Lindner v. Meadow Gold Dairies, Inc.
| Decision Date | 09 August 2007 |
| Docket Number | Civil No. 06-00394 JMS/LEK. |
| Parties | Jeffrey S. LINDNER, Plaintiff, v. MEADOW GOLD DAIRIES, INC., Defendant, Third-Party Plaintiff, and Counter Defendant, v. Southern Food Group, Inc., Third-Party Defendant and Counter Claimant. |
| Court | U.S. District Court — District of Hawaii |
Kenneth R. Kupchak, Mark M. Murakami, Damon Key Leong Kupchak Hastert, Honolulu, HI, for Plaintiff.
Bert T. Kobayashi, Jr., Jonathan A. Kobayashi, Joseph A. Stewart, Kobayashi Sugita & Goda, Honolulu, HI, for Defendant, Third-Party Plaintiff.
C. Michael Heihre, Dennis W. Chong Kee, Jerry C. Ling, Cades Schutte, Honolulu, HI, for Third-Party Defendant and Counter Claimant.
ORDER GRANTING PLAINTIFF'S MOTION FOR PARTIAL SUMMARY JUDGMENT AND DENYING THIRD-PARTY DEFENDANT'S COUNTERMOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COUNT III (LIQUIDATED DAMAGES)
Plaintiff Jeffrey Lindner ("Lindner") and Third-Party Defendant Southern Food Group, L.P. ("SFG") have moved for partial summary judgment as to Lindner's claim for liquidated damages, asserted in Count III of his Complaint. Lindner argues that the plain language of the Lease entitles him to a lump sum liquidated damages cash payment. The court agrees and rejects SFG's arguments that performance under the Lease was frustrated and that the allegedly insufficient notice by Lindner relieved it of any contractual obligation to pay liquidated damages. The court therefore GRANTS Lindner's Motion for Partial Summary Judgment and DENIES SFG's Countermotion for Partial Summary Judgment as to Count III of the Complaint.
This is the second round of motions for partial summary judgment in this case. Additional background was set forth in the court's first Order, Lindner v. Meadow Gold Dairies, Inc., 2007 WL 1430373 .
Lindner is the fee simple owner of real property leased to Meadow Gold Dairies, Inc. ("Meadow Gold") under a 1988 Lease ("Lease").1 On May 28, 1997, Meadow Gold exercised its renewal options, extending the Lease until September 30, 2013. A few months later, Meadow Gold assigned its interests and obligations under the Lease to SFG.2
Meadow Gold leased the land, located on the island of Kauai, to operate a dairy farm ("Moloa' a Dairy Farm"). The downstream parcel was originally occupied by the Papa`a Bay Ranch, a working ranch. On January 15, 1998, a little over four months before Meadow Gold exercised its right to a fifteen-year renewal of the Lease, the downstream parcel was sold to Mandalay Properties Hawaii, Inc. ("Mandalay") and developed into the "Tara Plantation," a 15,000 square foot, 6 bedroom, 8.5 bath, two-living room home with two separate 4,000 square foot guest bungalows, a spring-fed swimming pool, and an on-site yoga studio.3 The Tara Plantation was originally developed as one of the personal homes of Peter Guber ("Guber"), principal of Mandalay and current chairman and owner of film production company Mandalay Entertainment.
The relationship between neighbors Guber and Meadow Gold quickly soured. In an April 1999 meeting with representatives of SFG, Guber stated that he planned to spend millions of dollars developing Tara Plantation and that the Moloa`a Dairy Farm (then still in operation upstream) "was a good farm, but in a bad location." Michael Koenig ("Koenig"), the Vice President of Operations of SFG, understood these statements to mean that the dairy farming operations were too close to Guber's property. SFG's Mot. for Partial Summ. J., Koenig Decl. ¶ 4. During the meeting, Guber allegedly emphasized his contacts with environmental organizations and national media outlets. Id. ¶ 3.
By letter dated April 23, 1999, Mandalay complained of raw sewage and contamination of its downstream land and water and asserted Meadow Gold's liability. See Pl's. Mot. for Partial Summ. J. Ex. 13. Guber also filed a complaint regarding manure on the Moloa`a Dairy Farm with the Hawaii Department of Health and sent Lindner "a threatening letter asking [Lindner] to pay damages." Pl's. Reply, Lindner Decl. ¶¶ 20, 22. Lindner agreed to cover some of Guber's costs in retaining consultant Brad Finney, Pl's. Reply, Lindner Decl. ¶ 49.
