Ward Management Development Company, LLC v. Nordic PCL Construction, Inc.
Filing
101
ORDER OVERRULING OBJECTIONS, ADOPTING OCTOBER 19, 2018 FINDINGS AND RECOMMENDATION, AND DENYING DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND BILL OF COSTS WITHOUT PREJUDICE re: 92 . Signed by CHIEF JUDGE J. MICHAEL SEABRIGHT on 1/ 14/2019. Related: Defendant's Bill of Costs: ECF 83 . Defendant's Motion for Attorneys' Fees: ECF 84 . Findings and Recommendation to Deny Defendant Nordic PCL Construction, Inc.'s Motion for Attorneys' Fees and Bill of Costs ("F&R"): ECF 92 . Objection to F&R: ECF 93 . Memo in Opp to Objection to F&R: ECF 96 . Sur-Reply in Opposition to Objection to F&R: ECF 99 -2. (afc)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
WARD MANAGEMENT
DEVELOPMENT COMPANY, LLC,
et al.,
Civ. No. 17-00568 JMS-RLP
Plaintiffs,
vs.
NORDIC PCL CONSTRUCTION, INC.,
ORDER OVERRULING
OBJECTIONS, ADOPTING
OCTOBER 19, 2018 FINDINGS
AND RECOMMENDATION, AND
DENYING DEFENDANT’S
MOTION FOR ATTORNEYS’
FEES AND BILL OF COSTS
WITHOUT PREJUDICE
Defendant.
ORDER OVERRULING OBJECTIONS, ADOPTING OCTOBER 19, 2018
FINDINGS AND RECOMMENDATION, AND DENYING DEFENDANT’S
MOTION FOR ATTORNEYS’ FEES AND BILL OF COSTS WITHOUT
PREJUDICE
I. INTRODUCTION
Defendant Nordic PCL Construction, Inc. (“Defendant” or “Nordic”)
objects under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2)
to Magistrate Judge Richard Puglisi’s October 19, 2018 Findings and
Recommendation to Deny Defendant Nordic PCL Construction, Inc.’s Motion for
Attorneys’ Fees and Bill of Costs (the “October 19, 2018 F&R”). Based on the
following, the objections are OVERRULED and the October 19, 2018 F&R is
ADOPTED. Because the action was dismissed without prejudice under Hawaii
1
Revised Statutes (“HRS”) § 672E-13, Defendant is not a “prevailing party.”
Defendant’s Motion and Bill of Costs are DENIED without prejudice.
II. BACKGROUND
On August 6, 2018, this court granted Defendant’s Motion to Dismiss,
dismissing without prejudice the First Amended Complaint (“FAC”) filed by
Plaintiffs Ward Management Development Company, LLC (“Ward
Management”); Waiea Management Development Company, LLC (“Waiea”);
Victoria Ward, Ltd. (“Victoria Ward”); and 1118 Ala Moana, LLC (“1118 Ala
Moana”) (collectively “Plaintiffs”). See ECF No. 81; Ward Mgmt. Dev. Co. v.
Nordic PCL Constr. Co., 2018 WL 3733608 (D. Haw. Aug. 6, 2018).
In dismissing the FAC, the court did not address the merits of the suit
(and does not do so here) — the substance, however, concerns alleged claims
against Nordic sounding in breach of contract and breach of warranty arising from
alleged defects in the recent construction of the 36-story Waiea Tower in the
Kaka‘ako district of Honolulu, and related contractual issues with a Construction
Management Agreement between Ward Management and Nordic. Rather, much of
the litigation in this forum centered around alleged jurisdictional defects:
Defendant’s arguments that complete diversity of citizenship is lacking because
(1) the Association of Unit Owners of 1118 Ala Moana is a required party under
2
Federal Rule of Civil Procedure 19(b) whose presence destroys diversity; and
(2) Victoria Ward has Hawaii citizenship (rather than Texas citizenship as alleged
in the FAC) where Defendant also has Hawaii citizenship.
