EState of Tahilan v. Friendly Care Home Health Serv., Inc.

• Decision Date: 04 August 2010
• Docket Number: Cv. No. 09-00430 DAE-LEK
• Citation: 731 F.Supp.2d 1000
• Parties: The ESTATE OF Agnes P. TAHILAN, Plaintiff, v. FRIENDLY CARE HOME HEALTH SERVICES, INC., a foreign corporation; Michael Lee Folkes; John Does 1-10; Doe Corporations; Doe "Non-Profit" Corporations 1-10; Doe Governmental Units 1-10; and Doe Entities 1-10, Defendants.
• Court: U.S. District Court — District of Hawaii

731 F.Supp.2d 1000

The ESTATE OF Agnes P. TAHILAN, Plaintiff,

v.FRIENDLY CARE HOME HEALTH SERVICES, INC., a foreign corporation; Michael Lee Folkes; John Does 1-10; Doe Corporations; Doe "Non-Profit" Corporations 1-10; Doe Governmental Units 1-10; and Doe Entities 1-10, Defendants.

Cv. No. 09-00430 DAE-LEK.

United States District Court,

D. Hawai'i.

Aug. 4, 2010.

Douglas J. Sameshima, Wailuku, HI, Scott E. Kubota, Agena & Kubota, Honolulu, HI, for Plaintiff.

Michael Lee Folkes, Glendora, CA, pro se.

Joachim P. Cox, Robert K. Fricke, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI, for Defendants.

ORDER: 1) DENYING DEFENDANT'S MOTION TO DISMISS; 2) DENYING PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT; AND 3) GRANTING PLAINTIFF'S ALTERNATIVE MOTION FOR ORDER STRIKING DEFENSE

DAVID ALAN EZRA, District Judge.

On August 2, 2010, the Court heard Plaintiff's Motion for Summary Judgment, or in the Alternative, for Order Striking Defense and Defendant's Motion to Dismiss. Douglas J. Sameshima, Esq., appeared at the hearing on behalf of Plaintiff; Defendant Michael Folkes appeared pro se. After reviewing the motion and the supporting and opposing memoranda, the Court DENIES Defendant's Motion to Dismiss (Doc. # 40), DENIES Plaintiff's Motion for Summary Judgment (Doc. # 29), and GRANTS Plaintiffs Alternative Motion for Order Striking Defense (Doc. # 29).

BACKGROUND

The facts of this case have already been detailed in a prior order by this Court (Doc. # 12) and are summarized below only as is relevant to the instant motion.

This matter involves a loan made by Agnes Tahilan ("Tahilan"), now deceased, to Defendant Michael Folkes ("Folkes") in May 2006. The loan was made so that Folkes might purchase Friendly Care Home Health Services, Inc. ("Friendly Care").¹

The events leading up to the loan are generally undisputed. Folkes and Tahilanapparently met in 1987 while both lived on Maui. (Doc. # 5 at 2.) For a time, Folkes and Tahilan were allegedly involved romantically. ² ( Id.) In 2003, Folkes married and moved from Maui to California, but Folkes and Tahilan remained in contact with each other until Tahilan's death in 2008. ( Id.) In 2006, Folkes informed Tahilan that he and his wife planned to purchase Friendly Care with a loan from the Small Business Administration but did not have enough liquid cash to meet the seller's demands. ( Id.) Tahilan allegedly offered to loan Folkes $200,000 to complete the purchase of Friendly Care. ( Id. at 3.) In or about May 2006, Tahilan took out a home equity loan on her real property and delivered the sum of $219,560.64 to Folkes. (Doc. # 1, Ex. A at 3.)

Folkes, with his wife, became owner of Friendly Care in 2006 and that same year, Folkes became President of Friendly Care. (Doc. # 5, Ex. 1 ¶¶ 2-3.) This was made possible in part due to Tahilan's funding, which she wired to Folkes' bank account in California. ( Id. ¶ 7.)

Although it is undisputed that Tahilan made the loan to Folkes, the parties dispute the nature of that loan. Since Tahilan's death, the majority of the loan principal has not been paid, and the parties dispute whether Tahilan and Folkes entered into an oral agreement that upon Tahilan's death the loan would be forgiven. (Doc. # 5 at 4; Doc. # 8 at 8-9.)

On December 2, 2008, the Estate of Agnes Tahilan ("Plaintiff") filed suit in the State of Hawai'i Circuit Court of the Second Circuit against Folkes, Friendly Care, and unnamed individuals, corporations, partnerships, and governmental units. (Doc. # 1, Ex. A.) The action was removed to this Court on September 11, 2009. (Doc. # 1.)

