Preez v. Banis

RONI DU PREEZ, Plaintiff, v. RICK BANIS, DON CARANO, FRED SCARPELLO, JOHN MACKALL, ET AL., Defendants.

CIVIL NO. 14-00171 LEK-RLP

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII

January 30, 2015

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS FIRST AMENDED COMPLAINT [DOC. 38]

On August 4, 2014, Defendants Rick Banis, Don Carano, Fred Scarpello, John Mackall, individually and as Trustees of the Estate of William Pennington ("the Trustee Defendants"), Kent Green, Racquel Bridgewater,¹ WNP Enterprises, Inc., and Western Equities, LLC (all collectively, "Defendants") filed their Motion to Dismiss First Amended Complaint [Doc. 38]. [Dkt. no. 42.] Pro se Plaintiff Roni Du Preez ("Plaintiff") filed her memorandum in opposition on October 9, 2014, and Defendants filed their reply on October 20, 2014. [Dkt. nos. 60, 64.] Plaintiff also filed a surreply on October 27, 2014. [Dkt. no. 66.] On October 24, 2014, the Court issued an entering order ("EO") finding this matter suitable for disposition without a hearingpursuant to Rule LR7.2(d) of the Local Rules of Practice of the United States District Court for the District of Hawai`i ("Local Rules"). [Dkt. no. 65.] On November 26, 2014, this Court issued an EO directing Defendants to file the trust documents relevant to the Motion, and Defendants did so on December 10, 2014. [Dkt. nos. 68, 73.] After careful consideration of the Motion, supporting and opposing memoranda, and the relevant legal authority, Defendants' Motion is HEREBY GRANTED IN PART AND DENIED IN PART for the reasons set forth below.

BACKGROUND

In January 2005, William Pennington hired Plaintiff to be the "Manager/Housekeeper/Caretaker" of his residence located at 4340 Melianani Drive in Wailea, Hawai`i ("the Pennington Residence"). [First Amended Complaint, filed 7/21/14 (dkt. no. 38), at ¶ 6.<sup>2</sup>] The duties of the position included attending to "Mr. Pennington and/or Mr. Pennington's wife and/or guests and/or entourage" when they were staying at the Pennington Residence, as well as maintaining the residence and the Penningtons' vehicles. [Id. at ¶¶ 9, 11.] Plaintiff acknowledges that: Mr. Pennington was from Reno, Nevada; he was not a Hawai`i resident; and he usedthe Property as a vacation property. [Id. at ¶¶ 6-7.] However, she alleges that Mr. Pennington and his wife "had the intention to spend most of their time in Hawaii." [Id. at ¶ 7.]

Plaintiff alleges that, during her "hiring meeting," Mr. Pennington "made an express contractual offer to the Plaintiff, of life time employment and compensation (along with other benefits), until her death or voluntary decision to retire." [Id. at ¶ 9.] Mr. Pennington allegedly promised Plaintiff that she would receive a monthly salary of $2,500 for the rest of her life or "until her voluntary retirement." [Id. at ¶ 14.] Plaintiff believed this to mean that, if Mr. Pennington died, "she would receive EITHER a lump sum equivalent to her yearly income until retirement age of sixty five (65) OR an annuity of $2,500 for her life or until retirement." [Id. at ¶ 19 (some emphases omitted).] According to Plaintiff, Mr. Pennington made "the specific promise: 'stick with me and I will take care of you for life.'" [Id. at ¶ 18.] In addition, because Mr. Pennington's wife was to inherit the Pennington Residence after Mr. Pennington's death, Plaintiff expected to continue her employment at the residence after Mr. Pennington's death. [Id. at ¶ 19.]

According to Plaintiff, Defendant Kent Green, who was either Western's chief executive officer ("CEO") or chief financial officer ("CFO") at the time, was present at the hiringmeeting and took notes memorializing "the statements and promises" that Mr. Pennington made to Plaintiff. [Id. at ¶ 9.] She asserts that she accepted the terms Mr. Pennington promised by shaking his hand, and the hands of the other persons present. She alleges that the promises he made were also made "by extension" by "those present representing the Pennington corporate interests." [Id. at ¶ 18.]

Plaintiff alleges that, during her employment at the Pennington Residence, Mr. Pennington reaffirmed his promises to her with statements like, "don't do anything to get fired and I will take care of you for life" and "don't worry, you are taken care of." [Id. at ¶ 20.] Plaintiff alleges that there were at least five other employees to whom Mr. Pennington made similar promises, two of whom continue to be employed by the Trustee Defendants. [Id. at ¶ 21.]

Mr. Pennington died on May 15, 2011. [Id. at ¶ 23.] The Pennington Residence was sold in March 2012, and Defendants terminated Plaintiff's employment at some point thereafter. Plaintiff states that Defendants did not provide her with a severance package and they refused, without cause, to provide her with an employment reference. [Id. at ¶ 25.] Plaintiff alleges that, as a result of Defendants' actions, she has been unable to secure other employment, has been unable to collect unemployment benefits, and suffered emotional distress. [Id.]

