Pac. Commercial Servs., LLC v. Lvi Envtl. Servs., Inc., Civ. No. 16-00245 JMS-KJM
| Decision Date | 10 August 2018 |
| Docket Number | Civ. No. 16-00245 JMS-KJM |
| Parties | PACIFIC COMMERCIAL SERVICES, LLC, a Hawaii limited liability company, Plaintiff, v. LVI ENVIRONMENTAL SERVICES, INC., nka NORTHSTAR CONTRACTING GROUP, INC., ET AL., Defendants. |
| Court | U.S. District Court — District of Hawaii |
PACIFIC COMMERCIAL SERVICES, LLC, a Hawaii limited liability company, Plaintiff,
v.
LVI ENVIRONMENTAL SERVICES,
INC., nka NORTHSTAR CONTRACTING GROUP, INC., ET AL., Defendants.
Civ. No. 16-00245 JMS-KJM
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII
August 10, 2018
FINDINGS OF FACT AND CONCLUSIONS OF LAW
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff Pacific Commercial Services, LLC ("PCS") filed this action for breach of contract and unjust enrichment against Defendants LVI Environmental Services, Inc. ("LVI") and Northstar Recovery Services, Inc. ("NRS") (collectively, "Defendants")1 related to two projects: the first involves
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services relating to deactivation of the Hawaiian Electric Company's ("HECO") Honolulu Power Plant (the "HECO Project"); the second relates to a building that was destroyed by a 2012 fire at HECO's Kahuku Wind Farm (the "Kahuku Project"). Stip. Facts ¶ 7. In response, LVI filed a Counterclaim for reimbursement of certain payments. After substantial pre-trial litigation and an order resolving some issues at the summary-judgment stage, the court conducted a non-jury trial of the remaining issues on January 17-18, 2018, followed by post-trial briefing.
Pursuant to Federal Rule of Civil Procedure 52(a), the court issues these Findings of Fact ("Findings") and Conclusions of Law ("Conclusions"). To the extent any Findings may also be deemed to be Conclusions, they shall also be considered Conclusions. Similarly, to the extent any Conclusions may be deemed to be Findings, they shall be considered Findings. See In re Bubble Up Del., Inc., 684 F.2d 1259, 1262 (9th Cir. 1982) ("The fact that a court labels determinations 'Findings of Fact' does not make them so if they are in reality conclusions of law.") (citation omitted).
The court finds and concludes that Plaintiff has proven by a preponderance of the evidence that LVI breached provisions of the HECO Subcontract and the Kahuku Subcontracts (as those terms are described in the
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Findings) and that Plaintiff is entitled to damages and, separately, recovery for unjust enrichment. LVI failed to prove its Counterclaim by a preponderance of the evidence, and Plaintiff did not breach the HECO Subcontract first. Plaintiff is entitled to recover damages and restitution against Defendants in the amount of $767,053.14, plus prejudgment interest to be calculated based on a supplemental filing. After entry of Judgment, Plaintiff is also entitled to submit an application for reasonable attorneys' fees and costs in accordance with the court's local rules.
For convenience of the parties, the court begins by summarizing (without citations to the record) the key points, which are detailed and supported in the Findings and Conclusions that follow. The parties know the issues in dispute and the specific evidence in question, and thus will understand this summary even if a casual reader would not without first reviewing the Findings and Conclusions for context.
LVI breached the HECO Subcontract by violating its obligation to use PCS exclusively for waste transportation and disposal services for the HECO Project, such as by contracting directly with Waste Management for removal of asbestos containing material ("ACM") beginning in January of 2013. For this breach, PCS is entitled to damages of $699,044.74 for ACM work and $22,478.25
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for "other non-hazardous solid waste" (performed by Tajiri), along with prejudgment interest to be determined in a supplemental filing.
But PCS failed to prove its claim for $284,978.10 in damages related to 518,142 gallons of "oily water" removed by Unitek beginning in March 2013. The scope of such work was not contemplated in the HECO Subcontract and was the subject of a change order to the main LVI-HECO Prime Contract that resulted in a much lower unit price than in potentially-applicable line items in the HECO Subcontract (i.e., 69 cents per gallon paid to Unitek versus $1.50 per gallon in a line item in the HECO Subcontract). It is entirely speculative whether PCS would have been awarded such work under a change order (and if so, at what price) even if LVI had not breached the HECO Subcontract and LVI had offered responsibility for the oily-water task to PCS. Indeed, PCS (as a waste broker) probably would not have performed the task itself and would have lost money if it had done so at 69 cents per gallon.