On February 10, 2000, Mandalay provided notice that it intended to file a "citizen's lawsuit" against Meadow Gold on the grounds that the operation of the Moloa`a Dairy Farm violated the Clean Water Act, 33 U.S.C. §§ 1251, et seq. ("Clean Water Act"). SFG's Mot. for Partial Summ. J. Ex. J. Specifically, Mandalay asserted that the Moloa`a Dairy Farm was a "point source" under 33 U.S.C. § 1362(14) because it was a "concentrated animal feeding operation" as defined by 40 C.F.R. § 122.24(b)(3). Mandalay alleged that Meadow Gold's operations at the Moloa`a Dairy Farm violated the provisions of the Clean Water Act by discharging pollutants in contravention of the "zero discharge performance" standard set forth in 40 C.F.R. § 412.15;4 failing to design and construct a facility for all areas of the land parcel which could contain wastewater and runoff water from a catastrophic rainfall as required by 40 C.F.R. § 412.15(b);5 and failing to obtain a National Pollution Discharge Elimination System ("NPDES") permit under 40 C.F.R. § 122.1(b). Mandalay attested that it would seek the maximum civil penalty of $25,000 per day per violation. SFG's Mot. for Partial Summ. J. Ex. J.
Following receipt of Mandalay's intent to sue letter, SFG contacted the Hawaii Department of Health (which administers the Clean Water Act in Hawaii) to inquire whether Meadow Gold was required to maintain facilities on all of its dairy fields — and not just the Moloa`a Dairy plant itself — which would be able to handle a continuous and catastrophic rainfall. The Hawaii Department of Health was not able to give SFG a firm opinion on the matter. SFG's Mot. for Partial Summ. J., Matsunaga Decl. ¶ 3.
Shortly thereafter, Meadow Gold announced the closure of the Moloa`a Dairy Farm, explaining in a press release that "the decision to close the farm was driven by the realities of market and regulatory forces that have changed over the years." SFG's Mot. for Partial Summ. J. Ex. P.
Meadow Gold terminated the Lease effective December 31, 2000,6 almost thirteen years early. In several letters to Lindner, SFG requested that Lindner waive the liquidated damages provision contained in the Lease. See Pl's. Mot. for Partial Summ. J. Exs. 5 & 6; SFG's Mot. for Summ. J. Ex. I. The liquidated damages provision provides:
Lessee may terminate this Lease prior to the expiration of the term upon giving written notice to Lessor of its intent to terminate six (6) months prior to the effective date of such termination, together with a lump sum cash payment representing the present value (capitalized at the then prevailing Bank of Hawaii prime rate charged to its most responsible commercial customers) of the minimum rent due for the remainder of the term of the Lease, but not more than the present value of five (5) years of rent. The obligation to pay the present value of five (5) years rent shall apply during the initial ten (10) year term as well as during the three (3) five (5) year option periods described below, including Lessee's failure to exercise the option on any five (5) year option period. The foregoing payment shall constitute liquidated damages and not a penalty since the damages to be suffered by Lessor would be difficult to determine if Lessee were to terminate the Lease or fail to exercise any five (5) year option right.
Pl's. Mot. for Partial Summ. J. Ex. 1, Art. I § 2 (hereinafter "Lease"). Meadow Gold remained responsible for the payment of liquidated damages notwithstanding its assignment of the Lease to SFG. See Lease Art. IV § 9 (). Neither Meadow Gold nor SFG paid Lindner a lump sum liquidated damages cash payment. See Pl's. Mot. for Partial Summ. J., Lindner Decl. ¶ 8.
Lindner filed suit on July 19, 2006, seeking in Count III a lump sum cash liquidated damages payment. Meadow Gold answered Lindner's Complaint on November 16, 2006. On December 1, 2006, Meadow Gold filed a Third-Party Complaint against SFG. On January 8, 2007, SFG answered Meadow Gold's Third-Party Complaint and filed a Counterclaim against Meadow Gold.
On February 7, 2007, SFG filed a Motion for Partial Summary Judgment as to Counts I and II of Lindner's Complaint, which Meadow Gold joined. This court granted in part and denied in part SFG's Motion for Partial Summary Judgment, finding that some, but not all of Lindner's claims for additional rent were time-barred under Hawaii law. The court also ordered the parties into arbitration as to the remaining claims for additional rent due. See generally Lindner v. Meadow Gold Dairies, Inc., 2007 WL 1430373 .
Lindner filed a Motion for Partial Summary Judgment as to his claim for liquidated damages contained in Count III on May 2, 2007. SFG filed a Countermotion for Partial Summary Judgment as to Count III on May 31, 2007, which Meadow Gold joined. Lindner filed his Reply on June 7, 2007; SFG filed its Reply on June 13, 2007. The court heard oral arguments on June 18, 2007.
A party is entitled to summary judgment where there is no genuine issue of material fact. Fed.R.Civ.P. 56(c). When reviewing a motion for summary judgment, the court construes the evidence — and any dispute regarding the existence of facts — in favor of the party opposing the motion. Snead v. Metro. Prop. & Cas. Ins. Co., 237 F.3d 1080, 1086 (9th Cir. 2001). "One of the principal purposes of the summary judgment rule is to isolate and dispose of factually...
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Lindner v. Meadow Gold Dairies, Inc.
...in this case. See Lindner v. Meadow Gold Dairies, Inc., 2007 WL 1430373 (D.Haw. May 14, 2007); Lindner v. Meadow Gold Dairies, Inc., 515 F.Supp.2d 1154, 2007 WL 2320669 (August 9, 2007): Order Granting Pl's. Mot. for Partial Summ. J. and Denying Def's. Countermotion for Partial Summ. J. as ......