Ultimately, however, the court — applying Sinochem International
Co. v. Malaysia International Shipping Corp., 549 U.S. 422 (2007) — “bypassed”
even the jurisdictional issues, and dismissed the FAC without prejudice as required
by HRS § 672E-13 because Plaintiffs had failed to properly fulfill notice and
mediation prerequisites of Hawaii’s Contractor Repair Act, HRS ch. 672E, before
filing suit. See Ward Mgmt., 2018 WL 373308, at *1. That is, the court did not
preclude Plaintiffs from re-filing in this federal forum (and, likewise, did not
preclude Defendant from reasserting any other defenses it might want to raise) if
mediation was unsuccessful.
Specifically, HRS § 672E-13 provides in pertinent part:
The court . . . shall dismiss, without prejudice, any action
failing to meet the requirements of this chapter, unless:
....
(3) An applicable statute of limitations on actions would
prevent the refiling of an action, in which case the action
shall be immediately stayed to provide the claimant with
an opportunity to comply with this chapter, but for no
longer than six months[.]
3
Section 672E-13 thus contemplates that a dismissed action can be re-filed after
“the requirements of this chapter” (e.g., mediation) have been met, if the parties are
otherwise unable to resolve the dispute under the Contractor Repair Act’s
provisions, as the Hawaii Legislature envisioned. Indeed, § 672E-13(3) preserves
such a right to re-file by requiring a stay if an applicable limitations period would
otherwise expire in the meantime (which was not the situation here).
Accordingly, the court instructed the Clerk of Court to “close the case
file,” and the Clerk entered a corresponding judgment, stating “IT IS ORDERED
AND ADJUDGED that the Action is DISMISSED WITHOUT PREJUDICE, and
DISMISSED as pursuant to and in accordance with the Court’s Order filed August
6, 2018[.]” ECF No. 82.1
On August 20, 2018, Nordic filed a Motion for Attorneys’ Fees and a
Bill of Costs, seeking an award of $515,683.04 in attorneys’ fees and $2,439.39 in
costs as a “prevailing party” under HRS § 607-14,2 § 14.6 of the Construction
1
The record reflects that, after the court’s dismissal without prejudice, Plaintiffs appear
to have complied with chapter 672E’s requirements, see, e.g., ECF Nos. 90-2, 90-3, 96-1, and
Plaintiffs represent that they “will soon be renewing their claims.” ECF No. 96-1 at ¶ 9.
2
Section 607-14, entitled “Attorneys’ fees in actions in the nature of assumpsit, etc.,”
provides in part:
(continued . . .)
4
Management Agreement,3 and Federal Rule of Civil Procedure 54(d)(1). 4 ECF
Nos. 83 & 84. After due consideration, Magistrate Judge Richard Puglisi entered
the October 19, 2018 F&R, concluding that Nordic is not entitled to fees or costs
(. . . continued)
In all the courts, in all actions in the nature of assumpsit
and in all actions on a promissory note or other contract in writing
that provides for an attorney’s fee, there shall be taxed as
attorneys’ fees, to be paid by the losing party and to be included in
the sum for which execution may issue, a fee that the court
determines to be reasonable; provided that the attorney
representing the prevailing party shall submit to the court an
affidavit stating the amount of time the attorney spent on the action
and the amount of time the attorney is likely to spend to obtain a
final written judgment, or, if the fee is not based on an hourly rate,
the amount of the agreed upon fee. The court shall then tax
attorneys’ fees, which the court determines to be reasonable, to be
paid by the losing party; provided that this amount shall not exceed
twenty-five per cent of the judgment.
....
The above fees provided for by this section shall be
assessed on the amount of the judgment exclusive of costs and all
attorneys’ fees obtained by the plaintiff, and upon the amount sued
for if the defendant obtains judgment.
3
Section 14.6 of the Construction Management Agreement provides in part:
Disputes; Attorney’s Fees. If either party institutes any action or
proceeding against the other arising from or relating to the
provisions of this Agreement, the prevailing party in the action or
proceeding is entitled to recover all reasonable costs and attorneys’
fees from the unsuccessful party.