On the Counterclaim (and in defense of Plaintiff's claims), Defendants failed to prove that PCS breached the HECO Subcontract first when PCS charged LVI $700 per drum instead of $700 per ton for the sludge disposal. The per-drum unit price falls within the "small font" provision of Line Item 4 of Exhibit A to the HECO Subcontract. In this regard, the court accepts and relies
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upon the testimony of PCS managing director Jingbo Chang, whose manner of testifying was credible and believable. On the other hand, the testimony of Defendants' witness, former LVI branch manager Michael Moore, was evasive and inconsistent as to key points in this particular area (such as whether he knew or should have known that PCS was charging $700 per drum), and thus the court finds against Defendants on this issue. Accordingly, Defendants' Counterclaim — seeking a refund regarding amounts LVI paid for 48 drums of waste — fails, as does their "first to breach" defense to Plaintiff's claim for breach of the HECO Subcontract. Defendants have also failed to prove that the HECO Subcontract was terminated by operation of the other asserted Terms and Conditions of the HECO Subcontract (i.e., note 2/paragraph 17, paragraph 4, or paragraph 10).
PCS is also entitled to $13,472.51 on its unjust enrichment claim related to the HECO Project for time and materials related to mercury component disposal (as set forth in Invoice 7864-06). It is also entitled to prejudgment interest on this amount at a per diem rate to be determined in a supplemental filing.
But PCS has not met its burden of proof as to the $25,000 it claimed under Invoice 7864-07 for "mobilization, demobilization, and waste documentation" from January 2012. These specific tasks were not included in the scope of the HECO Subcontract (or would have been included in the unit prices),
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and were not claimed until October 15, 2014 — well over two years after they would have been performed.
As for the Kahuku Project, PCS is entitled to recover for the unpaid invoices 8246-13, -14, -15, -18, and -19 (totaling $23,942.46) — invoices which are not excused by the "pay if paid" clauses. Prejudgment interest is also awarded as set forth in the table at page 58 of Plaintiff's Proposed Findings of Fact and Conclusions of Law, ECF No. 164 at 62 (and as incorporated in the Findings below).
Finally, PCS is entitled to $8,115.18 in demurrage charges outside the scope of the Kahuku Contracts, as set forth in Invoices 8246-16 and 8246-17. Prejudgment interest is awarded at the per diem rates set forth on pages 58 and 59 of Plaintiff's Proposed Findings and Conclusions, ECF No. 164 at 62-63 (and as incorporated in the Findings below).
The total amount of damages/restitution is summarized as follows:
| Basis of Award | Damages/Restitution |
| Count I (ACM work to Waste Management) | $ 699,044.74 |
| Count I (Non-hazardous solids to Tajiri) | $ 22,478.25 |
| Count II (Mercury component removal) | $ 13,472.51 |
| Count III (Kahuku project invoices) | $ 23,942.46 |
| Count IV (Demurrage charges) | $ 8,115.18 |
| Total | $ 767,053.14 |
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PCS filed this lawsuit against LVI in the Circuit Court of the First Circuit, State of Hawaii, on April 19, 2016. ECF No. 1-3. The Complaint alleged claims for breach of contract and unjust enrichment with respect to the HECO Project (Counts I and II) and the Kahuku Project (Counts III, IV, and V). Id. LVI removed the action to this Court on May 18, 2016, based on diversity of citizenship, 28 U.S.C. § 1332. ECF Nos. 1, 6.
On May 26, 2016, LVI and NRS filed their Answer to the Complaint, and LVI asserted a Counterclaim for a refund from PCS for alleged overpayments. ECF No. 8. And on June 9, 2016, PCS filed an Answer to the Counterclaim. ECF No. 12.
On February 21, 2017, PCS filed a Motion for Partial Summary Judgment on the liability of LVI for PCS's claims pertaining to the HECO Project, ECF No. 44, and Defendants filed two Motions for Partial Summary Judgment — one as to PCS's claims pertaining to the HECO Project, ECF No. 46, and one as to PCS's claims pertaining to the Kahuku Project, ECF No. 47. On April 27, 2017, PCS filed an Amended Motion for Partial Summary Judgment, ECF No. 80, and an Amended Complaint, ECF No. 82, to correct certain allegations in the original Complaint. The court heard the Motions on May 30, 2017. ECF No. 108.
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On June 26, 2017, the court entered an "Order: (1) Granting in Part and Denying in Part Plaintiff's Amended Motion for Partial Summary Judgment, ECF No. 80; (2) Denying Defendants' Motion for Partial Summary Judgment on Counts I and II of Complaint, ECF No. 46; and (3) Granting in Part and Denying in Part Defendants' Motion for Partial Summary Judgment on Counts III, IV, and V of Complaint, ECF No. 90" (the "MSJ Order"). See ECF No. 111; Stip. Facts ¶ 13; Pac. Commercial Servs., LLC v. LVI Envtl. Servs., Inc., 2017 WL 2817883 (D. Haw. June 26, 2017).
The MSJ Order determined as a matter of law that on or about April 23, 2012, LVI and PCS entered into the HECO Subcontract — a valid and enforceable subcontract for waste transportation and disposal services. Stip. Facts ¶ 13. It determined that the HECO Subcontract bound LVI to use PCS exclusively, and was not terminable at will by LVI. 2017 WL 2817883, at *6-7. It also determined that LVI breached the HECO Subcontract by diverting work away from PCS, but left for trial the duration of the breach and the amount of damages resulting from the breach. Id. at *7. The MSJ Order also did not resolve issues...
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