Davidson v. Paige

• Decision Date: 18 November 2021
• Docket Number: Civ. 20-00097 LEK-WRP
• Parties: STEVEN D. DAVIDSON, AS EXECUTOR OF THE ESTATE OF HOWARD W. DEMOORE; Plaintiff, v. JEREMY SLOTNICK PAIGE, VICKI SUSAN SLOTNICK, KBI, LLC, MELISSA JACKSON, RICHARD SHUCK, JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE PARTNERSHIPS 1-20, DOE ENTITIES 1-20, RHONDA LEE HAY, CYNTHIA NASH, Defendants.
• Court: U.S. District Court — District of Hawaii

STEVEN D. DAVIDSON, AS EXECUTOR OF THE ESTATE OF HOWARD W. DEMOORE; Plaintiff,
v.
JEREMY SLOTNICK PAIGE, VICKI SUSAN SLOTNICK, KBI, LLC, MELISSA JACKSON, RICHARD SHUCK, JOHN DOES 1-20, JANE DOES 1-20, DOE CORPORATIONS 1-20, DOE PARTNERSHIPS 1-20, DOE ENTITIES 1-20, RHONDA LEE HAY, CYNTHIA NASH, Defendants.

Civ. No. 20-00097 LEK-WRP

United States District Court, D. Hawaii

November 18, 2021

ORDER GRANTING IN PART AND DENYING IN PART THE THIRD-PARTY DEFENDANTS' MOTION TO DISMISS AND/OR STRIKE

LESLIE E. KOBAYASHI UNITED STATES DISTRICT JUDGE

On July 16, 2021, Third-Party Defendants Hawaii Life Real Estate Services, LLC (“Hawaii Life”), Rhonda Lee Hay (“Hay”), and Cynthia Nash (“Nash” and collectively “the Third-Party Defendants”) filed their Motion to Dismiss and/or Strike (1) Defendants Melissa Jackson and Richard Shuck's First Amended Third Party Complaint, Filed June 2, 2021 [Dkt. 102]; and (2) Defendants Jeremy Slotnick Paige and Vicki Susan Slotnick's Crossclaim Against Third-Party Defendants Hawaii Life Real Estate Services, LLC, Choi International, Inc., Rhonda Lee Hay, and Cynthia Nash, Filed May 18, 2021 [Dkt. 95] (“Motion”).

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[Dkt. no. 123.] Defendants/Crossclaimants Jeremy Slotnick Paige and Vicki Susan Slotnick (“the Paiges”) and Defendants/Third-Party Plaintiffs Melissa Jackson and Richard Shuck (“the Shucks”) filed their respective memoranda in opposition on August 3, 2021 (“Paige Opposition” and “Shuck Opposition”). [Dkt. nos. 129, 132.] The Third-Party Defendants filed their reply on August 10, 2021. [Dkt. no. 134.] 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”). The Third-Party Defendants' Motion is hereby granted in part and denied in part for the reasons set forth below.

BACKGROUND

On March 2, 2020, Plaintiff Steven D. Davidson, as Executor of the Estate of Howard W. DeMoore (“Plaintiff”), filed his Complaint against the Paiges, the Shucks, and Defendant KB1, LLC (“KB1”). [Dkt. no. 1.] The Complaint alleges that, on June 29, 2018, Plaintiff, as the seller, and the Paiges, as the buyers, entered into a “Purchase Contract” for the sale of real property in Kailua, Hawai'i (the “Property”). [Id. at ¶ 10.] Under paragraph M-1 of the Purchase Contract, Plaintiff was to provide certain documents to the Paiges no later than seven calendar days after the acceptance date, and the Paiges had seven calendar days after receipt of the documents to terminate

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the Purchase Contract. [Id. at ¶ 14.] Plaintiff alleges the acceptance date was on August 9, 2018. [Id. at ¶ 13.] On the same day as the acceptance, the Paiges allegedly acknowledged receipt of an initial preliminary report (“First Report”) containing hyperlinks to the documents required under paragraph M-1 of the Purchase Contract. [Id. at ¶ 16.] On August 15, 2018, the title company sent an updated preliminary report (“Second Report”) to the Paiges.

On August 16, 2018, the Paiges allegedly assigned the Purchase Contract to KB1 by an amendment to the Purchase Contract. As of August 13, 2018, the Shucks and the Paiges were the managers of KB1. On August 17, 2018, the Paiges and/or KB1 transferred the initial money deposit to escrow for purposes of completing the purchase. The money was allegedly wire-transferred to the title company from an account owned or controlled by the Shucks. On August 21, 2018, the title company sent a third preliminary report (“Third Report”) to the Paiges, which allegedly contained no material differences from the First Report and Second Report. Plaintiff alleges that, on August 25, 2018, KB1 attempted to terminate the Purchase Contract. Plaintiff claims the reason for the termination was due to a disagreement between the Paiges and the Shucks. [Id. at ¶¶ 1823.]

