Puana v. Kealoha

Decision Date28 February 2022
Docket NumberCiv. 16-00659 LEK-WRP
PartiesGERARD K. PUANA, RICKY L. HARTSELL, AS TRUSTEE OF THE FLORENCE M. PUANA TRUST; Plaintiffs, v. KATHERINE P. KEALOHA, LOUIS M. KEALOHA, MINH-HUNG NGUYEN, MINH-HUNG "BOBBY" NGUYEN; DANIEL SELLERS, NIALL SILVA, WALTER CALISTRO, DRU AKAGI, JOHN AND/OR JANE DOES 1-50, DEREK WAYNE HAHN, Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Court (Hawaii)

ORDER GRANTING IN PART AND DENYING IN PART THE MOTIONS TO DISMISS

LESLIE E. KOBAYASHI, UNITED STATES DISTRICT JUDGE

Before the Court are: (1) Defendant Derek Hahn's (“Hahn”) Motion to Dismiss (“Hahn Motion”), filed on August 16, 2021; (2) Defendant City and County of Honolulu's (“the City”) Motion to Dismiss Second Amended Complaint (ECF 207) (City Motion), filed on August 24, 2021; and (3) Defendant Minh-Hing “Bobby” Nguyen's (“Nguyen”) Motion to Dismiss Second Amended Complaint [Doc. 207] (“Nguyen Motion”), filed on September 23, 2021 (collectively “the Motions”). [Dkt. nos. 211, 216, 236.] Plaintiffs Gerard K. Puana (Puana) and Ricky L. Hartsell as Trustee of the Florence M. Puana Trust (collectively Plaintiffs) filed their memoranda in opposition to the City Motion and the Hahn Motion on September 24, 2021 and their memorandum in opposition to the Nguyen Motion on October 29 2021. [Dkt. nos. 238, [1] 241, 263.] Hahn and the City filed their respective replies on October 1, 2021 and October 8, 2021. [Dkt. nos. 251, 256.] Nguyen did not file a reply. The Hahn Motion and the City Motion came on for hearing on October 15 2021. See Minutes, filed 10/15/21 (dkt. no. 260). The Court found the Nguyen Motion suitable for disposition without a hearing pursuant to Rule LR7.1(c) of the Local Rules of Practice for the United States District Court for the District of Hawaii (“Local Rules”). See Entering Order, filed 11/9/21 (dkt. no. 264). The Motions are hereby granted in part and denied in part for the reasons set forth below.

BACKGROUND

According to Plaintiffs, around January 2007, Katherine Kealoha (Katherine), a Deputy Prosecuting Attorney for the City at the time, approached Puana with an investment opportunity. [Second Amended Complaint for Damages (“Second Amended Complaint”), filed 8/1/21 (dkt no. 207), at ¶ 19.] Puana is Katherine's uncle. Between February 2007 and October 2008, Puana invested with Katherine. In December 2007, Puana asked Katherine if his investments could be used as a down payment to purchase a condominium (“the Greenwood Condo”), but she told him the amount invested was not sufficient for a down payment. In January 2009, Katherine asked Puana to talk to Florence Puana (Florence), Puana's mother and Katherine's paternal grandmother, about seeking a reverse mortgage on Florence's house to fund the Greenwood Condo purchase and allow Katherine and her husband Louis Kealoha (“Louis” and collectively “the Kealohas”), who served as the Chief of Police for the Honolulu Police Department (“HPD”) at the time, to consolidate their personal bills and refinance a property. In the same month, Katherine obtained power of attorney from Florence and became the Trustee of the Gerard K. Puana Revocable Trust (“the Puana Trust”), in which she allegedly prepared and executed a fraudulent trust document. The document effectuating the Puana Trust was notarized by a person named Allison Lee-Wong. Plaintiffs allege Katherine used the name Allison Lee-Wong as an alter ego to facilitate fraudulent activities. Plaintiffs allege Puana never signed the Puana Trust document, and it contained a list of assets that have never belonged to Puana. [Id. at ¶¶ 19-31.]

In October 2009, the reverse mortgage was recorded and the funds, approximately $513, 474, were deposited into an account controlled by Katherine. [Id. at ¶ 32.] In the same month, the Greenwood Condo deed, in Katherine's name, was recorded. Katherine did not pay off the reverse mortgage as she promised, and Florence lost her house as a result. Plaintiffs allege the Kealohas spent the funds from the reverse mortgage on their lavish and extravagant lifestyle. [Id. at ¶¶ 32, 34-35.]

