc.

Filing 33

ORDER GRANTING DEFENDANTS RENATO FUCHS AND DANIEL NELSONS MOTION TO DISMISS; DENYING DEFENDANTS REQUEST FOR ATTORNEYS FEES; AND GRANTING PLAINTIFF HAWAII MASONS REQUEST FOR LEAVE TO AMEND. "The court GRANTS Fuchs and Nelsons Motion to Dismiss, G RANTS Hawaii Masons request for leave to amend, and DENIES without prejudice Fuchs and Nelsons request for attorneys fees. If Hawaii Masons wishes to file an Amended Complaint asserting new claims against Fuchs and Nelson, it must do so by Decembe r 4, 2017. Claims against Global Stone remain in issue." Signed by JUDGE SUSAN OKI MOLLWAY on 11/13/17. (cib, )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 HAWAII
HAWAII MASONS’ PENSION TRUST
FUND; HAWAII MASONS’ AND
PLASTERERS’ ANNUITY TRUST
FUND; HAWAII MASONS’ VACATION
AND HOLIDAY TRUST FUND;
HAWAII MASONS’ AND
PLASTERERS’ APPRENTICESHIP
AND TRAINING TRUST FUND;
HAWAII MASONS’ HEALTH AND
WELFARE TRUST FUND,

)
)
)
)
)
)
)
)
)
)
)
Plaintiffs,
)
)
vs.
)
)
GLOBAL STONE HAWAII, INC.;
)
RENATO FUCHS; DANIEL NELSON;
)
JOHN DOES 1-10; DOE
)
CORPORATIONS 1-10; DOE
)
PARTNERSHIPS 1-10; DOE
)
GOVERNMENTAL AGENCIES 1-10;
)
DOE TRUSTS 1-10,
)
Defendants.
)
_____________________________ )

Civ. No. 17-00289 SOM-RLP
ORDER GRANTING DEFENDANTS
RENATO FUCHS AND DANIEL
NELSON’S MOTION TO DISMISS;
DENYING DEFENDANTS’ REQUEST
FOR ATTORNEYS’ FEES; AND
GRANTING PLAINTIFF HAWAII
MASONS’ REQUEST FOR LEAVE TO
AMEND.

ORDER GRANTING DEFENDANTS RENATO FUCHS AND DANIEL NELSON’S MOTION
TO DISMISS; DENYING DEFENDANTS’ REQUEST FOR ATTORNEYS’ FEES; AND
GRANTING PLAINTIFF HAWAII MASONS’ REQUEST FOR LEAVE TO AMEND.
I.

INTRODUCTION.
A group of trust funds (“Hawaii Masons”) alleges that

Defendant Global Stone Hawaii, Inc. (“Global Stone”), and two of
its officers (Defendants Renato Fuchs and Daniel Nelson)
violated the Employee Retirement Income Security Act of 1974, 29
U.S.C. § 1001 et. seq. (“ERISA”), by failing to make certain
contributions to the funds.

Fuchs and Nelson move to dismiss.

Hawaii Masons seeks to recover from Fuchs and Nelson in their

individual capacities, asserting claims for breach of fiduciary
duty, alter ego liability, and constructive trust.

Fuchs and

Nelson respond that Hawaii Masons’ allegations fail as a matter
of law, are devoid of factual detail, and are merely conclusory.
The court agrees with Fuchs and Nelson and grants the motion to
dismiss.
II.

BACKGROUND.
A.

The Complaint.

Hawaii Masons is the trustee of various trust funds
maintained on behalf of Hawaii construction workers (the “Trust
Funds”): Hawaii Masons’ Pension Trust Fund; Hawaii Masons and
Plasterers’ Annuity Trust Fund; Hawaii Masons’ Vacation and
Holiday Trust Fund; Hawaii Masons’ and Plasterers’
Apprenticeship and Training Trust Fund; and Hawaii Masons’
Health and Welfare Trust Fund.

ECF 1, PageID # 1.

The Trust

Funds are jointly trusteed labor-management trust funds
maintained under 29 U.S.C. § 186(c)(5) that operate as employee
benefit plans.

ECF 1, PageID # 3.

Hawaii Masons is a fiduciary

under ERISA with respect to the Trust Funds.
#s 2, 3.
Hawaii.

Id. at PageID

Hawaii Masons’ principal offices are in Honolulu,
Id. at PageID # 3.
On June 15, 2017, Hawaii Masons filed a Complaint

against Global Stone, Fuchs, and Nelson.

2

Id. at PageID #s 1-2.

The Complaint states that at all relevant times Global
Stone was a Hawaii corporation engaged in an industry affecting
commerce under ERISA and the Labor-Management Relations Act
(“LRMA”).

See id. at PageID # 4 (citing 29 U.S.C. §§ 1002(5),

(11), (12), and 29 U.S.C. § 142(1), (3)).

The Complaint alleges

that Global Stone agreed to abide by the terms of a Master
Agreement Covering the Ceramic Tile, Marble & Terrazzo Trades in
the State of Hawaii (the “CBA”) and a Declaration of Trust
Agreement connected to each Trust Fund (the “Trust Agreements”).
Id. at PageID # 5.

The Complaint states that Hawaii Masons is a

third-party beneficiary of the CBA.

Id.

Under the CBA and the

Trust Agreements, Global Stone allegedly promised to make
monthly contributions to the Trust Funds for employee benefits
and for labor performed by covered employees, and to pay
liquidated damages in the event of any delinquency.
PageID # 7.
ongoing.

Id. at

Global Stone’s payment obligations are allegedly

Id. at PageID #s 7-8.
According to the Complaint, Global Stone failed to pay

the full contribution amounts from April 2016 to April 2017.
Id. at PageID # 7.

Global Stone also allegedly failed to pay

liquidated damages from August 2012 to October 2012, January
2013 to January 2015, and November 2016 to February 2017.
Hawaii Masons seeks to recover the unpaid funds, accrued

3

Id.

interest, damages flowing from the nonpayments, and costs and
attorneys’ fees.

Id. at PageID #s 8, 14.

Fuchs and Nelson are officers of Global Stone and Utah
residents.

Id. at PageID # 4; see also ECF 15-2, PageID # 68.

The Complaint asserts three claims against them: breach of
fiduciary duty, constructive trust, and alter ego liability.
First, the Complaint alleges that “due to breach of
fiduciary duties,” Fuchs and Nelson “should be held personally
liable for . . . delinquent contributions and sums owed” by
Global Stone under the CBA and Trust Agreements.
# 10.

ECF 1, PageID

To support this claim, the Complaint makes the following

specific allegations:
1. “[Fuchs and/or Nelson] is a fiduciary under ERISA
because s/he exercised authority or control
respecting management or disposition of plan
assets.”