ECF No. 24-1 at 36.
4
Rule 54(d)(1) provides in part: “(1) Costs Other Than Attorney’s Fees. Unless a
federal statute, these rules, or a court order provides otherwise, costs—other than attorney’s
fees—should be allowed to the prevailing party.”
5
because this court’s August 6, 2018 dismissal did not render it a “prevailing party”
for such purposes. ECF No. 92 at 8-9.
On November 2, 2018, Nordic filed Objections to the October 19th
F&R under 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2).
ECF No. 93. Plaintiffs filed an Opposition on November 30, 2018, ECF No. 96,
and a corresponding Reply and Sur-Reply were filed on December 12, 2018 and
December 21, 2018 respectively. ECF Nos. 97-2 & 99-2. The court decides the
matter without an oral hearing under Local Rule 7.2(e).
III. STANDARD OF REVIEW
When a party objects to a magistrate judge’s findings or
recommendations, the district court must review de novo those portions to which
the objections are made and “may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28 U.S.C.
§ 636(b)(1); see also United States v. Raddatz, 447 U.S. 667, 673 (1980); United
States v. Reyna-Tapia, 328 F.3d 1114, 1121 (9th Cir. 2003) (en banc) (“[T]he
district judge must review the magistrate judge’s findings and recommendations de
novo if objection is made, but not otherwise.”). That is, “[t]he district judge may
accept the portions of the findings and recommendation to which the parties have
not objected as long as it is satisfied that there is no clear error on the face of the
6
record.” Naehu v. Read, 2017 WL 1162180, at *3 (D. Haw. Mar. 28, 2017)
(citations omitted).
Under a de novo standard, this court reviews “the matter anew, the
same as if it had not been heard before, and as if no decision previously had been
rendered.” Freeman v. DirecTV, Inc., 457 F.3d 1001, 1004 (9th Cir. 2006); United
States v. Silverman, 861 F.2d 571, 576 (9th Cir. 1988). The district court need not
hold a de novo hearing; however, it is the court’s obligation to arrive at its own
independent conclusion about those portions of the magistrate judge’s findings or
recommendation to which a party objects. United States v. Remsing, 874 F.2d 614,
618 (9th Cir. 1989).
IV. DISCUSSION
A.
Attorneys’ Fees
1.
HRS § 607-14
In this case alleging diversity jurisdiction, Hawaii substantive law
applies in determining whether Nordic is entitled to an award of attorneys’ fees.
See, e.g., Kona Enters., Inc. v. Estate of Bishop, 229 F.3d 877, 883 (9th Cir. 2000).
The parties do not dispute that this action is “in the nature of assumpsit” for
purposes of § 607-14. Rather, the question is whether Nordic is a “prevailing
7
party” for such purposes, where the Clerk of Court entered a judgment dismissing
the action without prejudice as set forth in the court’s August 6, 2018 Order.
The October 19, 2018 F&R relied primarily on Oahu Publications,
Inc. v. Abercrombie, 134 Haw. 16, 332 P.3d 159 (2014), which analyzed prior
Hawaii appellate opinions on prevailing-party issues in various attorney-fee
contexts, as well as analogous federal law. Oahu Publications concluded that an
appellee was not a “prevailing party” where the appellant’s appeal was dismissed
without prejudice to filing another appeal after procedural defects in the judgment
were corrected. Id. at 25-26, 332 P.3d at 168-69.
Oahu Publications recognized that, under Hawaii law, “[i]n general,
the litigant in whose favor judgment is rendered is the prevailing party.” Id. at 24,
332 P.3d at 167 (citation and internal quotation marks omitted). And “there is no
requirement that the judgment in favor of the prevailing party be a ruling on the
merits of the claim.” Id. at 25, 332 P.3d at 168. Nevertheless, although the
dismissal in that appeal was not “on the merits of the claim,” the appellee was not a
prevailing party because “the dismissal of the first appeal did not finally resolve”
the action. Id. “The [appellant] was free to file a second appeal once the circuit
court corrected the judgment.” Id. The Hawaii Supreme Court reasoned:
8
[U]nlike in Ranger [Insurance Co. v. Hinshaw, 103 Haw.
