Jou v. Adalian
| Decision Date | 01 September 2016 |
| Docket Number | CIV. NO. 15-00155 JMS-KJM |
| Parties | EMERSON M.F. JOU, M.D., Plaintiff, v. GREGORY M. ADALIAN, Defendant. |
| Court | U.S. District Court — District of Hawaii |
This long-running, procedurally-complex dispute concerns two separate suits between Plaintiff Emerson Jou ("Plaintiff" or "Jou") and Defendant Gregory Adalian ("Defendant" or "Adalian"). The court refers to the prior suit, Jou v. Adalian, Civ. No. 09-00226 JMS-KJM (D. Haw.) (Judgment entered Dec. 23, 2010) as "Jou I," and the present suit, Jou v. Adalian, Civ. No. 15-00155 JMS-KJM (D. Haw.) (Filed April 29, 2015) as "Jou II."
Adalian moves under Federal Rule of Civil Procedure 12(c) for judgment on the pleadings on all claims in Jou's amended complaint filed on November 13, 2015. Jou II, Doc. No. 41.1 Adalian primarily argues that this suit (Jou II) is barred by doctrines of prior adjudication (i.e., res judicata/collateral estoppel), given extensive pre- and post-judgment proceedings in Jou I. On the other hand, Jou contends that this suit was properly brought as an independent action for damages based on a fraudulently-induced settlement agreement in Jou I.2 Based on the following, the Motion is GRANTED. Jou, however, may file a Second Amended Complaint as to Count Three.
Although this suit was filed on April 29, 2015, this protracted dispute between Jou and Adalian dates back to at least May 19, 2009, when Jou I was filed. The court reviewed and analyzed much of the relevant history of Jou I in its February 5, 2015 "Order (1) Denying Plaintiff's Motion for an Order for Arrest and Incarceration of [Adalian] . . . and (2) Vacating Orders of May 2, 2014 . . . and June 5, 2014" ("February 5, 2015 Order"). Jou I, Doc. No. 161; Jou II, Doc. No. 41-4 (published at Jou v. Adalian, 2015 WL 477268 (D. Haw. Feb. 5, 2015)). And because it asserts a res judicata/collateral estoppel defense, Adalian's Motion requires the court once again to examine the details of Jou I carefully. The courtthus draws upon its February 5, 2015 Order to begin explaining the background for this Motion, and provides additional relevant details as necessary to analyze whether this suit is barred by principles of prior adjudication.
Jou filed his initial complaint in Jou I on May 19, 2009, seeking payment of promissory notes (the "Notes") issued by Adalian in 1991 and 1992, asserting three claims regarding the Notes. See Jou I, Doc. No. 1. As detailed in the First Amended Complaint in Jou I, the Notes were related to a 1989 "SCV Limited Partnership," with Adalian as general partner, and Jou as one of several limited partners. Jou I, Doc. Nos. 52, 52-4. The First Amended Complaint re-asserted the three claims related to payment of the Notes, and added five claims related to the SCV Limited Partnership. Jou I, Doc. No. 52.
On June 28, 2010, the parties placed a settlement of Jou I on the record before U.S. Magistrate Judge Kevin S.C. Chang. Jou I, Doc. No. 63. The case, however, remained open -- a dismissal from the parties was due on September 30, 2010. Id. Specifically, in a July 6, 2010 written settlement agreement ("Settlement Agreement"), Adalian agreed to pay Jou $180,000, with an initial payment of $25,000, and a second payment of $155,000 due no later than September 30, 2010. Jou I, Doc. No. 69-3 at 2; Jou II, Doc. No. 55-2 at 2. TheSettlement Agreement concerned only the Notes; it did not release claims or defenses regarding the SCV Limited Partnership. Jou II, Doc. No. 55-2 at 4.3 To that end, the Settlement Agreement required Jou to file a second amended complaint that asserted only the three claims related to the Notes. Id. at 2.
Accordingly, on September 24, 2010, Jou filed by stipulation a second amended complaint that was identical to the initial complaint. Jou I, Doc. No. 66.