Id.

2. “The trust fund contributions were and are plan
assets at all relevant times as the payment of
contributions due from Global Stone to the Trust
Funds accrued and w[ere] considered as being held in
trust by Global Stone for the benefit of the Trust
Funds to whom such contributions are due and
payable.”

Id. (emphasis omitted).

4

3. “[Fuchs and/or Nelson] breached his/her fiduciary
duties by intentionally failing to report and/or pay
the required contributions to Trust Funds and
failing to discharge his duties as set forth by
ERISA and 29 U.S.C. § 1104(a).”

Id. at PageID # 11.

The Complaint includes no further factual allegations regarding
the breach of fiduciary duty claim.

See id.

Second, the Complaint requests that a “constructive
trust . . . be imposed upon the assets of” Fuchs, Nelson, and
Global Stone.

Id. at PageID # 12; see also id. at PageID # 15.

To support this request, the Complaint makes a single
allegation: “As a result of” Fuchs and Nelson’s “breach of their
fiduciary duties of care and loyalty to the participants and
beneficiaries of Trust Funds as alleged herein, plan assets have
been improperly diverted from Trust Funds to Global Stone
and/or” Fuchs and Nelson.

Id. at PageID # 11; see also id. at

PageID # 14 (reiterating the allegation that contribution
amounts “have been improperly diverted from Plaintiffs to Global
Stone and/or” Fuchs and Nelson (emphasis omitted)).
Third, the Complaint claims that “at all relevant
times, Global Stone was the alter ego and/or the mere
instrumentality of [Fuchs and Nelson].”

Id. at PageID # 12.

The Complaint asserts alter ego liability “based on all or some
of the following relevant factors”:
5

a)
b)
c)
d)
e)
f)

g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)

Undercapitalization
Failure to observe corporate formalities 

Absence of corporate records 

Insolvency of corporation at time of
transaction 

Siphoning off of funds by the dominant
shareholder(s) 

Shareholders guarantying [sic] corporate
liabilities in their individual 

capacities 

Nonfunctioning officers or directors 

Lack of officers or directors 

Failure to issue stock 

Absence of consideration for stock 

Corporation is a facade of the operation
of the dominant shareholder(s) 

Corporation's inability to meet payroll
and other obligations 

Commingling of funds or assets 

Stripping the corporation of assets in
anticipation of litigation 

Use of the corporate shell to advance
purely personal ends 

Treatment of corporate assets as personal
assets 

Cash advances to
shareholders/officers/directors 

Advances to corporation by shareholders 

Undocumented loans 

Use of individual rather than corporate
checks and
Fraud and misrepresentation with respect
to Trust Fund plan assets
of which [Fuchs
and/or Nelson] was a fiduciary for the
employees covered by the Bargaining
Agreement and trust agreements.

Id. at PageID #s 12-13.
The Complaint asserts that, with Global Stone as their
alter ago and “instrumentality,” Defendants Fuchs and Nelson
“should be held liable for all the judgments entered in favor of
6

[Hawaii Masons] and/or delinquent contributions or sums owed”
under the CBA and Trust Agreements “as a matter of equity and
fairness.”

Id. at PageID # 13.

The Complaint supports this

assertion with another list of “factors,” “all or some” of which
are allegedly “relevant”:
a) Nonpayment of trust fund obligations by
Global Stone; 

b) Violation of statute or public policy; 

c) Misrepresentations by Global Stone and/or
members/officers/directors; and/or 

d) The acting principals of Global Stone[]
were responsible for and ratified
administrative decisions exercised on
behalf of Global Stone, were vested with
the authority to exercise discretionary
control over the management of the
financial responsibilities and business
affairs of GLOBAL STONE, and exercised
discretionary control over the management
of the financial responsibilities and
business affairs of GLOBAL STONE
including, but not limited to, authorizing
and tendering the payment of contributions
and withholdings due to the funds pursuant
to the Bargaining Agreement and trust fund
agreements; and/or
e) The acting principals of Global Stone
intentionally misrepresented to Trust
Funds the amount of hours worked by its
employees by failing to report and/or
transmit contributions in a timely fashion
to Trust Funds.
Id. at PageID # 14 (emphases omitted).

The Complaint includes

no further factual allegations concerning any of these
“factors.”

See id.

7

B.

Fuchs and Nelson’s Motion to Dismiss.

On September 20, 2017, Fuchs and Nelson moved to
dismiss under Rule 12(b)(6) of the Federal Rules of Civil
Procedure.

ECF 15.

Defendants say that the claims against them

are deficient because they are “merely conclusory,” lack
“factual allegations,” and “are not supported by current law.”
ECF 15-2, PageID # 68.

They point to Ninth Circuit cases that

they characterize as holding that “officers of employers are not
personally liable when the employer fails to make contributions
to ERISA plans.”

Id. at PageID # 69; see, e.g., Bos (I) v.

Board of Trustees, 795 F.3d 1006, 1009 (9th Cir. 2015) (noting
the rule that officers are not liable for company nonpayments
because “unpaid contributions by employers to employee benefit
funds are not plan assets” covered by ERISA (emphasis added)).
C.

Hawaii Masons’ Memorandum in Opposition.

On October 6, 2017, Hawaii Masons filed a Memorandum
in Opposition to the Motion to Dismiss (“Memorandum”).

ECF 17.

The Memorandum disputes the claim that unpaid employer
contributions are not “plan assets” governed by ERISA, and
appends the CBA and some of the Trust Agreements that were
referenced in the Complaint.

See ECF 17-10, PageID # 136; ECF

17-11, PageID # 262; ECF 17-12, PageID # 302.

Hawaii Masons

says that these Agreements evince the intent of the parties to
deem unpaid contributions to be “plan assets.”
8

See ECF 17,

PageID #s 93, 107.

The Memorandum excerpts the following

provisions:
1. “Contractor payments to the various Trust Funds and
other Funds[,] as specified in this Agreement shall
be paid only for hours worked.”

Id. at PageID # 96.

2. “Each Contractor shall participate in the Hawaii
Masons Health and Welfare Trust Fund . . . .”

Id.

3. “Contractor contributions to the various Funds as
specified and provided for above shall be paid or
postmarked by the 20th day of the month . . . .”

Id.

4. “[T]he parties have agreed that such contributions
shall be payable to and deposited in the Masons’
Health and Welfare Fund . . . .”

Id. at PageID

# 97.
5. “The Masons’ Welfare Fund shall consist of all
contributions, investments made and held by the
Trustees, income from said investments, and any
other property received and held by the Trustees to
carry out the purposes herein.”

Id.

6. “Each Employer shall pay contributions to the Hawaii
Masons’ Welfare Fund in accord with the terms of the
Labor Agreement.”

