627 F.2d 991 (9th Cir. 1980), 78-1302, THI-Hawaii, Inc. v. First Commerce Financial Corp.

Docket Nº:78-1302.
Citation:627 F.2d 991
Party Name:THI-HAWAII, INC., a Hawaii Corporation, Plaintiff-Appellant, v. FIRST COMMERCE FINANCIAL CORPORATION, a Nevada Corporation, and Ellaric Corporation, a Hawaii Corporation, Defendants-Appellees.
Case Date:September 15, 1980
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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Page 991

627 F.2d 991 (9th Cir. 1980)

THI-HAWAII, INC., a Hawaii Corporation, Plaintiff-Appellant,

v.

FIRST COMMERCE FINANCIAL CORPORATION, a Nevada Corporation,

and Ellaric Corporation, a Hawaii Corporation,

Defendants-Appellees.

No. 78-1302.

United States Court of Appeals, Ninth Circuit

September 15, 1980

Argued and Submitted June 12, 1980.

Page 992

Chad P. Love, Honolulu, Hawaii, argued, Daral G. Conklin, Honolulu, Hawaii, on brief, for plaintiff-appellant.

Wayne P. Nasser, Honolulu, Hawaii, for defendants-appellees.

On Appeal from the United States District Court for the District of Hawaii.

Before ANDERSON, FERGUSON and NELSON, Circuit Judges.

J. BLAINE ANDERSON, Circuit Judge:

The plaintiff, THI-Hawaii, Inc., (THI) appeals from the granting of summary judgment in defendants' favor on THI's complaint for treble damages, injunctive and declaratory relief under the Sherman Antitrust Act, 15 U.S.C. § 1 et seq., and the Clayton Act, 15 U.S.C. §§ 15 and 26. THI filed its complaint on September 29, 1977. Defendant Ellaric Corporation, later joined by defendant First Commerce Financial Corporation, filed its motion for summary judgment on October 19, 1977, along with its affidavits and exhibits. THI filed no affidavits or other factual responses in opposition to the motion. The district court granted Ellaric's motion following a hearing on November 21.

I. BACKGROUND

In 1967, AITS, Inc., while in the process of constructing the Hawaiian Regent Hotel in Waikiki, entered into an agreement with an individual named H. B. Rothbard, and First Commerce Financial Corporation (FCFC) whereby AITS agreed to lease to either Rothbard or FCFC 3,000 square feet of commercial space on the ground floor of the hotel. The agreement specified lease provisions, including a monthly rental of $1.00 per square foot, against 8% of the lessee's gross revenues, and granting Rothbard the exclusive right to sell certain items such as tobacco, sundries, and other tourist-oriented items and services within the hotel.

AITS, however, refused to execute the lease itself for reasons unimportant to the present appeal. Rothbard filed suit for specific performance in Hawaii state court, and obtained a decree of specific performance on March 5, 1973. AITS filed a notice of appeal to the Supreme Court of Hawaii. Coincidentally with its legal defeat at Rothbard's hands, AITS sold the Hawaiian Regent to THI-Hawaii, the plaintiff in the present action. THI and FCFC, holder of Rothbard's lease rights, immediately began conducting settlement negotiations.

On August 10, 1973, THI and FCFC entered into an Agreement of Lease which terminated the AITS-Rothbard litigation. Under the new lease, FCFC guaranteed an annual minimum rental of $90,000 per year or 8% of total gross sales if in excess of $1,125,000.00 per year. The lease also obligated FCFC to make improvements in the leased space at a cost of $10.00 per square foot. In FCFC's favor were the carrying over of the exclusive sales provision, and a provision giving FCFC the right to sell additional items on a nonexclusive basis, the right to open a "duty-free" shop, and the right to sell liquor. FCFC immediately subleased the space to Ellaric Corporation, which opened a gift shop known as "The Store."

THI's other commercial tenants at the Hawaiian Regent proved to be less than eager to observe the terms of the exclusive in Ellaric's lease. The record reflects several instances in which Ellaric discovered that items which it allegedly had the exclusive right to sell in the hotel were being sold by other establishments. Ellaric in each instance resorted to demand letters directed toward THI or to other forms of legal persuasion in an attempt to enforce the provisions of the exclusive. An additional sore spot arose sometime in 1976 when THI commenced construction of additional facilities adjacent to the Hawaiian Regent which it claimed were not covered by the exclusive.

Page 993

The relationship between THI as landlord on the one hand and FCFC and Ellaric as tenants on the other has thus been something of a running battle over the exclusive almost from the time of the inception of the lease.

THI, apparently exasperated over the insistence of FCFC and Ellaric on strict compliance with the terms of the exclusive, took the offensive by filing its antitrust complaint in the present action. The first count charged FCFC and Ellaric with violations of Section One of the Sherman Act, 15 U.S.C. § 1, alleging that the exclusive was an unreasonable restraint of trade, and also that the exclusive constituted a per se violation of the antitrust laws. The second count prayed for a declaratory judgment interpreting the lease and declaring it to be illegal. The total relief which THI sought included treble damages, injunctive relief against the enforcement of the exclusive, and...

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