Jiang v. Fang

• Decision Date: 17 September 2021
• Docket Number: CIVIL 20-00100 JAO-KJM
• Parties: YE JIANG, et al., Plaintiffs, v. ZHONG FANG aka JOHNSON FANG, et al., Defendants.
• Court: U.S. District Court — District of Hawaii

YE JIANG, et al., Plaintiffs,
v.
ZHONG FANG aka JOHNSON FANG, et al., Defendants.

CIVIL No. 20-00100 JAO-KJM

United States District Court, D. Hawaii

September 17, 2021

FINDINGS AND RECOMMENDATION TO DENY DEFENDANTS' JOINT MOTION FOR ATTORNEY FEES AND COSTS

Kenneth J. Mansfield, Unites States Magistrate Judge.

On August 24, 2021, Defendants Jiayu Wang, Zhong Fang, California Investment Regional Center LLC, Hawaii Ocean Plaza, LLC, California Regional Center LLC, Los Angeles City Plaza LP, LA Valley Garden Plaza LP, 9920 Valley Blvd LP, Zhe Fang, Hawaii Ocean Plaza LP, Wuhan Western U.S. Investment Immigration Consultant Inc., Min Hu, American Investment Immigration Fund, Hawaii City Plaza LP, USA Realty Construction Group Inc., and Lamei Fang (collectively, “Defendants”) filed a Joint Motion for Attorney Fees and Costs (“Motion”). ECF No. 200. On August 31, 2021, Plaintiffs Ye Jiang, Takahiro Suzuki, Xia Chen, Huili Chao, and Nobuzo Matsui (collectively, “Plaintiffs”) filed their Memorandum in Opposition to the Motion. ECF No. 202. On September 7, 2021, Defendants Jiayu Wang, Zhong Fang, California Investment Regional

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Center LLC, Hawaii Ocean Plaza, LLC, California Regional Center LLC, Los Angeles City Plaza LP, LA Valley Garden Plaza LP, 9920 Valley Blvd LP, Zhe Fang, Wuhan Western U.S. Investment Immigration Consultant Inc., Min Hu, American Investment Immigration Fund, USA Realty Construction Group Inc., and Lamei Fang filed their Reply. ECF No. 203. On September 8, 2021, Defendant Hawaiian Ocean Plaza LP and Hawaii City Plaza LP filed a joinder in the Reply. ECF No. 204.

The Court elects to decide this matter without a hearing pursuant to Rule 54.2(g) of the Local Rules of Practice for the United States District Court for the District of Hawaii. After carefully considering the Motion, applicable law, and the record in this case, the Court FINDS AND RECOMMENDS that the district court DENY the Motion for the reasons set forth below.

BACKGROUND

The parties and this Court are familiar with the facts and issues in this case. The Court therefore will only recite those relevant to the Motion.

On March 6, 2020, Plaintiffs and former plaintiff Eisaku Kato (“Kato”) filed a 1st Amended Verified Complaint (“First Amended Complaint”). ECF No. 6. On October 6, 2020, Defendants filed a Motion for Dismissal, in Whole or in Part, of [ECF NO. 6] 1^st Amended Verified Complaint or, in the Alternative, For a More Definite Statement (“Motion to Dismiss”). ECF No. 133. On November 23, 2020,

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the district court issued an Order Dismissing 1st Amended Verified Complaint (“11/23/2020 Order”), which dismissed sua sponte the First Amended Complaint and denied as moot the Motion to Dismiss. ECF No. 151. The 11/23/2020 Order dismissed the First Amended Complaint and permitted Plaintiffs and Kato to seek leave to file an amended pleading. Id.

Plaintiffs subsequently filed three motions for leave to file a second amended verified complaint, the first of which Plaintiffs withdrew before the Court ruled on it. See ECF Nos. 157, 160. This Court denied the other two motions for Plaintiffs' failure to cure the pleading deficiencies identified in the district court's 11/23/2020 Order. See ECF Nos. 162, 164, 169, 183. This Court's May 19, 2012 Order Denying Plaintiffs' Third Motion for Leave of the Court to File 2nd Amended Verified Complaint (“05/19/2021 Order”) denied with prejudice Plaintiffs' request for leave to file an amended complaint. ECF No. 183 at 10.

Plaintiffs appealed the 05/19/2021 Order to the district court. ECF No. 187. On July 9, 2021, the district court issued its Order (1) Affirming Magistrate Judge's Order Denying Plaintiffs' Third Motion for Leave of the Court to File the 2nd Amended Verified Complaint and (2) Dismissing Action (“07/09/2021 Order”). ECF No. 192. That same day, pursuant to the 07/09/2021 Order, the Clerk of Court entered judgment. ECF No. 193. Plaintiffs filed an appeal of the

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district court's 07/09/2021 Order, which is pending with the Ninth Circuit Court of Appeals. On August 24, 2021, Defendants timely filed the instant Motion.

