Hi-Pac, Ltd. v. Avoset Corp., Civ. 96-00763 ACK.

• Decision Date: 22 September 1997
• Docket Number: No. Civ. 96-00763 ACK.,Civ. 96-00763 ACK.
• Citation: 26 F.Supp.2d 1230
• Court: Hawaii Supreme Court
• Parties: HI-PAC, LTD., Ron Pestel, & Jean Pestel, Plaintiffs, v. AVOSET CORP., Avoset International, Ltd., & Avoset Food Corp., Defendants.

26 F.Supp.2d 1230

HI-PAC, LTD., Ron Pestel, & Jean Pestel, Plaintiffs, v.AVOSET CORP., Avoset International, Ltd., & Avoset Food Corp., Defendants.

No. Civ. 96-00763 ACK.

United States District Court, D. Hawai`i.

September 22, 1997.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Philip R. Brown, Honolulu, HI, for plaintiffs.

Lennes N. Omuro, Goodsill Anderson Quinn & Stifel, Honolulu, HI, for defendants.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR SUMMARY JUDGMENT

KAY, Chief Judge.

FACTUAL BACKGROUND

This case involves an alleged agreement between Avoset Corporation, Avoset Food Corporation or Avoset International¹ and Hi-Pac, Limited("Hi-Pac" or "plaintiff").The defendants are packagers and suppliers of perishable foods, i.e., dairy products, based in California, and Hi-Pac is a Hawaii corporation that distributes food to government retail outlets, food services and distribution centers.In October of 1993, the defendants allegedly entered into an agreement whereby they would package and supply dairy products to Hi-Pac who in turn would sell them to military bases and installations throughout Hawaii and the Pacific Region.In June of 1994, defendants allegedly refused to honor this agreement.

In response, on August 20, 1996, Hi-Pac, Hi-Pac's president, Ron Pestel, and Hi-Pac's vice president, Jean Pestel(collectively referred to as "plaintiffs") brought suit against Avoset Int'l asserting: (1) breach of contract; (2) tortious breach of contract; (3) negligent and/or intentional infliction of emotional distress; and (4) damage to business reputation.Plaintiffs amended their complaint wherein Avoset was the only named defendant.

On September 16, 1996, Avoset removed the action to this Court.On March 10, 1997, this Court denied Avoset's motion to dismiss or, in the alternative, to transfer venue, and gave plaintiffs leave to amend their First Amended Complaint.On March 25, 1997, plaintiffs filed their Second Amended Complaint to add Avoset Food and Avoset Int'l as defendants.Defendants filed their answer on April 4, 1997, and reasserted, inter alia, the affirmative defense that plaintiffs' claims are barred by lack of personal jurisdiction.On June 2, 1997, defendants filed the instant motion for summary judgment.Plaintiffs filed their opposition on August 27, 1997 to which defendants replied on September 4, 1997.The Court heard oral argument on September 15, 1997.

STANDARD OF REVIEW

Summary judgment shall be granted where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.Fed.R.Civ.P. 56(c).One of the principal purposes of the summary judgment procedure is to identify and dispose of factually unsupported claims and defenses.Celotex Corp. v. Catrett,477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986).

The United States Supreme Court has declared that summary judgment must be granted against a party who fails to demonstrate facts to establish an element essential to his case where that party will bear the burden of proof of that essential element at trial.Celotex,477 U.S. at 322, 106 S.Ct. 2548."If the party moving for summary judgment meets its initial burden of identifying for the court the portions of the materials on file that it believes demonstrate the absence of any genuine issue of material fact [citations omitted], the nonmoving party may not rely on the mere allegations in the pleadings in order to preclude summary judgment."T.W. Elec. Serv. v. Pacific Elec. Contractors Ass'n,809 F.2d 626, 630(9th Cir.1987).

Rather, Rule 56(e) requires that the nonmoving party set forth, by affidavit or as otherwise provided in Rule 56, specific facts showing that there is a genuine issue for trial.T.W. Elec. Serv.,809 F.2d at 630.At least some "significant probative evidence tending to support the complaint" must be produced.Id.Legal memoranda and oral argument are not evidence and do not create issues of fact capable of defeating an otherwise valid motion for summary judgment.British Airways Bd. v. Boeing Co.,585 F.2d 946, 952(9th Cir.1978).

The standard for a grant of summary judgment reflects the standard governing the grant of a directed verdict.SeeEisenberg v. Ins. Co. of North America,815 F.2d 1285, 1289(9th Cir.1987)(citingAnderson v. Liberty Lobby, Inc.,477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986)).Thus, the question is whether "reasonable minds could differ as to the import of the evidence."Anderson,477 U.S. at 250-51, 106 S.Ct. 2505.

