Nicol v. Kaanapali Golf Estates Cmty. Ass'n
| Decision Date | 03 September 2021 |
| Docket Number | CIV. 17-00251 JMS-KJM |
| Parties | TODD NICOL, ET AL., Plaintiffs, v. KAANAPALI GOLF ESTATES COMMUNITY ASSOCIATION, INC., ET AL., Defendants. |
| Court | U.S. District Court — District of Hawaii |
ORDER GRANTING PARTIAL SUMMARY JUDGMENT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 56(F)
This case stems from a bitter dispute over short-term vacations rentals at the Kaanapali Golf Estates (“KGE”), a luxury residential community on Maui. Essentially, Plaintiffs, KGE property owners, allege that Defendants, former board members of the Kaanapali Golf Estates Community Association (“KGECA”), acted wrongfully in their personal capacities when they attempted to enforce KGECA restrictions on vacation rentals of less than 180 days.[1] Here, pursuant to Federal Rule of Civil Procedure 56(f), the court considers whether to sua sponte grant summary judgment as to four of Plaintiffs' claims: (1) breach of contract; (2) breach of good faith and fair dealing; (3) violation of the federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1961 et seq.; and (4) violation of the State of Hawaii RICO Act, Hawaii Revised Statutes (“HRS”) Chapter 842.
After carefully considering the parties' arguments and the evidentiary record, the court determines that none of these claims can survive summary judgment. Accordingly, the court GRANTS summary judgment in favor of Defendants as to the breach of contract claim, breach of good faith and fair dealing claim, federal RICO claim, and state RICO claim.
Plaintiffs initiated this case in May 2017, alleging 16 separate claims against the KGECA and former KGECA board members in both their official and personal capacities. ECF No. 1. They alleged that the KGECA and its board had wrongfully drafted, put to a vote, enacted, and enforced a 2014 amendment to the KGECA Covenants, Conditions, and Restrictions (“CC&Rs”) to prohibit shortterm vacation rentals of less than 180 days (the “2014 Amendment”). Id. In November 2017, all claims against the KGECA and its board members in their official capacities were submitted to binding arbitration as required by the KGECA CC&Rs. ECF No. 29. The arbitration panel dismissed all claims against the KGECA and the board members in their official capacity. See ECF No. 36. Based on the results of arbitration, the parties agreed that the only claims that remained before this court were the 16 claims against the board members in their individual capacities. See ECF Nos. 29, 48.
On June 16, 2020, Defendants moved for summary judgment. ECF No. 50. In their Motion, however, Defendants did not address any of the individual claims against them, instead arguing that because the board members did not act with gross negligence, they could not be held personally liable for any claim. Id. at PageID # 1657. At no point during the summary judgment proceedings did either party attempt to address the viability of any specific claim or address any other ground for summary judgment. See ECF No. 66 at PageID # 2976-77.
On October 6, 2020, the court issued an Order granting partial summary judgment, ECF No. 66. The court limited its analysis to the specific issue raised by the Motion-whether Defendants acted with gross negligence. Id. at PageID # 2950. On that basis, the court granted summary judgment as to all allegations related to the voting process used to ratify the 2014 Amendment and related to drafting and recording that Amendment. Id. But the court denied the Motion with respect to Plaintiffs' allegations of “unwarranted and wrongful invasions of privacy, trespassing, and harassment” perpetrated by Defendants while enforcing short-term vacation rental rules. Id. at PageID # 2975 (quoting ECF No. 60 at PageID # 2419). Specifically, the court ruled that Plaintiffs' claims could survive to the extent they arose from allegations that:
Id. at PageID # 2975.
The court then ordered “the parties to confer in an effort to reach a stipulation as to which claims and defendants survive this Order.” Id. at PageID # 2977. On April 20, 2021, the parties submitted a Stipulation for Partial Dismissal of Claims, ECF No. 85, in which they agreed to dismiss 8 of the 16 claims.[2] Pursuant to the Stipulation, the following claims remained:
See ECF No. 85; see also ECF No. 92 at PageID # 3451.