The First Amended Complaint alleges the following claims against all Defendants: breach of implied-in-fact contract ("Count I"); wrongful termination in violation of public policy ("Count II"); breach of the covenant of good faith and fair dealing ("Count III"); interference with prospective economic advantage ("Count IV"); "promissory fraud" ("Count V"); and promissory estoppel ("Count VI"). Plaintiff prays for: compensatory and/or consequential damages; specific performance of payment of the income and benefits she would have received until age sixty-five and the pension that she would have received upon retirement; $250,000 in damages for emotional distress; $5,625,500 in punitive or exemplary damages; attorneys' fees and costs; interest; and any other appropriate relief.

In the instant Motion, Defendants urge this Court to dismiss all of Plaintiff's claims with prejudice pursuant to Fed. Civ. P. 12(b)(6). In the alternative, Defendants argue that this Court should grant summary judgment in their favor as to all claims.

DISCUSSION

I. Choice of Law

This Court must first address Defendants' argument that Nevada law applies to Plaintiff's claims.

This Court has ruled that, at the time of removal, there was diversity jurisdiction over the instant case. [OrderDenying Pltf.'s Motion to Remand and Pltf.'s Motion to Strike Defs.' Opp. to Remand, filed 6/25/14 (dkt. no. 28) ("6/25/14 Order"), at 10.³] "A federal court sitting in diversity must apply the forum state's choice of law rules." Jorgensen v. Cassiday, 320 F.3d 906, 913 (9th Cir. 2003). The Hawai`i Supreme Court

has "moved away from the traditional and rigid conflict-of-laws rules in favor of the modern trend towards a more flexible approach looking to the state with the most significant relationship to the parties and subject matter." Lewis v. Lewis, 69 Haw. 497, 499, 748 P.2d 1362, 1365 (1988) (citing Peters [v. Peters], [63 Haw. 653, 660, 634 P.2d 586, 591 (1981)]). This flexible approach places "[p]rimary emphasis . . . on deciding which state would have the strongest interest in seeing its laws applied to the particular case." Id. Hence, this court has said that the interests of the states and applicable public policy reasons should determine whether Hawai`i law or another state's law should apply. SeePeters, 63 Haw. at 667-68, 634 P.2d at 595. "The preferred analysis, [then] in our opinion, would be an assessment of the interests and policy factors involved with a purpose of arriving at a desirable result in each situation." Id. at 664, 634 P.2d at 593.

Mikelson v. United Servs. Auto. Ass'n, 107 Hawai`i 192, 198, 111 P.3d 601, 607 (2005) (some alterations in Mikelson). Defendants argue that Nevada law applies because it "has the most significant relationship to the parties and subject matter here." [Mem. in Supp. of Motion at 10.]

A. Choice-of-Law Provision

In addition, as part of the choice of law analysis, this Court will consider any choice-of-law provisions in the relevant trust documents. Hawai`i courts have recognized that, as a general rule, "a settlor's choice of law regarding trust administration is enforceable." In re Thomas H. Gentry Revocable Trust, Nos. 29727, 29728, 2013 WL 376083, at *9 & n.8 (Hawai`i Ct. App. Jan. 31, 2013) (citations omitted). Defendants have submitted the February 24, 2005 Restatement of "The William N. Pennington Separate Property Trust" ("Pennington Trust Restatement"), and the "Will of William N. Pennington," dated February 24, 2005 ("Pennington Will"). [Defs.' Submission of Trust Documents in Supp. of Motion, Decl. of David J. Morandi, Exhs. B, C.] The Pennington Will gives Mr. Pennington's entire estate to the Pennington Trust. [Pennington Will at 2.]

Defendants acknowledge that "[r]eferences to applicable state law in the [Pennington Trust Restatement] appear only in Article 11." [Defs.' Submission of Trust Documents at 2.] Article 11, titled Powers of Trustees, states:

To carry out the purposes of any trust created under this instrument, the Trustees are vested with the following powers with respect to the trust estate and any part of it. The Trustees shall also enjoy all other powers now or hereafter conferred by law including, without limitation, all powers set forth in the trust and probate laws of the State of Nevada. All of the Trustees' powers are exercisable only in a fiduciary capacity.

[Pennington Trust Restatement at 9.] This Court finds that Article 11 only designates Nevada law as the applicable law for the determination of the Trustees' powers; it does not designate Nevada law as the law applicable to claims against the Trust. This Court therefore concludes that there is no choice-of-law provision that applies to Plaintiff's claims. This Court will determine which state's law applies based on the "most significant relationship" analysis.

B. Most Significant Relationship

Hawai`i and Nevada each has a significant relationship to the parties. Plaintif...