The Ninth Circuit has established that "[n]o longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment."California Architectural Bldg. Products, Inc. v. Franciscan Ceramics., Inc.,818 F.2d 1466, 1468(9th Cir.1987).Moreover, the United States Supreme Court has stated that "[w]hen the moving party has carried its burden under Rule 56(c), its 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).

Indeed, "if the factual context makes the nonmoving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is a genuine issue for trial."Franciscan Ceramics,818 F.2d at 1468(emphasis in original)(citingMatsushita,475 U.S. at 587, 106 S.Ct. 1348).Of course, all evidence and inferences to be drawn therefrom must be construed in the light most favorable to the nonmoving party.T.W. Elec. Serv.,809 F.2d at 630-31.

DISCUSSION

I.PERSONAL JURISDICTION AND TRANSFER OF VENUE

Preliminarily, the Court addresses defendants' contention (pursuant to Federal Rule of Civil Procedure 12(b)(2)) that this action is barred for lack of personal jurisdiction.On March 10, 1997, this Court denied defendant Avoset's motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer venue opining that Avoset had the requisite sufficient contacts with the state to satisfy Hawaii's long-arm statute and the Due Process Clause.See generallySher v. Johnson,911 F.2d 1357, 1360(9th Cir.1990).Specifically, this Court held that Avoset had taken action in Hawaii whereby it purposefully availed itself of the privilege of conducting activities in the forum of Hawaii, thereby invoking the benefits and protections of the forum's laws, and further noted that subsequent 12(b)(2) motions would be entertained if, after discovery, the relationship between the various Defendants became more apparent.

Defendants contend that there is now an adequate basis for this Court to conclude that it does not have personal jurisdiction over Avoset Int'l, the only company with which Hi-Pac had an alleged oral agreement.However, defendants have failed to provide the Court with sufficient additional evidence to clarify the parameters of the business relationships between the defendants.Rather, defendants merely assert that plaintiff never had any meetings with an Avoset representative in Hawaii, that plaintiff knew Avoset Int'l was the overseas marketing arm of Avoset Food, and that Hi-Pac never attempted to distribute Avoset products in Hawaii.

Defendants' assertions are belied by evidence produced in this case.First, both Avoset Food and Avoset Int'l initiated correspondence to the plaintiff.Second, Hi-Pac intended to market the Dairy Fresh line of products which are labeled for distribution by Avoset.Finally, defendants have offered no evidence to change the Court's earlier opinion that the defendants, even if they are separate corporate entities, were involved in a joint venture.The Court finds that plaintiffs have fulfilled their burden of establishing a prima facie case of personal jurisdiction over defendants.²The Court, therefore, properly has jurisdiction pursuant to 28 U.S.C. 1332(a).

II.The Settlement Agreement Between Hidden Villa And Hi-Pac

Prior to addressing the motion for summary judgment, the Court disposes of defendants' proclamation that the suit is barred by a settlement agreement between plaintiffs and Hidden Villa Ranch ("Hidden Villa").Prior to the filing of the instant suit, plaintiffs filed an action against Hidden Villa, which ultimately settled as reflected in a Mutual Release and Settlement Agreement ("Settlement Agreement").The Settlement Agreement provides, in pertinent part, that:

6.Binding on Successors

The Agreement shall inure to the benefit of, and shall be binding upon, each of the parties hereto, and their ... suppliers

....

Defendants contend that they are released from the instant matter by virtue of the Settlement Agreement because Avoset Int'l supplies Hidden Villa with products manufactured by other Avoset companies.

The Court rejects defendants' arguments for two reasons.First, the breach of contract at issue in the Hidden Villa litigation occurred prior to the supplier relationship between defendants and Hidden Villa.Second, and more compelling, as demonstrated by affidavits, plaintiffs expressly rejected Hidden Villa's request to include the Avoset companies as releasees.Evidently, neither settling party intended to release the defendants from future litigation.

III.Breach of An Oral Contract³

A.The Oral Agreement Was Sufficiently Definite To Withstand A Motion For Summary Judgment

Generally, the construction and legal effect of a contract is a question of law.Hanagami v. China Airlines, Ltd.,67 Haw. 357, 364, 688 P.2d 1139(1984)(citations omitted).To be enforceable, a contract must be certain and definite as to its essential terms.Boteilho v. Boteilho,58 Haw. 40, 564 P.2d 144, 146(Haw.1977).The law leans against the destruction of contracts for uncertainty; courts shall favor a determination that an agreement is sufficiently definite.In Re Application of Sing Chong Co.,1...