26, 79 P.3d 119 (2003)], where the plaintiff moved for
leave to dismiss its complaint and the circuit court
dismissed the complaint with prejudice, the [appellant]
did not move to dismiss the first appeal, nor did the
[Hawaii Intermediate Court of Appeals] dismiss the first
appeal with prejudice. In other words, the [appellant]
was free to file another appeal upon entry of an amended
judgment[.]
Id.
And Oahu Publications supported its holding by embracing a line of
federal cases as consistent with its reasoning, applying a “material alteration” test
reiterated in Buckhannon Board and Care Home, Inc. v. West Virginia Department
of Health and Human Resources, 532 U.S. 598 (2001). See Oahu Publications,
134 Haw. at 26, 332 P.3d at 169 (“Our conclusion in this regard is consistent with
a line of cases concluding that a ‘material alteration of the legal relationship of the
parties [is] necessary to permit an award of attorney’s fees.’”) (quoting
Buckhannon, 532 U.S. at 604). The Hawaii Supreme Court cited with approval a
holding that “a dismissal without prejudice does not alter the legal relationship of
the parties ‘because the defendant remains subject to risk of re-filing.’” Id.
(quoting Oscar v. Alaska Dept. of Educ. & Early Dev., 541 F.3d 978, 981 (9th Cir.
2008)). “These cases therefore also support our conclusion that [appellee] had not
prevailed upon dismissal of the first appeal because there was no ‘material
9
alteration of the legal relationship of the parties,’ and it remained at risk that
[appellant] would file another appeal[.]” Id. That is, the appellee was not a
prevailing party “because there had been no determination that [appellee] would
ultimately prevail on appeal.” Id. (emphasis added).
On de novo review, the court is likewise convinced that Oahu
Publication’s reasoning applies here in analyzing the effect of the August 6, 2018
dismissal without prejudice and corresponding judgment. Similar to Oahu
Publication, the court dismissed the FAC without prejudice, and Plaintiffs are free
to re-file (subject to Defendant’s defenses). As with Oahu Publications, the
dismissal did not “ultimately” or “finally” resolve any issue (other than that
Plaintiffs had not yet fulfilled prerequisites to filing suit). And as Oahu
Publication analyzed, there was no “material alteration of the legal relationship of
the parties” where Nordic “remained at risk that [Plaintiffs] would file another”
suit. Id. at 26, 332 P.3d at 169.
The court is not swayed by Nordic’s argument that the analysis ends
because an actual judgment was entered in its favor. Nordic relies primarily on
Hawaii case law — analyzed and distinguished in Oahu Publications — stating
that “a defendant who succeeds in obtaining a judgment of dismissal is a prevailing
party for the purpose of fees[.]” Blair v. Ing, 96 Haw. 327, 331, 31 P.3d 184, 188
10
(2001) (citing Wong v. Takeuchi, 88 Haw. 46, 49, 961 P.2d 611, 614 (1998)) (other
citation omitted). That statement, however, is not as concrete as Nordic suggests.
