Greys Ave. Partners, LLC v. Theyers, CIVIL NO. 19-00079 JAO-KJM
| Citation | 484 F.Supp.3d 895 |
| Decision Date | 03 September 2020 |
| Docket Number | CIVIL NO. 19-00079 JAO-KJM |
| Parties | GREYS AVENUE PARTNERS, LLC, et al., Plaintiffs, v. Colin THEYERS, Defendant. |
| Court | U.S. District Court — District of Hawaii |
Jerry A. Ruthruff, Maria Ann Carmichael, Ronald T. Ogomori, Ronald T. Ogomori AAL ALC, Honolulu, HI, for Plaintiffs.
Gregory W. Kugle, Brooke H. Hunter, Casey Tadakazu Miyashiro, Damon Key Leong Kupchak Hastert, Honolulu, HI, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS
In their Third Amended Complaint ("TAC"), ECF No. 45, Plaintiffs Greys Avenue Partners, LLC ("GAP") and Castle Resorts & Hotels, Inc. ("Castle") (collectively, "Plaintiffs") bring various claims against Defendant Colin Theyers arising out of a joint venture to convert property in New Zealand into a hotel. Defendant Theyers moves to dismiss the TAC under Federal Rule of Civil Procedure 12(b)(6) on the grounds that Plaintiffs failed to state their claims. See ECF No. 52. For the reasons stated below, Defendant Theyers’ Motion is GRANTED in part and DENIED in part.
A. Facts
Because the Court's prior Order Denying Defendant's Motion to Dismiss Plaintiffs’ First Amended Complaint ("FAC") sets forth in detail most of the relevant background facts and procedural history, they are not repeated here. See Greys Ave. Partners, LLC v. Theyers , 431 F. Supp. 3d 1121, 1124–27 (D. Haw. 2020). Briefly, Defendant is the director and manager of Greys Avenue Investments Limited ("GAIL"), whose sole shareholder is Mr. Aaron Coupe, and which owned the relevant property in New Zealand (the "Property"). See TAC ¶¶ 10–14. Plaintiffs were approached about converting the Property into a hotel. See, e.g., id. ¶¶ 18–26. After discussions, GAP and GAIL executed a Heads of Agreement ("HOA") and then a Shareholders Agreement ("SHA") with the expectation that title to the Property would be transferred to a new jointly owned company, Ascent Industries No. 33 Limited ("Ascent"), with GAP and GAIL each holding equal shares in Ascent. See, e.g., id. ¶¶ 24, 28–50.
Additional specific factual allegations contained in the TAC are addressed below as relevant to the parties’ arguments regarding whether Plaintiffs have stated the following claims: Count I—Negligent Misrepresentation; Count II—Intentional Misrepresentation; Count III—Fraud; Count IV—Conversion; Count V—Unjust Enrichment; Count VI—Securities Fraud; Count VII—Conspiracy to Defraud; and Count VIII—Punitive Damages.
Rule 12(b)(6) allows an attack on the pleadings for failure to state a claim on which relief can be granted. "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus , 551 U.S. 89, 94, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) (citation omitted). However, a court is "not bound to accept as true a legal conclusion couched as a factual allegation." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’ " Id. (quoting Twombly , 550 U.S. at 557, 127 S.Ct. 1955 ) (alteration in original). A complaint must "state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. This means that the complaint must plead "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, 129 S.Ct. 1937 (citation omitted).
To plead a claim for fraud with particularity, as required by Rule 9(b)’s heightened pleading standard, a party's "[a]verments of fraud must be accompanied by ‘the who, what, when, where, and how’ of the misconduct charged." Vess v. Ciba-Geigy Corp. USA , 317 F.3d 1097, 1106 (9th Cir. 2003) (quoting Cooper v. Pickett , 137 F.3d 616, 627 (9th Cir. 1997) ). The plausibility standard of Rule 8 also applies to cases subject to Rule 9(b). See Cafasso, United States ex rel. v. Gen. Dynamics C4 Sys., Inc. , 637 F.3d 1047, 1054 (9th Cir. 2011).