Id. at PageID # 98.

9

7. “Every Employer who participates in the Masons’
Welfare Fund shall be bound by this Agreement and
Declaration of Trust.”

Id.

In the Memorandum, Hawaii Masons also alleges, for the
first time, that “Defendants” “are in possession” of assets
“which were actually paid to the Training Fund.” 1

Id. at PageID

#s 99, 112 (citing Affidavit of Karen Tamashiro).

Hawaii Masons

argues that because “the sum was in fact once paid over to the
Training Fund,” “at a minimum, such sum now held by Defendants
should be considered plan assets, giving rise to a fiduciary
duty.”

Id. at PageID # 113.

Consequently, Hawaii Masons

claims, the “Individual Defendants”--i.e., Fuchs and Nelson-must be liable as “fiduciaries with respect to a portion of the
Training Fund delinquency.”

Id. at PageID #s 99, 112.

Also for the first time, the Memorandum claims that
Hawaii Masons is entitled to relief on the ground that “Vacation
Fund contributions are clearly [ERISA] plan assets” “as monies
which were deducted from employee wages.”

Id. at PageID # 114.

The Memorandum excerpts 29 C.F.R. § 2510.3-102(a)(1), which
states:
1

At a hearing on October 30, 2017, counsel for Hawaii Masons
attempted to clarify this nonspecific reference to “Defendants.”
Counsel stated that this allegation relates to a check that the
Training Fund refunded only to Global Stone, but also said that
“questions remain” about whether some of the money was
improperly diverted to Fuchs and Nelson, who, according to
counsel, may be taking draws on the company.
10

The assets of [an ERISA] plan include
amounts (other than union dues) that a
participant or beneficiary pays to an
employer, or amounts that a participant has
withheld from his wages by an employer, for
contribution or repayment of a participant
loan to the plan, as of the earliest date on
which such contributions or repayments can
reasonably be segregated from the employer’s
general assets.
Id.; see ECF 17, PageID # 113.

Hawaii Masons says that Vacation

Fund benefits are “statutorily deemed plan assets” under this
provision.

ECF 17, PageID # 114.

Citing various affidavits,

the Memorandum avers that “Vacation Fund benefits are recognized
as part of an employee’s wage package,” id. at PageID # 101
(citing affidavit of Jeff Ornellas), and contributions to that
Fund are “included in the employee’s gross income on each
paycheck and then taxed,” id. (citing affidavit of Karen
Tamashiro).

This allegedly means that “when [Global Stone]

fails to pay the corresponding contribution to the Vacation
Fund, [its employees are] insufficiently credited” when they
receive monies from the Fund at the end of the year.

See id. at

PageID #s 101-02 (citing affidavit of Karen Tamashiro).

Global

Stone’s unpaid Vacation Fund contributions therefore allegedly
qualify as “amounts withheld from an employee’s wages for
contributions” under the Code of Federal Regulations.
PageID # 113.

11

Id. at

Hawaii Masons’ Complaint, by comparison, makes only
one allegation specifically regarding these Funds: the
“Training[] and Vacation & Holiday funds are employee welfare
benefit plans.”

ECF 1, PageID # 2.

Aside from this allegation,

the Complaint does not explicitly discuss either Fund.

See id.

The Complaint does cite 29 C.F.R. § 2510.3-102 once, but not to
allege that Vacation Fund contributions qualify as “amounts
withheld from an employee’s wages.”

Instead, the Complaint

says:
[T]rust fund contributions were and are plan
assets at all relevant times as the payment
of contributions due from GLOBAL STONE to
the Trust Funds accrued and w[ere]
considered as being held in trust by GLOBAL
STONE for the benefit of the Trust Funds to
whom such contributions are due and payable.
See 29 Code of Federal Regulations §2510.3102.
ECF 1, PageID # 10 (emphasis added).
In the Memorandum, Hawaii Masons also requests “leave
to amend its Complaint pursuant to Rule 15(a) of the Federal
Rules of Civil Procedure” “[t]o the extent the Court finds
defects in the allegations” pled.
D.

ECF 17, PageID # 117.

Fuchs and Nelson’s Reply.

Fuchs and Nelson filed a Reply on October 17, 2017.
ECF 18.

The Reply disputes that the “‘shall’ verbiage” in the

Trust Agreements and the CBA proves that the parties intended to
deem unpaid contributions to be ERISA plan assets.
12

Id. at

PageID # 314.

It also argues that Hawaii Masons’ Memorandum in

Opposition is “inappropriately attempt[ing] to circumvent [a]
pleading defect by seeking to introduce” allegations that are
not in the Complaint.
E.

Id. at PageID #s 320-21.

Other Filings.

On September 20, 2017, Global Stone filed an Answer to
the Complaint that variously admits or denies the allegations
against it.

ECF 14.

On October 19, 2017, Hawaii Masons moved

to strike Fuchs and Nelson’s Reply on the ground that it was
filed a day late.
ECF 22; ECF 24.

ECF 20.

Fuchs and Nelson opposed the motion.

At the hearing on October 30, 2017, the court

denied the motion to strike.
III.

STANDARD OF REVIEW.
Fuchs and Nelson move to dismiss under Rule 12(b)(6)

of the Federal Rules of Civil Procedure.

Dismissal under Rule

12(b)(6) may be based on either: (1) lack of a cognizable legal
theory, or (2) insufficient facts under a cognizable legal
theory.

Balistreri v. Pacifica Police Dept., 901 F.2d 696, 699

(9th Cir. 1988) (citing Robertson v. Dean Witter Reynolds, Inc.,
749 F.2d 530, 533–34 (9th Cir. 1984)).
To survive a Rule 12(b)(6) motion to dismiss, a
complaint’s “[f]actual allegations must be enough to raise a
right to relief above the speculative level, on the assumption
that all the allegations in the complaint are true (even if
13

doubtful in fact).”

Bell Atl. Corp. v. Twombly, 550 U.S. 544,

555 (2007) (citation omitted); accord Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (“[T]he pleading standard Rule 8 announces
does not require ‘detailed factual allegations,’ but it demands
more than an unadorned, the-defendant-unlawfully-harmed-me
accusation.”).

The court takes all allegations of material fact

as true and construes them in the light most favorable to the
nonmoving party, and then evaluates whether the complaint
“state[s] a claim to relief that is plausible on its face.”
Twombly, 550 U.S. at 570; Sprewell v. Golden State Warriors, 266
F.3d 979, 988 (9th Cir. 2001); Syntex Corp. Sec. Litig., 95 F.3d
922, 926 (9th Cir. 1996).

“A claim has facial plausibility when

the plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable for
the misconduct alleged.”

Iqbal, 556 U.S. at 678.