In 2011, Puana became suspicious of Katherine and asked her multiple times to return to him the money he invested, and she refused. Subsequently, the Kealohas began a campaign to falsely implicate Puana in criminal activity. The campaign included Louis directing HPD Criminal Intelligence Unit (“CIU”) officers to surveil Puana twenty-four hours a day. On June 27, 2011, Puana was arrested for unauthorized entry into a dwelling (“UED”) after stepping inside his neighbor's house during an argument over a parking spot. Plaintiffs allege that, once Puana was arrested, Katherine unlawfully entered his residence with Nguyen and Defendant Daniel Sellers (Sellers), who were CIU officers. Katherine seized $15, 000 in cash and other items. On June 30, 2011, Puana was charged with UED in a case prosecuted by the office where Katherine was then employed as a Senior Deputy Prosecuting Attorney. Puana was incarcerated for seventy-two days. During that time, Katherine told family members his arrest was drug related and they should not post bail or assist him because she was handling the situation. [Id. at ¶¶ 48-56.]

Puana pleaded no contest to the UED charge, and he received a deferred acceptance of his plea. [Id. at ¶ 64.] Around November 2013, Katherine directed personnel at the prosecutor's office to oppose Puana's motion to dismiss his deferred acceptance of no contest plea and to argue the court should convert the deferred acceptance of no contest into a felony conviction. [Id. at ¶ 67.]

In March 2013, Plaintiffs sued Katherine in state court for fraud and breach of fiduciary duty, amongst other claims relating to the 2009 reverse mortgage. Katherine filed a counterclaim against Florence and Puana. Plaintiffs allege Katherine lied and committed perjury throughout that case. On February 12, 2015, the jury returned a verdict in favor of Katherine and awarded her $658, 787 in damages on her counterclaim. [Id. at ¶¶ 69-78.]

In June 2013, the Kealohas continued their campaign to discredit Puana by staging the theft of their personal mailbox to frame Puana. [Id. at ¶ 85.] Plaintiffs allege Katherine, Louis, Nguyen, Sellers, and Hahn (who was also an HPD officer) made false statements, fabricated evidence, and falsified reports to implicate Puana in the theft of the mailbox. Specifically, Plaintiffs allege: Nguyen and Louis falsely identified Puana as the person who stole the mailbox; Katherine reported to the police that she could identify Puana from surveillance video as the person stealing the mailbox; and Puana was followed and investigated by police officers, including Nguyen, Sellers, Hanh, Defendant Walter Calistro (Calistro), Defendant Drew Akagi (Akagi), and Defendant Niall Silva (Silva). Puana was arrested and charged for destroying a letter box or mail and indicted by a federal grand jury. [Id. at ¶¶ 87-96.] Plaintiffs allege that, on December 4, 2014, Louis testified at Puana's federal criminal trial, and he knowingly and deliberately testified falsely and revealed prejudicial information before the jury, which caused a mistrial. On December 15, 2014, the federal charge against Gerard Puana was dismissed with prejudice. [Id. at ¶¶ 99-100.]

Plaintiffs allege that, in 2015 and 2016, the Honolulu Police Commission (Police Commission) refused to open its own investigation into Louis's conduct related to the December 2014 mistrial. On December 19, 2016, Louis received a target letter from the United States Attorney's Office informing him that he was the target of a federal grand jury corruption investigation. He was subsequently placed on paid leave. [Id. at ¶¶ 104-06.] Louis received a $250, 000 severance and allowed to resign in “good standing.” [Id. at ¶¶ 107, 110.]

Plaintiffs also allege that, in 2014 and 2015, the City and County of Honolulu Ethics Commission's (Ethics Commission) Executive Director Charles Totto (“Totto”) had seventeen separate investigations open regarding Louis and Katherine's misuse of City resources, conflicts of interest, and abuse of their positions. [Id. at ¶¶ 114-117.] Plaintiffs allege the Ethics Commission, Prosecuting Attorney Keith Kaneshiro (“Kaneshiro”), and others frustrated the investigations, which ultimately led to Totto's removal from investigating Louis and Katherine. See id. at ¶¶ 118-23.

Plaintiffs further allege that, in 2016, Kaneshiro made public statements in support of Katherine, criticized the federal grand jury investigation into the crimes she was ultimately convicted of, and expressed his belief in Katherine's innocence. [Id. at ¶ 136.]

On December 16, 2016, Silva pled guilty to a felony. He was originally charged with conspiring to obstruct justice for his false statements, false testimony, and false reports regarding the handling of the surveillance video which purportedly showed Puana stealing the Kealohas' mailbox. As charged in the felony, Silva conspired with Katherine, Nguyen, Sellers, and Louis. [Id. at ¶¶ 137-38.]

On October 19, 2017, Katherine, Louis, Hahn, and Nguyen were indicted by a federal grand jury and charged with conspiring to violate Plaintiffs' constitutional rights under color of law, conspiring to alter, destroy, or conceal evidence, conspiring to make false statements, conspiring to obstruct justice, bank fraud, and identity theft. [Id. at ¶ 139.] In March 2018, Katherine, Louis, Hahn, and Nguyen were charged in a First Superseding Indictment. On June 27, 2019, a jury found Katherine, Louis, Hahn, and Nguyen guilty of: conspiring to obstruct justice regarding the investigation and prosecution of Puana for the purported stolen mailbox; obstructing and impeding Puana's criminal trial; and obstructing and impeding the...

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