On September 16, 2009, Friendly Care filed a motion to dismiss based on lack of personal jurisdiction, or in the alternative, improper venue. (Doc. # 5.) On November 2, 2010, the Court granted Friendly Care's Motion. (Doc. # 12.) Accordingly, Plaintiff's claims against Friendly Care were dismissed without prejudice, and Friendly Care is no longer a defendant from this action. ( Id.)

In the Complaint, Plaintiff asserts eight causes of action. Counts I, II, and VI are contract claims brought against Folkes for borrowing money and not paying back the principal or interest. Count III requests that Folkes hold any remaining funds in a constructive trust. Counts IV and V are negligent and fraudulent misrepresentation claims against Folkes. Count VIII is a claim against Folkes for allegedly using Friendly Care as an alter ego. Count VII is a conspiracy to commit fraud claim against Folkes for allegedly conspiring to take monies obtained from Tahilan.³

On May 12, 2010, Plaintiff filed a Motion for Summary Judgment, or in the Alternative, for Order Striking Defense. ("MSJ," Doc. # 29-3.) On June 23, 2010, Folkes filed an Opposition to Plaintiff's Motion. ("Opp'n to MSJ," Doc. # 39.) On the same day, Folkes filed a Motion to Dismiss, or inthe alternative, Denial of Plaintiff's Motion for Summary Judgment. ("Mot.," Doc. # 40.) On July 9, 2010, Plaintiff filed a Reply in support of its Motion for Summary Judgment. ("Reply to MSJ," Doc. # 47.) The same day, Plaintiff filed an Opposition to Folkes' Motion to Dismiss. ("Opp'n to Mot.," Doc. # 48.)

STANDARD OF REVIEW

Federal Rule of Civil Procedure ("Rule") 56 requires summary judgment to be granted when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c): see also Porter v. Cal. Dep't of Corr., 419 F.3d 885, 891 (9th Cir.2005); Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000). A main purpose of summary judgment is to dispose of factually unsupported claims and defenses. Celotex Corp. v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Summary judgment must be granted against a party that fails to demonstrate facts to establish what will be an essential element at trial. See id. at 323, 106 S.Ct. 2548. The burden initially falls upon the moving party to identify for the court those "portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact." T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir.1987) (citing Celotex Corp., 477 U.S. at 323, 106 S.Ct. 2548).

Once the moving party has carried its burden under Rule 56, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial" and may not rely on the mere allegations in the pleadings. Porter, 419 F.3d at 891 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). If the nonmoving party produces direct evidence of a material fact, the court may not assess the credibility of this evidence nor weigh against it any conflicting evidence presented by the moving party. The nonmoving party's evidence must be taken as true. T.W. Electrical Service, Inc. v. Pacific Electrical Contractors Ass'n, 809 F.2d 626, 632 (9th Cir.1987) (internal citations omitted).

However, the nonmoving party may not rely on the mere allegations in the pleadings in order to preclude summary judgment. Instead, the nonmoving party must set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial. Id. at 630 (citation omitted) (emphasis added). The opponent "must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). If the factual context makes the non-moving party's claim or defense implausible, the party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue of trial. Id. at 587, 106 S.Ct. 1348.

Pursuant to Rule 12(b)(6), a motion to dismiss will be granted where the plaintiff fails to state a claim upon which relief can be granted. Review is limited to the contents of the complaint. See Clegg v. Cult Awareness Network, 18 F.3d 752, 754 (9th Cir.1994). A complaint may be dismissed as a matter of law for one of two reasons: "(1) lack of a cognizable legal theory, or (2) insufficient facts under a cognizable legal claim." Robertson v. Dean Witter Reynolds. Inc., 749 F.2d 530, 534 (9th Cir.1984) (citation omitted). Allegations of fact in the complaint must be taken as true and construed in the light most favorable to the plaintiff. See Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 946 (9th Cir.2005).

A complaint need not include detailed facts to survive a Rule 12(b)(6) motion to dismiss. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In providing grounds for relief, however, a plaintiff must do more than recite the formulaic elements of a cause of action. See id. at 556-57, 127 S.Ct. 1955; see also McGlinchy v. Shell Chem. Co., 845 F.2d 802, 810 (9th Cir.1988) ("[C]onclusory allegations without more are insufficient to defeat a motion to dismiss for failure to state a claim.") (citation omitted). "The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions," and courts "are not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (internal quotations and citations omitted). Thus, "bare assertions amounting to nothing more than a formulaic recitation of the elements" of a claim "are not entitled to an assumption of truth." Moss v. U.S. Secret Service, 572 F.3d 962, 969 (9th Cir.2009) ("the non-conclusory 'factual content,' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.") (internal quotations and citations omitted).

A court looks at whether the facts in the complaint sufficiently state a "plausible" ground for...