See, e.g., Wong, 88 Haw. at 49, 961 P.2d at 614 (“Usually the litigant in whose
favor judgment is rendered is the prevailing party. . . . Thus, a dismissal of the
action, whether on the merits or not, generally means that defendant is the
prevailing party.”) (quoting Wright, Miller & Kane, Federal Practice and
Procedure: Civil 2d § 2667 (1983)) (emphases added). Although Wong upheld an
award of fees, Oahu Publications recognized that Wong was “decided on the
defense of laches and the applicable statute of limitations,” 134 Haw. at 25, 332
P.3d at 168, and thus — unlike the situation in Oahu Publications with no
“prevailing party” — was “finally resolve[d],” id. Likewise, the dismissal of
plaintiff’s claims in Blair was final because the defendant “owed Plaintiffs no
duty” as a matter of law. Blair, 96 Haw. at 328, 31 P.3d at 185.5
5
The August 6, 2018 Judgment issued under Rule 58 was entered to signify that the case
is “final” — that is, no other issues or parties remained to be decided at that stage — for
purposes of a potential appeal. See Fed. R. Civ. P. 54(a) (defining a judgment as “a decree and
any order from which an appeal lies”); WMX Techs., Inc. v. Miller, 104 F.3d 1133, 1136-37 (9th
Cir. 1997 (en banc) (stating that district courts should make intentions clear when dismissing a
complaint without prejudice, and requiring judgment to “fix an unequivocal terminal date for
appealability”) (citation omitted). Presumably, Plaintiffs could have sought review in the Ninth
Circuit of the court’s August 6, 2018 dismissal within 30 days of that Judgment if they disagreed
with the court’s rulings under Sinochem or HRS § 672E-13.
11
In analogous situations, even a favorable “judgment” is insufficient.
For example, Nelson v. University of Hawaii, 99 Haw. 262, 54 P.3d 433 (2002),
held that a plaintiff had not prevailed for purposes of a fee award under HRS
§ 378-5(c)6 despite obtaining a judgment because “the judgment on appeal simply
vacated the trial court’s judgment . . . and remanded the case for a new trial on the
merits.” Id. at 265, 54 P.3d at 436. Nelson reasoned that § 378-5(c) “requires the
attainment of a judgment creating at least a ‘material alteration of the legal
relationship of the parties’ before fees can be awarded,” id. at 267, 54 P.3d at 438,
concluding that “[i]n this case, this court’s judgment permitted Nelson to retry her
case.” Id., 54 P.3d at 438. See also Gurrobat v. HTH Corp., 135 Haw. 128, 134,
346 P.3d 197, 203 (2015) (“In Nelson, fees were not awarded because the case was
remanded for a new trial, placing plaintiff ‘in the same position as she was before
trial.’”) (quoting Nelson, 99 Haw. at 267, 54 P.3d at 438).
Stated differently, Nordic did not “obtain[] relief sufficiently enduring
to satisfy the ‘material alteration of the parties’ legal relationship[.]” Higher Taste,
Inc. v. City of Tacoma, 717 F.3d 712, 716 (9th Cir. 2013) (emphasis added).
6
Section 378-5(c) provides: “In any action brought under this part, the court, in addition
to any judgment awarded to the plaintiff or plaintiffs, shall allow costs of action, including costs
of fees of any nature and reasonable attorney’s fees, to be paid by the defendant.”
12
Again, it is critical that Plaintiffs are not precluded from re-filing their action, and
Nordic might eventually lose completely — despite having obtained some
temporary interim success in obtaining a dismissal without prejudice. As Higher
Taste reasoned:
For example, a plaintiff who succeeds at the preliminary
injunction stage but loses on the merits after the case is
litigated to final judgment is not a prevailing party under
[42 U.S.C.] § 1988; in those circumstances, she secures
only an “ephemeral” victory and gains no “enduring”
change in the legal relationship of the parties.
Id. at 717 (quoting Sole v. Wyner, 551 U.S. 74, 86 (2007)). See also Wood v.
Burwell, 837 F.3d 969, 975 (9th Cir. 2016) (“The dispositive question is not
whether the plaintiff ultimately obtained some form of substantive relief, but rather
whether there is a lasting alteration in the legal relationship between the parties.”)
(bold emphasis added); compare Amphastar Pharm. Inc. v. Aventis Parma SA, 856
F.3d 696, 710 (9th Cir. 2017) (determining that a defendant obtaining a dismissal
for lack of subject matter jurisdiction is a prevailing party, concluding that
“[c]ommon sense says that [defendant] won a significant victory and permanently
changed the ‘legal relationship of the parties’”) (emphasis added). 7
7
And as the October 19, 2018 F&R reasoned, the court’s ruling that Plaintiffs had not
complied with the pre-filing requirements of chapter 672E does not constitute a material
(continued . . .)