In reviewing the Complaint, the evidence in the record, and the October 6, 2020 Summary Judgment Order ahead of trial, the court became concerned that many of the remaining claims could not realistically survive summary judgment. See ECF No. 92 at PageID # 3451. On June 22, 2021, the court held a hearing to discuss, among other things, the viability of Plaintiffs' remaining claims under a summary judgment standard. ECF No. 91. Prior to the hearing, the court advised the parties that they “should come prepared to address whether and why each of the remaining claims should proceed to trial, ” and warned that “[i]f the parties cannot articulate credible reasons why the claims should proceed, the court is inclined to consider summary judgment sua sponte pursuant to Federal Rule of Civil Procedure 56(f).” ECF No. 89 at PageID # 3442.
At the hearing, counsel for both parties were unprepared to realistically evaluate which claims should survive summary judgment. See ECF No. 92 at PageID # 3452. Thus, the court orally ruled that it would consider summary judgment sua sponte pursuant to Rule 56(f) with respect to five of the remaining claims:
ECF No. 92 at PageID # 3453.[3]
Pursuant to Rule 56(f), the court issued a “Rule 56(f) Notice, ” in which it identified the deficiencies in each of these claims and ordered the parties to submit briefing addressing whether each of these five claims should survive summary judgment. Id. at PageID # 3456. Plaintiffs submitted a brief in response on July 16, 2021, ECF No. 93. In that brief, Plaintiffs concede that their Condominium Property Act claim should be dismissed, id. at PageID # 3460 n.1, but assert that their claims for Breach of Contract, Breach of Good Faith and Fair Dealing, Federal RICO, and Hawaii RICO should survive. Defendants submitted their reply brief on July 23, 2021, ECF No. 95. This matter is decided without a hearing pursuant to Local Rule 7.1(c).
Federal Rule of Civil Procedure 56(f) governs a district court's ability to grant summary judgment sua sponte. It provides that “[a]fter giving notice and a reasonable time to respond, ” the court may “(1) grant summary judgment for a nonmovant; (2) grant the motion on grounds not raised by a party; or (3) consider summary judgment on its own after identifying for the parties material facts that may not be genuinely in dispute.” Fed.R.Civ.P. 56(f). “Sua sponte grants of summary judgment are only appropriate if the losing party has ‘reasonable notice that the sufficiency of his or her claim will be in issue.'” Greene v. Solano Cnty. Jail, 513 F.3d 982, 990 (9th Cir. 2008) (quoting Buckingham v. United States, 998 F.2d 735, 742 (9th Cir. 1993)).
Federal Rule of Civil Procedure 56(a) mandates summary judgment “against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); see also Broussard v. Univ. of Cal. at Berkeley, 192 F.3d 1252, 1258 (9th Cir. 1999). “An issue is ‘genuine' only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is ‘material' only if it could affect the outcome of the suit under the governing law.” In re Barboza, 545 F.3d 702, 707 (9th Cir. 2008) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). When considering the evidence on a motion for summary judgment, the court must draw all reasonable inferences on behalf of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); see also Posey v. Lake Pend Oreille Sch. Dist. No. 84, 546 F.3d 1121, 1126 (9th Cir. 2008) ( that “the evidence of [the nonmovant] is to be believed, and all justifiable inferences are to be drawn in his favor” (citations omitted)).
In its prior Order granting summary judgment, ECF No. 66, the court ruled that only certain of Plaintiffs' allegations survive-allegations that Defendants (1) entered Plaintiffs' homes unannounced and without permission; and (2) surveilled Plaintiffs and their families, including by covertly taking photographs of them in their homes. Thus, the only question currently before the court is whether these allegations state a claim against Defendants in their personal capacities for (1) breach of contract; (2) breach of good faith and fair dealing; (3) federal RICO; or (4) state RICO.[4]
The personal liability of board members is governed by HRS § 414D-149, which provides general...
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