Defendant first argues that the doctrine of judicial estoppel precludes Plaintiffs from alleging facts that did not occur at a February 2018 meeting in Honolulu because the Court's prior Order (addressing the FAC and concluding it had personal jurisdiction over Defendant) relied on the fact that Defendant traveled to Honolulu and allegedly made certain misrepresentations there on that date. However, the FAC also contained allegations related to the parties’ interactions before Defendant traveled to Honolulu, and their continuing obligations after that meeting, see, e.g. , ECF No. 9 ¶¶ 15–20, 25–29, 35, 39, and Plaintiffs’ arguments in favor of the Court finding personal jurisdiction were in accord, see, e.g. , ECF No. 17 at 8–14. Although the Court emphasized that Defendant's travel to and conduct within Honolulu were important factors when concluding the requisite minimum contacts existed, it did not limit the minimum contacts analysis to Defendant's presence within Honolulu but also relied on Defendant's contacts with the forum state both before and after the relevant in-person meetings here. See, e.g., Greys Ave. Partners , 431 F. Supp. 3d at 1128–32. Judicial estoppel is therefore not applicable. See Hamilton v. State Farm Fire & Cas. Co. , 270 F.3d 778, 783 (9th Cir. 2001) .
Defendant also asks the Court to abstain from exercising jurisdiction under the Colorado River doctrine, which applies when "considerations of ‘wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation,’ may justify a decision by the district court to stay federal proceedings pending the resolution of concurrent state court proceedings involving the same matter." Holder v. Holder , 305 F.3d 854, 867 (9th Cir. 2002) (quoting Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976) ) (other citation omitted). This limited doctrine applies only in exceptional cases, where there is a clear justification for a stay or dismissal. See R.R. St. & Co. v. Transp. Ins. Co. , 656 F.3d 966, 978 (9th Cir. 2011). Defendant contends Colorado River abstention applies here because Plaintiffs initially sued both him and Mr. Coupe in this action, but then dismissed Mr. Coupe and filed suit against Mr. Coupe in Hawai'i state court raising issues similar to those raised in this federal action. But that state action against Mr. Coupe already concluded in a final, default judgment in Plaintiffs’ favor against Mr. Coupe, and so is not a concurrent case.1 See ECF No. 52-3; ECF No. 55 at 14 n.5, 15.
Furthermore, a stay or dismissal under Colorado River "is inappropriate when there is a good chance that the federal court would have to decide the case eventually because the state proceeding will not resolve all of the issues in the federal case." R.R. St. & Co. , 656 F.3d at 983 (citation omitted). Defendant does not dispute that Plaintiffs bring claims here (e.g., unjust enrichment and conspiracy) that were not brought in the state court action against Mr. Coupe. See ECF No. 55 at 16. Therefore, the Court is not convinced that, where a state court action has already been resolved in Plaintiffs’ favor by default judgment against one party, Plaintiffs’ related suit in federal court against a different defendant, which raises some distinct claims, must be stayed or dismissed. See, e.g., R.R. St. & Co. , 656 F.3d at 979 (). The Court declines to stay or dismiss this action under Colorado River.2
Defendant contends that Counts I and II fail for a number of reasons. Defendant first argues that the plain terms of the HOA preclude Plaintiffs from alleging they relied on oral representations that the property was subject to a $14.8 million mortgage and that GAIL would transfer title to the property to Ascent upon execution of the SHA. At this stage, Plaintiffs have plausibly alleged justifiable reliance on these communications. See, e.g. , TAC ¶¶ 21–50, 58–59, 62–63. Defendant does not dispute that justifiable reliance is a question of fact that assesses all of the circumstances of a particular case rather than incorporating a purely objective standard. See Honolulu Disposal Serv., Inc. v. Am. Benefit Plan Adm'rs, Inc. , 433 F. Supp. 2d 1181, 1190–91 (D. Haw. 2006) ; see also Ill. Nat'l Ins. Co. v. Nordic PCL Constr., Inc. , Civil No. 11-00515 SOM/KSC, 2013 WL 5739639, at *11 (D. Haw. Oct. 22, 2013). His arguments that the HOA negates any justifiable reliance are therefore misplaced at this juncture, particularly because he has not articulated how the HOA unambiguously provides that refinancing (or anything else) was a condition precedent to transferring the Property subject to $16.2 million indebtedness.3 And, as Plaintiffs note, the type of extrinsic evidence contained within their allegations may be admissible here because the parol evidence rule only precludes the use of such evidence to vary or contradict the terms of an unambiguous and integrated contract—and even then there remains an exception that permits...
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