13
In contrast, under Ninth Circuit law, a federal defendant who obtains a
dismissal without prejudice to a plaintiff re-filing an action in state court,
precluding a return to federal court, could be deemed a “prevailing party” because
the defendant succeeded in eliminating a cause of action and a federal forum. See
Miles v. California, 320 F.3d 986, 989 (9th Cir. 2003) (concluding that a defendant
who obtained “dismiss[al] without prejudice to [plaintiff’s] right to seek any
available relief in the state court” is a prevailing party because “[t]he dismissal
eliminates [a federal] claim from further proceedings in federal court and thus has
changed the legal relationship of [the parties]”) (internal quotation marks
omitted). 8
(. . . continued)
alteration of the relationship between the parties — Defendants, for example, did not obtain a
mandatory injunction from this court compelling Plaintiffs to mediate. The requirement is an
obligation of state law, not a result of this court’s decision.
8
The court rejects Nordic’s argument (made for first time in its Reply) that Plaintiffs are
“legally barred from refiling and pursuing their claims” in federal court because such claims
must now be filed in an apparently-related state court action as a compulsory counterclaim (after
Nordic filed an October 25, 2018 cross-claim against Plaintiffs in that action). See ECF No. 97-2
at 5. Nordic’s contention that a federal suit is barred by Hawaii’s rules on compulsory
counterclaims is premature — at best, the argument is a defense that could be made to a re-filed
federal suit. And the sole case that Nordic relies on, JPMorgan Chase Bank, N.A. v. Moniz, 2016
WL 6433841 (D. Haw. Oct. 25, 2016), concluded only that the plaintiff in that case waived the
federal claim by not asserting it in the state court action. Id. at *4. This court has no indication
that such is the situation in the state court action cited by Nordic. Moreover, even assuming that
a parallel proceeding is pending or could be brought in state court, the relevant analysis would
likely be discretionary abstention under Colorado River Water Conservation District v. United
States, 424 U.S. 800 (1976). In any event, the court’s August 6, 2018 dismissal without
(continued . . .)
14
Nor is the court convinced by Defendant’s argument that the issue is
controlled by CRST Van Expedited, Inc. v. Equal Employment Opportunity
Commission, 136 S. Ct. 1642, 1651 (2016) (holding that “a defendant need not
obtain a favorable judgment on the merits in order to be a ‘prevailing party’”) —
an argument not made to Judge Puglisi. True, CRST specifically addressed
whether a defendant prevails, recognizing that much of prior Supreme Court case
law arose while analyzing whether a plaintiff prevails. See id. at 1646 (“The Court,
however, has not set forth in detail how courts should determine whether a
defendant has prevailed.”). The Supreme Court observed:
Plaintiffs and defendants come to court with different
objectives. A plaintiff seeks a material alteration in the
legal relationship between the parties. A defendant seeks
to prevent this alteration to the extent it is in the
plaintiff’s favor. The defendant, of course, might prefer
a judgment vindicating its position regarding the
substantive merits of the plaintiff's allegations. The
defendant has, however, fulfilled its primary objective
whenever the plaintiff’s challenge is rebuffed,
irrespective of the precise reason for the court’s decision.
The defendant may prevail even if the court’s final
judgment rejects the plaintiff’s claim for a nonmerits
reason.
(. . . continued)
prejudice did not bar Plaintiffs from re-filing in this court, and Nordic did not otherwise obtain a
material alteration of the legal relationship of the parties.
15
Id. at 1651.
But, although Nordic “rebuffed” Plaintiffs’ challenge (at least
initially), this does not necessarily or automatically mean it is the prevailing party
under Hawaii law. CRST did not abandon the “material alteration” test in
assessing whether a defendant prevails — it remains fundamental that the
“touchstone of the prevailing party inquiry must be the material alteration of the
legal relationship of the parties,” id. at 1646 (quoting Texas State Teachers Ass’n v.