Conclusory

allegations of law, unwarranted deductions of fact, and
unreasonable inferences are insufficient to defeat a motion to
dismiss.

Sprewell, 266 F.3d at 988; Syntex Corp. Sec. Litig.,

95 F.3d at 926.
On a Rule 12(b)(6) motion, the court’s review is
generally limited to the contents of the complaint.

Sprewell,

266 F.3d at 988; Campanelli v. Bockrath, 100 F.3d 1476, 1479
(9th Cir. 1996).

If matters outside the pleadings are

considered, the Rule 12(b)(6) motion is treated as one for
14

summary judgment.

See Keams v. Tempe Tech. Inst., Inc., 110

F.3d 44, 46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d 932,
934 (9th Cir. 1996).

The court may “consider certain materials

–-documents attached to the complaint, documents incorporated by
reference in the complaint, or matters of judicial notice–without converting the motion to dismiss into a motion for
summary judgment.”

United States v. Ritchie, 342 F.3d 903, 908

(9th Cir. 2003).
IV.

ANALYSIS.
Hawaii Masons claims that Global Stone and its

officers violated ERISA by failing to make contributions
required by the CBA and the Trust Agreements.

The claims

against Global Stone are not currently before the court.

This

order evaluates Hawaii Masons’ claims against company officers
Fuchs and Nelson in their individual capacities.
The Complaint asserts three claims against Fuchs and
Nelson: breach of fiduciary duty, alter ego liability, and
constructive trust.

The court will discuss these claims in

turn, but first looks to jurisdiction.
A.

The Court Has Subject Matter Jurisdiction.

The court has subject matter jurisdiction over the
claims against Fuchs and Nelson.

District courts have

jurisdiction over civil actions brought under ERISA by “a
participant, beneficiary, [or] fiduciary.”
15

29 U.S.C. § 1132(e).

Hawaii Masons is suing Fuchs and Nelson under ERISA § 409(a), 29
U.S.C. § 1109(a), see ECF 1, PageID # 11, and Hawaii Masons, as
trustee of the Trust Funds, is an ERISA fiduciary, see 29 U.S.C.
§ 1002(21)(A); ECF 1, PageID # 2.
B.

The Court Dismisses the Fiduciary Claims Against
Fuchs and Nelson.

“In enacting ERISA, Congress set out to protect
participants in employee benefit plans by establishing standards
of conduct, responsibility, and obligations for fiduciaries of
employee benefit plans, and by providing for appropriate
remedies.”

Ariz. State Carpenters Pension Tr. Fund v. Citibank

(Ariz.), 125 F.3d 715, 719 (9th Cir. 1997) (quoting Yeseta v.
Baima, 837 F.2d 380, 383 (9th Cir. 1988)).

Hawaii Masons claims

that Fuchs and Nelson are liable under ERISA § 409(a), 29 U.S.C.
§ 1109(a), which provides that “any person who is a fiduciary
with respect to a plan who breaches any of the responsibilities,
obligations, or duties imposed upon fiduciaries [by ERISA] shall
be personally liable.”

Id.; see ECF 1, PageID # 11.

Fuchs and

Nelson respond that the claim fails as a matter of law, because
they are not “fiduciaries with respect to a[n ERISA] plan.”
29 U.S.C. § 1109(a) (emphasis added).

See

This court agrees that,

in the context of the claims before this court, Fuchs and Nelson
cannot be said to be ERISA fiduciaries.

16

1.

Unpaid Contributions are not “Plan Assets”
from which Fiduciary Obligations Flow.

“ERISA defines a fiduciary as, inter alia, an
individual who ‘exercises any discretionary authority or
discretionary control respecting management of [a] plan or
exercises any authority or control respecting management or
disposition of its assets.’”

Bos (I) v. Board of Trs., 795 F.3d

1006, 1008-09 (9th Cir. 2015) (quoting 29 U.S.C. § 1002(21)(A)).
Establishing ERISA fiduciary status “requires (1) showing that
. . . plan assets are at issue and (2) that the individual
defendants exercised authority or control relating to the
management or disposition of such assets.”

Trs. of S. Cal. Pipe

Trades Health & Welfare Tr. Fund v. Temecula Mech., Inc., 438 F.
Supp. 2d 1156, 1162 (C.D. Cal. 2006) (quoting NYSA–ILA Med. &
Clinical Serv. Fund v. Catucci, 60 F. Supp. 2d 194, 200
(S.D.N.Y. 1999)), abrogated on other grounds, Bos (I), 795 F.3d
1006.

Both parties agree that the question of whether “plan

assets are at issue” is, at least initially, governed by the
rule announced in Cline v. Industrial Maintenance Engineering &
Contracting Co., 200 F.3d 1223 (9th Cir. 2000).

See ECF 17,

PageID # 105; ECF 18, PageID # 312.
In Cline, the Ninth Circuit addressed an allegation
that entities had “violated their fiduciary duties by failing to
deposit funds owed to [an Employee Pension Benefit] Plan

17

pursuant to [a] CBA.”

200 F.3d at 1229.

Cline held that

fiduciary duties had not arisen because “[u]ntil the employer
pays the employer contributions over to the plan, the
contributions do not become plan assets over which fiduciaries
of the plan have a fiduciary obligation; this is true even where
the employer is also a fiduciary of the plan.”

Id. at 1234.

Post-Cline, the Ninth Circuit has “consistently held that unpaid
contributions by employers to employee benefit funds are not
plan assets.”

Bos v. Board of Trustees, 795 F.3d 1006, 1009

(9th Cir. 2015); see also, e.g., Carpenters Pension Tr. Fund v.
Moxley, 734 F.3d 864, 867 (9th Cir. 2013) (“[M]oney that is owed
to the Fund is not in the Fund, and is therefore not yet a Fund
‘asset.’”).
This case calls for a straightforward application of
the Cline rule.

Hawaii Masons alleges that Fuchs and Nelson’s

company failed to make certain contributions to the Trust Funds.
See ECF 1.

Under Cline, Fuchs and Nelson cannot be liable for

the alleged nonpayments because unpaid “contributions do not
become plan assets over which [even] fiduciaries of the plan
have a fiduciary obligation.”

See Cline, 200 F.3d at 1234.

Hawaii Masons therefore may not pursue fiduciary claims against
Fuchs and Nelson.

See Hawaii Masons’ Health & Welfare Fund v.

Dynamic Interiors, LLC, 2015 WL 438181, at 5 (D. Haw. Jan. 15,
2015) (finding identical allegations by the Hawaii Masons’
18

Health and Welfare Fund against officers of Dynamic Interiors
insufficient under Cline), report and recommendation adopted,
No. Civ. 14-00434 LEK, 2015 WL 500496 (D. Haw. Feb. 3, 2015).
Hawaii Masons resists this straightforward application
of Cline.