DISCUSSION

Defendants assert that “[a]ttorneys' fees and related non-taxable expenses are awarded according to state laws when a court sitting in diversity applies state substantive law.” ECF No. 200 at 9 (citation omitted). The Court notes, however, that Plaintiffs did not invoke diversity jurisdiction under 28 U.S.C. § 1331. See ECF No. 6 at 6 ¶¶ 21-22. In any case, Plaintiffs invoked supplemental jurisdiction over their state law claims. The Court thus applies state law in determining whether the prevailing party is entitled to attorneys' fees. See Kauhako v. Bd. of Educ. Dep't of Educ., Civil No. 13-00567 DKW-KJM, 2016 WL 11408176, at *3 (D. Haw. Oct. 20, 2016), adopted in 2016 WL 7428735 (D. Haw. Dec. 21, 2016), aff'd, 744 Fed.Appx. 344 (9th Cir. 2018); Ogeone v. Yang, Civil No. 13-00166 SOM/RLP, ECF No. 213 at 2 (filed Apr. 7, 2015), adopted in 2015 WL 2075050 (D. Haw. May 14, 2015), aff'd, 700 Fed.Appx. 779 (9th Cir. 2017).^[1]

Under Hawaii law, “[o]rdinarily, attorneys' fees cannot be awarded as damages or costs unless so provided by statute, stipulation, or agreement.” Stanford Carr Dev. Corp. v. Unity House, Inc., 111 Haw. 286, 305, 141 P.3d 459,

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478 (2006) (citation and internal quotation marks omitted); see also DFS Grp., L.P. v. Paiea Props., 110 Haw. 217, 219, 131 P.3d 500, 502 (2006)) (“Generally, under the ‘American Rule,' each party is responsible for paying his or her own litigation expenses. A notable exception to the ‘American Rule,' however, is the rule that attorneys' fees may be awarded to the prevailing party where such an award is provided for by statute, stipulation, or agreement.” (quoting TSA Int'l, Ltd. v. Shimizu Corp., 92 Haw. 243, 263, 990 P.2d 713, 733 (1999))).

Defendants seek an award of attorneys' fees pursuant to Hawaii Revised Statutes (“HRS”) § 607-14. HRS § 607-14 requires a court to award attorneys' fees to the prevailing party in certain contract actions:

In all the courts, in all actions in the nature of assumpsit and in all actions on a promissory note or other contract in writing that provides for an attorney's fee, there shall be taxed as attorneys' fees, to be paid by the losing party and to be included in the sum for which execution may issue, a fee that the court determines to be reasonable . . . provided that this amount shall not exceed twenty-five per cent of the judgment . . . .

The Hawaii Supreme Court has interpreted HRS § 607-14 as providing for an attorneys' fees award in three types of cases: “(1) all actions in the nature of assumpsit; (2) all actions on a promissory note; and (3) contracts in writing that provides for an attorney's fee.” Eastman v. McGowan, 86 Haw. 21, 31, 946 P.2d 1317, 1327 (1997). A court awarding attorneys' fees pursuant to HRS § 607-14

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must apportion the fees claimed between assumpsit and non-assumpsit claims, if practicable. See Blair v. Ing, 96 Haw. 327, 332, 31 P.3d 184, 189 (2001).

In deciding whether Defendants are entitled to fees under HRS § 607-14, the Court must examine whether: (1) Defendants are the prevailing parties; and (2) Plaintiffs' First Amended Complaint constituted an action “in the nature of assumpsit.”^[2]

I. Prevailing Party

HRS § 607-14 entitles a prevailing party to an award of attorneys' fees. This district court has previously recognized that litigating the merits of a claim is not necessary to obtain “prevailing party” status:

Under Hawaii law, a party may be deemed the “prevailing party” entitled to an award of attorneys' fees under HRS § 607-14 without successfully litigating the merits of the party's claim. Kona Enters.[, Inc. v. Estate of Bernice Pauahi Bishop, ], 229 F.3d [877, ] 887 [(9th Cir. 2000)] (citing Wong v. Takeuchi, 88 Hawai‘i 46, 49, 961 P.2d 611, 614 (1998)) (holding that a defendant was a “prevailing party” within the meaning of HRS § 607-14 even though the plaintiff's action was dismissed on summary judgment on laches or statute of limitation grounds). Under this standard, “[u]sually the litigant in whose favor judgment is rendered is the prevailing party . . . Thus, a dismissal of the action, whether on the merits or not, generally means that the defendant is the prevailing party.” Wong, 88 Hawai‘i at 49, 961 P.3d at 614 . . .; MFD Partners v. Murphy, 9 Haw.App. 509, 514, 850 P.2d 713, 716 (Ct. App. 1992) (citing 6 J. Moore et al., Moore's Federal Practice ¶ 54.70 (2d ed. 1992)) (“[i]n general, a party in whose favor judgment has been rendered by the district court is the

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prevailing party in that court . . . for the purposes of costs and attorneys' fees.”).

Sheehan v. Centex Homes, 853 F.Supp.3d 1031, 1039 (D. Haw. 2011).

The district court dismissed this action in its 07/09/2021 Order. ECF No. 192. The Clerk of Court subsequently entered judgment in this case pursuant to the district court's 11/23/2020 Order and 07/09/2021...