Garland Indep. Sch. Dist., 489 U.S. 782, 792-93 (1989)), where “[t]his change
must be marked by ‘judicial imprimatur,’” id. (quoting Buckhannon, 532 U.S. at
605). Rather, CRST clarified that in assessing whether a defendant has prevailed in
“rebuffing” a plaintiff’s challenge, it is not necessary for such a “judicial
imprimatur” to be based on substantive grounds.9 “[T]he ultimate decision
9
As the Federal Circuit observed:
The relevant inquiry post-CRST, then, is not limited to whether a defendant
prevailed on the merits, but also considers whether the district court’s decision —
“a judicially sanctioned change in the legal relationship of the parties”— effects
or rebuffs a plaintiff’s attempt to effect a “material alteration in the legal
relationship between the parties.”
Raniere v. Microsoft Corp., 887 F.3d 1298, 1306 (Fed. Cir. 2018) (quoting CRST, 136 S. Ct. at
1646). Applying CRST, Raniere concluded that fees were appropriate because “Appellees ‘won’
through the court’s dismissal of [plaintiff’s] case with prejudice—they prevented [plaintiff] from
achieving a material alteration of the relationship between them, based on a decision marked by
‘judicial imprimatur.’” Id. (quoting CRST, 136 S. Ct. at 1646) (emphasis added).
16
whether to award fees does not distinguish between merits-based and non-meritsbased judgments.” Id. at 1651. That is, CRST decided a different question
(whether a defendant must obtain a decision “on the merits”) than that at issue here
(whether a dismissal without prejudice to re-filing is sufficient).
Moreover, in examining federal law, CRST’s ultimate holding is
completely consistent with Hawaii law. Compare, e.g., Wong, 88 Haw. at 49, 961
P.2d at 614 (concluding that there is “no requirement that the judgment in favor of
the prevailing party be a ruling on the merits of the claim”). Indeed, CRST
specifically left undecided the essentially identical issue to that now before this
court. See CRST, 136 S. Ct. at 1653 (“[Plaintiff] now urges this Court to hold that
a defendant must obtain a preclusive judgment in order to prevail. The Court
declines to decide this issue, however.”). Again, the inquiry here is a matter of
state law, and so even accepting Nordic’s argument that CRST changed the legal
landscape in a relevant manner for federal law, it did not do so for state law. This
court ultimately must still follow Oahu Publications.
What’s more, even with CRST’s changes in this area of the law, it did
not question Ninth Circuit authority holding that “dismissal without prejudice does
not alter the legal relationship of the parties because the defendant remains subject
to the risk of re-filing.” Oscar, 541 F.3d at 981; see also Cadkin v. Loose, 569
17
F.3d 1142, 1150 (9th Cir. 2009) (“Miles and Oscar, taken together, compel the
conclusion that a defendant is a prevailing party following dismissal of a claim if
the plaintiff is judicially precluded from refiling the claim against the defendant in
federal court.”). The rule appears to be well-settled. See, e.g., Dunster Live, LLC
v. Lonestar Logos Mgmt. Co., 908 F.3d 948, 951 (5th Cir. 2018) (reasoning that
“[a] dismissal without prejudice means no one has prevailed; the litigation is just
postponed” and holding that “a dismissal that allows for refiling does not result in
a ‘material alteration of the legal relationship of the parties’” for purposes of
awarding fees) (quoting Buckhannon, 532 U.S. at 604).
2.
Paragraph 14.6 of the Construction Management Agreement
The court also rejects Nordic’s alternative argument that, even if it is
not a prevailing party under § 607-14, it is a prevailing party under ¶ 14.6 of the
Construction Management Agreement. That paragraph provides in part that if a
party “institutes any action or proceeding . . . the prevailing party in the action or
proceeding is entitled to recover all reasonable costs and attorneys’ fees from the
unsuccessful party.” ECF No. 24-1 at 36 (emphases added). 10 Nordic contends
10
The parties do not dispute that this action is “arising from or relating to the provisions
of” the Construction Management Agreement for purposes of ¶ 14.6.
18
that it is a “prevailing party” in a “proceeding” (its motion to dismiss) thus
entitling it to reasonable costs and fees under this paragraph.