It claims that there is an “exception” to the Cline

rule under which “unpaid contributions can be considered plan
assets when a plan document itself identifies unpaid employer
contributions as a plan asset.”

ECF 17, PageID # 105.

In

support of this exception, Hawaii Masons cites two Ninth Circuit
cases and a regulation.

See id. (citing 29 C.F.R. § 2510.3-102;

Carpenters Pension Tr. Fund v. Moxley, 734 F.3d 864 (9th Cir.
2013); and Trs. of S. Cal. Pipe Trades Health & Welfare Tr. Fund
v. Temecula Mechanical, Inc., 438 F. Supp. 2d 1156 (C.D. Cal.
2006)).
Temecula

and

Moxley

discuss

contractual exception to Cline. 2

whether

there

is

a

Temecula held that the Cline

“rule gives way in the face of language in [a] plan document
identifying unpaid employer contributions as plan assets.”

438

F. Supp. 2d at 1163.

In Moxley, the Ninth Circuit took note of

the

ruling,

Temecula

court’s

recognize the exception.

but

did

not

decide

whether

734 F.3d at 869; see id. at 867.

2

The regulation cited is not relevant to whether there is a
contractual exception to the Cline rule. See 29 C.F.R.
§ 2510.3-102. Instead, as discussed infra, it relates to
allegations that employer contribution amounts have been
withheld from employee wages.
19

to
The

Ninth Circuit did decide the issue, however, in Bos (I) v. Board
of

Trustees,

795

F.3d

1006,

1009

(9th

Cir.

2015),

which

repudiated Temecula and foreclosed any contractual exception to
the Cline rule.
In Bos (I), an entity’s president, who owed a $500,000
debt to benefit plans under various trust agreements and a CBA,
filed for bankruptcy.

Id. at 1006-08.

At issue was a

bankruptcy provision that “provide[d] that debts incurred by a
debtor due to the debtor’s ‘fraud or defalcation while acting in
a fiduciary capacity’ are nondischargeable.”
(quoting 11 U.S.C. § 523(a)(4)).

Id. at 1008 n.2

The president insisted that he

was not a “fiduciary” under this provision, making his debts
dischargeable.

Id. at 1008.

Bos (I) analyzed the issue under

ERISA, explaining that “[i]f an individual is a fiduciary for
purposes of the Employee Retirement Income Security Act . . .
the individual is also treated as a fiduciary for purposes of
§ 523(a)(4).”

Id. at 1008 (citation omitted).

From the ERISA

perspective, the question was whether “an employer’s contractual
requirement to contribute to an employee benefits trust fund
makes it a fiduciary of unpaid contributions.”

Id. at 1007.

Bos (I) held that it did not, expressly “declin[ing] to apply
such an exception” to Cline.

Id. at 1009.

Noting a circuit split on the issue, the Ninth Circuit
in Bos (I) sided “with the view taken by the Sixth and Tenth
20

Circuits,” including the Sixth Circuit’s view in an ERISA case
involving unpaid contributions.

Id. at 1010-11 (discussing

Sheet Metal Local 98 Pension Fund v. Airtab, Inc., 482 F. App’x
67, 69-70 (6th Cir. 2012)).

Bos (I) read the Sixth Circuit case

as holding “that employers did not have sufficient control over
[a] plan’s claim for breach of contract to establish ERISA
fiduciary status.”

Because the president was not a fiduciary

under ERISA, Bos (I) concluded that he also “did not act as a
fiduciary under” the bankruptcy code provision in 11 U.S.C.
§ 523(a)(4).

Id. at 1012.

Hawaii Masons argues that Bos (I) applies only in
bankruptcy cases.

ECF 17, PageID # 107.

Some of Bos (I)’s

language is indeed specific to the issue of bankruptcy
dischargeability.

See 795 F.3d at 1010 (stating that the Ninth

Circuit had previously “declined to apply [a Cline] exception,
particularly in the context of [11 U.S.C.] § 523(a)(4)”); id. at
1010 n.4 (“Notably, [the Tenth Circuit’s decision declining to
find a contractual Cline exception] arose in the context of a
Chapter 7 bankruptcy proceeding . . . .”); id. at 1008, 1011
(grounding part of the analysis on the bankruptcy requirement
that “the debtor must have been a fiduciary prior to his
commission of the fraud or defalcation”).
The problem with a bankruptcy-only reading of Bos (I),
however, is that the very same panel hearing a subsequent
21

attorney’s fees motion in the very same case characterized its
analysis as based on ERISA.

The panel explained that, in Bos

(I), “we concluded that [Bos] was not a fiduciary under ERISA,
and thus the Bankruptcy Code’s ‘fiduciary’ exception to
discharge could not be applied to him.”

Bos (II) v. Bd. of

Trustees, 818 F.3d 486, 489 (9th Cir. 2016).

In other words,

Bos (I) took an antecedent-consequent approach: because, under
Cline, a contractual contribution requirement does not make an
employer a fiduciary of unpaid contributions under ERISA, the
contribution requirement does not make an employer a fiduciary
under the Bankruptcy Code.

Accord Bos (II), 818 F.3d at 489;

see also Bos (I), 795 F.3d at 1007, 1008.

Bos (II)’s

description of Bos (I) is consistent with Bos (I)’s statement of
agreement “with the view taken by the Sixth” Circuit in an ERISA
unpaid contribution case, and its suggestion that the ERISA
framework was appropriate because “[i]f an individual is a
fiduciary for purposes of the Employee Retirement Income
Security Act . . . the individual is also treated as a fiduciary
for purposes of § 523(a)(4).”

See Bos (I), 795 F.3d at 1007,

1010-11.
Hawaii Masons does not discuss Bos (II) in its
Memorandum in Opposition, see ECF 18, but at the hearing on
October 30, 2017, counsel argued that Bos (II)’s reading is
unpersuasive because it was (allegedly) not written by the judge
22

who wrote Bos (I).
this assertion.

The court can find no evidence to support

The decision in Bos (I) was written by Judge

Diarmuid O’Scannlain, joined by Judges Sandra Ikuta and District
Judge Larry Burns.

795 F.3d at 1007.

order issued by the same three judges.

Bos (II) was a per curiam
818 F.3d at 488.

Judge

O’Scannlain clearly joined in the Bos (II) ruling, and this
court is at a loss to understand why Hawaii Masons thinks that
there were different authors.
Bos (I) foreclosed Hawaii Masons’ proffered exception
to the Cline rule in both ERISA and bankruptcy cases.

Because

unpaid contributions are not “plan assets,” Hawaii Masons’
fiduciary claims against Fuchs and Nelson must be dismissed.
2.