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Plaintiff alleges the following claims: (1) breach of contract against the Paiges and KB1 for untimely notice of termination regarding the Purchase Contract (“Count I”); (2) intentional and/or negligent misrepresentation against the Paiges and KB1 (“Count II”); (3) vicarious liability based on joint venture against the Paiges and the Shucks for the breaches of the Purchase Contract and implied covenant of good faith and fair dealing (“Count III”); (4) vicarious liability based on agency against the Paiges and the Shucks for the breach of the Purchase Contract (“Count IV”); (5) alter ego liability against the Paiges and the Shucks because they are liable for KB1's breach of the Purchase Contract (“Count V”); and (6) declaratory relief against the Paiges, the Shucks, and KB1 (“Count VI”).^[1]

The Shucks and the Paiges filed their respective answers to the Complaint on April 30, 2020 and May 4, 2020. [Dkt. nos. 13, 14.] On May 18, 2021, the Paiges filed their Crossclaim Against Third-Party Defendants Hawaii Life Real Estate Services, LLC, Choi International, Inc., Rhonda Lee Hay,

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and Cynthia Nash (“Paige Crossclaim”). [Dkt. no. 95]. On June 2, 2021, the Shucks filed their First Amended Third Party Complaint Against Hawaii Life Real Estate Services, LLC, Choi International, Inc., Rhonda Lee Hay, and Cynthia Nash (“Amended Shuck Third-Party Complaint”). [Dkt. no. 102.]

The Shucks allege that, in November 2017, “Plaintiff entered into an Exclusive Right-to-Sell Listing Contract with Third-Party Defendant Choi International[, Inc. (‘Choi')].” [Amended Shuck Third-Party Complaint at ¶ 10.] In December 2017, Hawaii Life and Choi “formed a strategic alliance and created ‘the CHOI Group with Hawaii Life.'” [Id. at ¶ 11 (emphasis in original).] The Shucks also allege that, “concurrently with the execution of the Purchase Contract, ” Plaintiff and the Paiges “executed a Dual Agency Consent Addendum” (“the Addendum”) with Choi, Hawaii Life, and/or the Choi Group with Hawaii Life. [Id. at ¶ 13.] The Shucks claim that Choi “was responsible for correspondence with the seller (Plaintiff), and Third-Party Defendant Hawaii Life was responsible for correspondence with” the Paiges and KB1. [Id. at ¶ 14.] The Amended Shuck Third-Party Complaint states the Third-Party Defendants and Choi “sent, or caused to be sent, ” the First Report and Second Report to the Paiges or their agents. [Id. at ¶¶ 21, 24.] The Shucks allege the transaction manager for the prospective buyers' real estate agent emailed

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the Third Report to the Paiges after Hay instructed her to do so. [Id. at ¶ 29-30.]

The Shucks claim the Second Report and Third Report contained new information that was not in the First Report. The new information allegedly indicated that the First Report and Second Report were not final versions and, therefore, did not satisfy any of Plaintiff's obligations under paragraph M-1 and/or M-5 of the Purchase Contract. [Id. at ¶¶ 26, 32-33.] Moreover, the Shucks allege the delivery of the pdf versions of the title documents on August 21, 2018 constituted proper delivery under paragraph M-1 of the Purchase Contract, which was five days after the required deadline of August 16, 2018. The Shucks claim that, through the Third-Party Defendants' negligent acts and omissions, the title documents were not delivered to the Paiges within the time frame under paragraph M-1 or M-5 of the Purchase Contract.^[2] [Id. at ¶¶ 37-39.]

The Shucks allege the following claims: (1) negligence against the Third-Party Defendants for breaching their duty of care to Plaintiff and the Shucks for the untimely delivery of

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the title documents (“Third-Party Count I”); and (2) indemnification and/or contribution against the Third-Party Defendants because they caused the alleged damages to Plaintiff and the Shucks are not at fault (“Third-Party Count II”).

The Paige Crossclaim is a truncated version of the Amended Shuck Third-Party Complaint but alleges the same underlying facts. See Paige Crossclaim at ¶¶ 9-24. The Paige Crossclaim also alleges the same two claims as in the Amended Shuck Third-Party Complaint (i.e., negligence against the Third-Party Defendants and indemnification/contribution from the Third-Party Defendants). See id. at ¶¶ 25-40.

The Third-Party Defendants now move to strike and/or dismiss with prejudice the Amended Shuck Third-Party Complaint and the Paige Crossclaim.

DISCUSSION

I. Amended Shuck Third-Party Complaint

The Third-Party Defendants argue the Amended Shuck Third-Party Complaint should be dismissed or stricken because the claims are not derivative of Plaintiff's claims against the Shucks, and the Amended Shuck Third-Party Complaint “does not comply with the standards set forth by this Court with respect to seeking leave to file a third-party complaint under Rule 14.” [Mem. in Supp. of Motion at 10.] The Court agrees with the

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Third-Party Defendants that the Shucks' third-party claims are not derivative of Plaintiff's claims.

“A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it.” Fed.R.Civ.P. 14(a)(1). This Court has stated:

“The decision to allow a third-party defendant to be impleaded under rule 14 is entrusted to the sound discretion of the trial court.” United States v. One 1977 Mercedes Benz, 708 F.2d 444, 452 (9th Cir. 1983). A third-party claim “may be asserted only when the third party's liability is in some way dependant [sic] on the outcome of the main claim and the third party's liability is secondary or derivative.” [Id.] “The crucial characteristic of a Rule 14 claim is that defendant is attempting to transfer to the third-party defendant the liability asserted against him by the original plaintiff. The mere fact that the alleged third-party claim arises from the same transaction or set of facts as the original claim is not enough.” Stewart v. American Int'l Oil & Gas Co., 845 F.2d 196, 200 (9th Cir. 1988)

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