But nothing suggests that this language was meant to allow recovery
for fees and costs at individual steps of a formal dispute (whether termed an
“action” or “proceeding” before a tribunal) — such a reading could allow petitions
for fees at innumerable points in continuing litigation, prior to any party obtaining
lasting or ultimate success. Rather, such common language more plainly refers
broadly to “actions or proceedings” such as lawsuits in court, administrative
proceedings, arbitrations, or other tribunals. 11 As Plaintiffs point out, other
sections of the Construction Management Agreement support such a construction.
See ECF No. 24-1 at ¶ 14.5 (“Each party knowingly, voluntarily and intentionally
waives its right to a trial by jury . . . in all actions and other legal proceedings
arising out of or relating to this agreement[.]”) (emphasis omitted); id. (“This
waiver applies to all actions and other legal proceedings, whether sounding in
11
The phrase “action or proceeding” is commonly used to refer generally to cases in
tribunals such as courts or agencies. See, e.g., 28 U.S.C. § 2679(d)(1) (referring to “any civil
action or proceeding” against the United States); 42 U.S.C. § 1988(b) (allowing attorney’s fees
“[i]n any action or proceeding to enforce a provision”); 42 U.S.C. § 2000e-5(k) (“In any action
or proceeding under [Title VII] the court, in its discretion, may allow the prevailing party, other
than the [Equal Employment Opportunity] Commission or the United States, a reasonable
attorney’s fee as part of the costs[.]”); 20 U.S.C. § 1415(i)(3)(B)(i) (“In any action or proceeding
brought under this section, the court, in its discretion, may award reasonable attorneys’ fees as
part of the costs.”).
19
contract, tort or otherwise.”) (emphasis omitted); id. at ¶ 14.4 (selecting a Hawaii
forum for any “legal action or proceeding” relating to the agreement). In short, the
same “prevailing party” analysis applies to ¶ 14.6 of the Construction Management
Agreement — Nordic was not a prevailing party, whether in an “action” or a
“proceeding.”
B.
Costs
The result is no different with Nordic’s request for costs under Rule
54(d). Although this question is a matter of federal law (not state law as with the
fee request), the analysis is the same as discussed above. See Miles, 320 F.3d at
989 (applying Buckhannon’s material alteration test in assessing prevailing party
status under Rule 54); Dattner v. Conagra Foods, Inc., 458 F.3d 98, 103 (2d Cir.
2006) (same). Nordic is not entitled to costs under Rule 54(d)(1).
V. CONCLUSION
Because the court’s August 6, 2018 dismissal and corresponding
judgment was without prejudice to Plaintiffs re-filing suit, Defendant was not a
“prevailing party” for purposes of awarding attorneys’ fees or costs. Accordingly,
the court OVERRULES Defendant’s Objections to the October 19, 2018 Findings
and Recommendation to Deny Defendant’s Motion for Attorneys’ Fees and Bill of
Costs, ECF No. 93, and ADOPTS the Findings and Recommendation.
20
Defendant’s Motion for Attorneys’ Fees and Bill of Costs are DENIED. This
denial, however, is without prejudice to Defendant seeking a reasonable amount of
attorneys’ fees and costs if it later becomes a “prevailing party.” See, e.g., Nelson,
99 Haw. at 269, 54 P.3d at 440 (denying fee request “without prejudice to
[plaintiff’s] ability to collect such fees in the future should she obtain a
judgment . . . that represents a material alteration of the legal relationship between”
the parties).
IT IS SO ORDERED.
DATED: Honolulu Hawaii, January 14, 2019.
/s/ J. Michael Seabright
J. Michael Seabright
Chief United States District Judge
Ward Mgmt. Dev. Co. v. Nordic PCL Constr., Inc., Civ. No. 17-00568 JMS-RLP, Order
Overruling Objections, Adopting October 19, 2018 Findings and Recommendation, and Denying
Defendant’s Motion for Attorneys’ Fees and Bill of Costs without Prejudice
21
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?