Even if There Were the Cline Exception
Described by Hawaii Masons, It Would Not
Salvage the Fiduciary Claims.

Even if the contractual Cline exception existed in the
Ninth Circuit, it would not help Hawaii Masons.

The relevant

plan documents obligate Global Stone to make payments, but stop
short of defining plan assets as covering unpaid contributions.
This means that any purported Cline exception would not apply.
The Ninth Circuit in Bos (I) described the Cline
exception at length, consistently distinguishing between
contractual terms obliging payment and terms defining plan
assets as including unpaid contributions.

For instance, Bos (I)

understood the contractual Cline exception to mean that “a plan
23

document could convert an unpaid contribution into some type of
[ERISA] plan asset . . . [so long as] the language in either the
trust agreements or the promissory note . . . were sufficiently
specific to do so.”

795 F.3d at 1011 (emphasis added).

Bos (I) explained that California district courts
applying this exception had found unpaid contributions to be
plan assets only when “the plan document defined the fund as
including” unpaid contributions. Id. (emphasis added).

In

Temecula, “the plan document defined the fund as including
‘money due and owing to the Fund.’”

Id. (emphasis added)

(quoting Temecula Mechanical, 438 F. Supp. 2d. 1156, 1165 (C.D.
Cal. 2006)).

And in a similar case, “the plan document defined

the fund as including ‘all Contributions required . . . to be
made.’”

Id. (emphasis added) (quoting Bd. of Trs. v. River View

Constr., No. C–12–03514PJH(DMR), 2013 WL 2147418, at *6 (N.D.
Cal. Apr. 17, 2013)).

Bringing home the distinction, Bos (I)

also discussed an Eleventh Circuit case that specifically
distinguish[ed] between ‘a contractual or
legal claim for payment of the money due, in
contrast to the actual money due.’ The
[Eleventh Circuit] explained that if the
plan asset were merely a contractual right
to payment, the employer would have no
authority over the asset so as to establish
a fiduciary relationship. But because the
plan document defined the fund as including
receivable property, the court concluded
that the unpaid contributions themselves
could become fund assets . . . .

24

Id. at 1009–10 (9th Cir. 2015) (quoting ITPE Pension Fund v.
Hall, 334 F.3d 1011, 1016 (11th Cir. 2003)).
Hawaii Masons, despite invoking the Cline exception,
identifies no language in the CBA or the Trust Agreements
governing Global Stone that defines plan assets as including
unpaid contributions.

Instead, Hawaii Masons points to

provisions merely obligating Global Stone to make contributions
to the Trust Funds.

See ECF 17, PageID # 96 (“Contractor

payments to the various Trust Funds and other Funds[,] as
specified in this Agreement shall be paid only for hours
worked.”); id. (“Each Contractor shall participate in the Hawaii
Masons Health and Welfare Trust Fund”); id. (“Contractor
contributions to the various Funds as specified and provided for
above shall be paid . . . by the 20th day of the month”); id. at
PageID # 97 (“[T]he parties have agreed that such contributions
shall be payable to and deposited in the Masons’ Health and
Welfare Fund”); id. at PageID # 98 (“Each Employer shall pay
contributions to the Hawaii Masons’ Welfare Fund in accord with
the terms of the Labor Agreement”); id. (“Every Employer who
participates in the Masons’ Welfare Fund shall be bound by this
Agreement”). 3

3

The Complaint refers to the CBA and the Trust Agreements. See
ECF 1, PageID #s 3, 5. However, those documents are not
attached to the Complaint or expressly incorporated by
reference. It is not entirely clear that express provisions not
25

These provisions do not echo the provision that led
the Temecula court to apply the Cline exception.

See 438 F.

Supp. 2d at 1165 (“[T]he assets of this Trust Fund consist of
. . . Contributions and payments to or due and owing to the
Trustees . . . .” (emphasis added)).
If the mere presence of provisions mandating
contributions were sufficient, the Cline exception would swallow
the rule.

But courts applying Cline have suggested no

inclination to so weaken the rule.

See, e.g., ITPE Pension Fund

v. Hall, 334 F.3d 1011, 1013 (11th Cir. 2003) (“The proper rule,
developed by caselaw, is that unpaid employer contributions are
not assets of a fund unless the agreement between the fund and
the employer specifically and clearly declares otherwise.”).
Instead, courts have applied the Cline exception only when the
agreements expressly define “plan assets” as including unpaid
contributions.

See, e.g., ITPE Pension Fund, 334 F.3d at 1013,

1015 (finding language too ambiguous to apply the exception; the

quoted in the Complaint are properly before this court on the
present motion to dismiss. See United States v. Ritchie, 342
F.3d 903, 908 (9th Cir. 2003) (noting that a court may examine
“documents incorporated by reference in the complaint . . .
without converting the motion to dismiss into a motion for
summary judgment”). This court nevertheless discusses those
provisions here because what their language is does not appear
to be in dispute. Moreover, converting the present motion to
dismiss to a summary judgment motion disadvantages Hawaii
Masons, the very party that quotes the language in its
Memorandum in Opposition. Conversion could well affect Hawaii
Masons’ opportunity to amend the Complaint.
26

agreement provided that the “terms ‘Pension Fund’ or ‘Fund’
shall mean all property of every kind held or acquired under the
provisions of this instrument” (citation omitted)); Temecula,
438 F. Supp. 2d at 1165 (finding the exception applicable when
an agreement “ma[de] clear that the monies composing the Fund
include those that are ‘due and owing’ from ‘Employers’”); Trs.
of Nat’l. Elevator Indus. Pension v. Lutyk, 140 F. Supp. 2d 407,
411 (E.D. Pa. 2001) (discussed in Temecula) (finding the
exception applicable when the agreement provided that the “Trust
Fund shall consist of (a) such sums of money as shall be paid to
[the plan] by the Employers” (first emphasis added) (alteration
in original)).
Here, by contrast, the only excerpted provision
“defining” a fund does not expressly include unpaid
contributions.

See ECF 17, PageID # 97 (“The Masons’ Welfare

Fund shall consist of all contributions, investments made and
held by the Trustees, income from said investments, and any
other property received and held by the Trustees to carry out
the purposes herein.” (emphasis omitted)).
In sum, the excerpts Hawaii Masons relies on fall
short of what Bos (I) understood the Cline exception to require:
a “sufficiently specific” “plan document defin[ing] the fund as
including” unpaid contributions.

27

795 F.3d at 1011.

Even if

there were a contractual Cline exception in the Ninth Circuit,
it would not apply here.
3.

The Fiduciary Claims Also Fail Because the
Complaint’s Allegations Are Conclusory.

The Complaint’s fiduciary claims fail for an
additional reason: there are no factual allegations, only
conclusory allegations, regarding Fuchs and Nelson’s purported
control over plan assets.