As discussed in the February 5, 2015 Order, the Settlement Agreement did not involve any injunctive or declaratory relief -- it only concerned payment of money. Regarding "jurisdiction and enforcement," the Settlement Agreement provided Jou II, Doc. No. 55-2 at 6.
Adalian paid the first installment of $25,000, but did not pay the remaining $155,000 by September 30, 2010. Jou I, Doc. No. 88 at 2. Given Adalian's failure to pay, Jou filed a "Motion to Enforce Settlement Agreement and for Damages, Attorney's Fees, Costs and Judgment" ("Motion to Enforce") on October 6, 2010. Jou I, Doc. No. 69. In his Motion to Enforce, Jou argued, among other things, that Adalian had sold real estate in Pennsylvania in June 2010 for $693,900, which he could have used to make the $155,000 payment. Id. at 4. The Motion to Enforce argued that the sale "has the earmarks of a fraudulent conveyance to avoid paying Dr. Jou as agreed," and sought "specific enforcement" of the Settlement Agreement as well as "damages for failure to comply with [the] settlement agreement." Id. at 6 ().
Similarly, in his November 1, 2010 Reply in support of the Motion to Enforce, Jou emphasized that Adalian had sold the Pennsylvania property before he entered the Settlement Agreement thus "remov[ing] a significant asset from the reach of the judgment." Jou I, Doc. No. 76 at 4. Jou asked that Adalian be held in contempt, and again sought damages for Adalian's breach of the Settlement Agreement. Id. at 7-8. Specifically, Jou claimed that he "suffered a loss of $155,000 as a result of the breach, plus expenses and loss of interest." Id. at 8. And he argued -- as he has claimed in this action (Jou II) -- that Adalian committed fraud in procuring the Settlement Agreement, which Adalian did not intend to comply with when he signed it:
Plaintiff gives notice that he specifically reserves fraud, fraudulent conveyance and other claims against Defendant; however, this court has inherent power to sanction Mr. Adalian and impose the equivalent of punitive damages for fraudulent settlement conduct, inter alia, Defendant, at the time he signed the Settlement Agreement, did not intend to pay Dr. Jou. Instead, Mr. Adalian was buying time, so that he could transfer property out of the reach of any judgment. Mr. Adalian tacitly admits this transfer. This was a fraudulent conveyance.
Id. at 7-8. He continued:
In this connection, the Court is empowered to decree specific performance; that is, to order Mr. Adalian to pay the full amount within a short period of time (4 or 5 hours). Dr. Jou also reserves his right to sue independently for fraud and/or specific performance. . . . In the event Dr. Jou is left, as Mr. Adalian proposes, with a judgment, prejudgment interest should be awarded from the date of breach.
On November 19, 2010, Magistrate Judge Chang issued a Findings and Recommendation to Grant in Part and Deny in Part the Motion to Enforce ("November 19, 2010 F&R"). Jou I, Doc. No. 80. Given a binding Settlement Agreement, the November 19, 2010 F&R recommended (1) ordering Adalian to pay the $155,000 balance to Jou within one week from when this court took final action on the November 19, 2010 F&R (2) entry of final judgment of $155,000 in favor of Jou and against Adalian; (3) denial of Jou's requests for civil contempt, damages and sanctions; and (4) an award of fees and costs reasonably incurred in bringing the Motion to Enforce. Id. at 2-3. The November 19, 2010 F&R cautioned Adalian "that his failure to tender the balance of the settlement amount pursuant to a court order may result in a finding of civil contempt as well as other sanctions." Id. at 3. In Supplemental Findings, Magistrate Judge Chang recommended an additional award of $6,365.36 in fees and costs, also to be paidwithin one week from this court's final action on the November 19, 2010 F&R. Jou I, Doc. No. 81.
Both parties objected, at least in part, to the November 19, 2010 F&R. Among other arguments, Jou contended that the F&R should be modified "to authorize execution on the transferred asset [i.e., the Pennsylvania real property]." Jou I, Doc. 86 at 7. He argued:
And in responding to Adalian's objection, Jou argued that a settlement could be enforced as he had done, relying on Hawaii caselaw that provides options for a party's failure to comply with a settlement agreement:
To continue reading
Request your trial