ECF 15-2, PageID # 79.

As noted, establishing ERISA fiduciary status
“requires (1) showing that . . . plan assets are at issue and
(2) that the individual defendants exercised authority or
control relating to the management or disposition of such
assets.”

Trs. of S. Cal. Pipe Trades Health & Welfare Tr. Fund

v. Temecula Mech., Inc., 438 F. Supp. 2d 1156, 1162 (C.D. Cal.
2006) (quoting NYSA–ILA Med. & Clinical Serv. Fund v. Catucci,
60 F. Supp. 2d 194, 200 (S.D.N.Y. 1999)), abrogated on other
grounds by Bos (I), 795 F.3d 1006.
Hawaii Masons’ Complaint is devoid of nonconclusory
factual allegations regarding the “discretionary control”
element.

The only allegation on the issue provides: “Individual

Defendant [i.e. Fuchs or Nelson] is a fiduciary under ERISA
because s/he exercised authority or control respecting
management or disposition of plan assets.”

ECF 1, PageID # 10.

Hawaii Masons has “failed to present any detailed statement of

28

what actions occurred,” Cline v. Indus. Maint. Eng'g &
Contracting Co., 200 F.3d 1223, 1233 (9th Cir. 2000), and its
conclusory allegation is insufficient to defeat Fuchs and
Nelson’s motion to dismiss, see Sprewell v. Golden State
Warriors, 266 F.3d 979, 988 (9th Cir. 2001); Syntex Corp. Sec.
Litig., 95 F.3d 922, 926 (9th Cir. 1996).

Accord Hawaii Masons'

Health & Welfare Fund v. Dynamic Interiors, LLC, No. CIV. 1400434 LEK, 2015 WL 438181, at *5 (D. Haw. Jan. 14, 2015)
(deeming “conclusory” the identical allegation by Hawaii Masons’
Health & Welfare Fund that a defendant had “exercised authority
or control over the disposition of plan assets”), report and
recommendation adopted, No. CIV. 14-00434 LEK, 2015 WL 500496
(D. Haw. Feb. 3, 2015).
4.

Hawaii Masons’ Most Recent Allegations Do
Not Rescue Any Fiduciary Claims.

Hawaii Masons argues in the alternative that a
regulation independently supports some of its fiduciary claims.
See ECF 17, PageID # 113.

In 29 C.F.R. § 2510.3-102, ERISA

“plan assets” are defined to include amounts withheld from an
employee’s wages for contributions, stating in relevant part:
The assets of the plan include amounts
(other than union dues) that a participant
or beneficiary pays to an employer, or
amounts that a participant has withheld from
his wages by an employer, for contribution
or repayment of a participant loan to the
plan, as of the earliest date on which such
contributions or repayments can reasonably
29

be segregated from the employer’s general
assets.
Id. § 2510.3-102(a)(1).

In its Memorandum in Opposition, Hawaii

Masons argues that this regulation provides “a statutory basis
to establish that Defendants had control over [some] plan assets
and are therefore fiduciaries under ERISA.”
# 100.

ECF 17, PageID

Attaching various affidavits, Hawaii Masons avers that

Global Stone includes “Vacation Fund Benefits” “in [its]
employee’s gross income on each paycheck,” but “insufficiently
credit[s]” its employees by later underpaying its contribution
to the Vacation Fund.

ECF 17, PageID #s 101-102 (citing

affidavits of Karen Tamashiro and Jeff Ornellas).

According to

Hawaii Masons, it is entitled to some relief “because Vacation
Fund contributions are clearly plan assets” under 29 C.F.R.
§ 2510.3-102(a)(1) “as monies which were deducted from employee
wages.”

ECF 17, PageID # 114.
These allegations and affidavits regarding the

Vacation Fund are not found within the four corners of the
Complaint.

See ECF 1.

Unlike the uncontested language in the

CBA and Trust Agreements, these matters cannot be considered
without converting the motion to dismiss into a motion for
summary judgment. See Keams v. Tempe Tech. Inst., Inc., 110 F.3d
44, 46 (9th Cir. 1997); Anderson v. Angelone, 86 F.3d 932, 934
(9th Cir. 1996).

The court declines to make that conversion

30

here and therefore does not reach Hawaii Masons’ new Training
Fund argument.
Another argument regarding an alleged “Training Fund
delinquency,” ECF 17, PageID # 112, fails for the same reason.
In the Memorandum in Opposition but not in the Complaint, Hawaii
Masons avers that “Defendants” “are in possession” of assets
“which were actually paid to the Training Fund,” and which
“should be considered plan assets, giving rise to a fiduciary
duty.”

ECF 17, PageID #s 99, 112, 113 (citing affidavit of

Karen Tamashiro); see ECF 1 (containing no such allegations).
The court will not consider these recent claims and allegations.
C.

The Court Dismisses the Alter Ego Claims as
Conclusory.

Defendants Fuchs and Nelson insist that the alter ego
allegations, much like the fiduciary duty allegations, are
“conclusory and contain no factual substance.”
# 80.

ECF 15, PageID

The court agrees and dismisses the alter ego claims.
The Complaint asserts that “at all relevant times,

Global Stone was the alter ego and/or the mere instrumentality
of [Fuchs and Nelson],” and thus Fuchs and Nelson are liable for
any unpaid contributions “as a matter of equity and fairness.”
ECF 1, PageID #s 12, 13.

The Complaint provides no specific

factual allegations in support of this assertion.

31

Instead, it

lists “factors,” alleging that “all or some” of them are
“relevant”:
a)
b)
c)
d)
e)
f)

g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
q)
r)
s)
t)
u)

Undercapitalization
Failure to observe corporate formalities 

Absence of corporate records 

Insolvency of corporation at time of
transaction 

Siphoning off of funds by the dominant
shareholder(s) 

Shareholders guarantying [sic] corporate
liabilities in their individual 

capacities 

Nonfunctioning officers or directors 

Lack of officers or directors 

Failure to issue stock 

Absence of consideration for stock 

Corporation is a facade of the operation
of the dominant shareholder(s) 

Corporation's inability to meet payroll
and other obligations 

Commingling of funds or assets 

Stripping the corporation of assets in
anticipation of litigation 

Use of the corporate shell to advance
purely personal ends 

Treatment of corporate assets as personal
assets 

Cash advances to
shareholders/officers/directors 

Advances to corporation by shareholders 

Undocumented loans 

Use of individual rather than corporate
checks and
Fraud and misrepresentation with respect
to Trust Fund plan assets
of which [Fuchs
and/or Nelson] was a fiduciary for the
employees covered by the Bargaining
Agreement and trust agreements.

ECF 1, PageID #s 12-13.

32

Later, the Complaint lists other factors, “all or
some” of which are allegedly “relevant” to the alter ego claim:
a) Nonpayment of trust fund obligations by
Global Stone; 

b) Violation of statute or public policy; 

c) Misrepresentations by Global Stone and/or
members/officers/directors; and/or 

d) The acting principals of Global Stone[]
were responsible for and ratified
administrative decisions exercised on
behalf of Global Stone, were vested with
the authority to exercise discretionary
control over the management of the
financial responsibilities and business
affairs of GLOBAL STONE, and exercised
discretionary control over the management
of the financial responsibilities and
business affairs of GLOBAL STONE
including, but not limited to, authorizing
and tendering the payment of contributions
and withholdings due to the funds pursuant
to the Bargaining Agreement and trust fund
agreements; and/or
e) The acting principals of Global Stone
intentionally misrepresented to Trust
Funds the amount of hours worked by its
employees by failing to report and/or
transmit contributions in a timely fashion
to Trust Funds.
ECF 1, PageID # 14 (emphases omitted).
Given the “all or some” language, the court and
Defendants cannot tell what is really at issue.

Does Hawaii

Masons submit that Global Stone’s veil should be pierced based
only on “undercapitalization,” or do all of the enumerated
factors apply?

The conclusory list is not supported by any

factual allegations.

See ECF 1, PageID #s 12-14.

33

In light of

the conclusory and nonspecific allegations, Hawaii Masons’ alter
ego claim is dismissed.
D.

The Court Dismisses the Constructive Trust Claim.

The Complaint supports its constructive trust claim
with a single allegation: “[a]s a result of” Fuchs and Nelson’s
“breach of their fiduciary duties of care and loyalty to the
participants and beneficiaries of Trust Funds as alleged herein,
plan assets have been improperly diverted from Trust Funds to
Global Stone and/or” Fuchs and Nelson.

ECF 1, PageID # 11.

Therefore, says Hawaii Masons, a “constructive trust should be
imposed upon the assets of” Fuchs and Nelson.

Id. at PageID

# 12.
The court has already dismissed the fiduciary claims
against Fuchs and Nelson as a matter of law and because the
supporting allegations are conclusory.

The court agrees with

Fuchs and Nelson that, on the present state of the pleadings,
“there can be no legal basis for the Court to order a
constructive trust on the[ir] personal property.”

See ECF 15-2,

PageID # 80.
E.

The Court Grants Hawaii Masons’ Request for Leave
to Amend.

Hawaii Masons requests leave to amend “to the extent
the Court finds defects in the allegations” pled.

ECF 17,

PageID # 117 (invoking Fed. R. Civ. P. 15(a)(2)).

Leave to

34

amend “shall be freely given when justice so requires.”
Civ. P. 15(a).
liberality.”

Fed. R.

This policy is “applied with extreme
Eminence Capital, LLC v. Aspeon, Inc., 316 F.3d

1048, 1051 (9th Cir. 2003) (quoting Owens v. Kaiser Found.
Health Plan, Inc., 244 F.3d 708, 712 (9th Cir. 2001)).

A court

considers the following five factors: “(1) bad faith; (2) undue
delay; (3) prejudice to the opposing party; (4) futility of
amendment; and (5) whether the plaintiff has previously amended
his complaint.”
2004).

Nunes v. Ashcroft, 375 F.3d 805, 808 (9th Cir.

“[I]t is the consideration of prejudice to the opposing

party that carries the greatest weight.”

Eminence Capital, LLC

v. Aspeon, Inc., 316 F.3d 1048, 1052 (9th Cir. 2003).

That

said, “[f]utility of amendment can, by itself, justify the
denial of a motion for leave to amend.”

U.S. ex rel. Lee v.

SmithKline Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001)
(citation omitted).

“Absent prejudice, or a strong showing of

any of the remaining . . . factors, there exists a presumption
under Rule 15(a) in favor of granting leave to amend.”

Eminence

Capital, 316 F.3d at 1052.
Hawaii Masons has not previously amended its
complaint, and the court finds no indication of bad faith or
undue delay in the timing of Hawaii Masons’ request.
Additionally, Fuchs and Nelson did not oppose Hawaii Masons’
request for leave to amend, see ECF 15; ECF 18, and so did not
35

carry the “burden of showing prejudice.”

DCD Programs, Ltd. v.

Leighton, 833 F.2d 183, 186-87 (9th Cir. 1987).
The court grants Hawaii Masons’ request for leave to
amend consistent with this order.

Claims precluded by this

order should not be reiterated without adjustments that address
the rulings made here.
F.

The Court Denies Fuchs and Nelson’s Request for
Attorneys’ Fees.

Fuchs and Nelson request attorneys’ fees and costs,
arguing that Hawaii Masons’ counsel “should have known that in
light of [three recent District of Hawaii decisions] . . . the[]
verbatim allegations and claims in the present case would fail
as a matter of law.”

ECF 15-2, PageID # 81.

This is especially

so, say Fuchs and Nelson, because “counsel that now represents
[Hawaii Masons] was the same counsel that represented the
plaintiffs in each of these [three prior] cases.”

ECF 15-2,

PageID #s 71-72.
The request for fees is denied.

The other rulings in

this district are not binding here, and Hawaii Masons was free
to raise its arguments in the present case.

Moreover, this

court has given Hawaii Masons leave to amend it Complaint, so
that which party will ultimately prevail has not yet been
determined.

Finally, Defendants have not complied with Local

Rule 54.3, which requires, among other things, a description of

36

the work performed by counsel and a tabulation of the time
required to perform the work.

Any subsequent motion for

attorneys’ fees must comply with Local Rule 54.3.
V.

CONCLUSION.
For the foregoing reasons, the court GRANTS Fuchs and

Nelson’s Motion to Dismiss, GRANTS Hawaii Masons’ request for
leave to amend, and DENIES without prejudice Fuchs and Nelson’s
request for attorneys’ fees.
If Hawaii Masons wishes to file an Amended Complaint
asserting new claims against Fuchs and Nelson, it must do so by
December 4, 2017.
Claims against Global Stone remain in issue.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, November 13, 2017.

/s/ Susan Oki Mollway
Susan Oki Mollway
United States District Judge

Hawaii Masons’ Pension Trust Fund, et al., v. Global Stone Hawaii,
Inc., et al., Civ. No. 17-00289 SOM-RLP; ORDER GRANTING DEFENDANTS
RENATO FUCHS AND DANIEL NELSON’S MOTION TO DISMISS; DENYING
DEFENDANTS’ REQUEST FOR ATTORNEYS’ FEES; AND GRANTING PLAINTIFF
HAWAII MASONS’ REQUEST FOR LEAVE TO AMEND.

37