Adwalls Media, LLC v. Adwalls, LLC, 1:12-cv-00614

Background

Ad Walls, LLC sold advertising-lease interests to Adwalls Media, LLC under a written Asset Purchase Agreement for $500,000; James E. Blinn signed for Adwalls Media.
Ad Walls alleges a separate oral side promise by Blinn to pay $25,000 (to cover part of closing expenses) and that Ad Walls invoiced Blinn directly at his request so the $25,000 would not appear in the written Agreement.
Adwalls Media and Blinn moved for judgment on the pleadings and summary judgment against Ad Walls’ Counterclaim (against Adwalls Media) and Third-Party Complaint (against Blinn).
Key claims at issue: Count I (breach of promise regarding $25,000), Count II (fraudulent misrepresentation about Blinn having “partners” and unjust enrichment based on the $25,000), and Count V (fraudulent misrepresentation about Adwalls Media’s experience).
Court treated pleadings and evidence: applied parol-integration principles to bar oral side deals against the contracting LLC, but allowed nonparty Blinn to be sued individually; applied Rule 9(b) for fraud pleadings and summary-judgment standards for evidentiary disputes.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Count I (breach of promise for $25,000) survives against Adwalls Media	Blinn orally promised $25,000 as additional consideration; Adwalls Media is liable	Integration clause in the written Agreement bars enforcement of any prior/oral side agreement; lack of consideration	Granted summary judgment for Adwalls Media (integration/parol rule).
Whether Count I survives against Blinn individually	The $25,000 promise was Blinn's personal side deal; Blinn should pay	Integration clause protects Adwalls Media but not Blinn; challenge lack of consideration	Denied summary judgment as to Blinn — triable issues remain; integration clause doesn't bind nonparty.
Whether Count II fraud claim (Blinn’s alleged misstatement about having partners) is adequately pled and supported	Blinn falsely claimed partners to justify keeping $25,000 out of the Agreement; Ad Walls relied on that	Count II is insufficiently pled and, on summary judgment, Ad Walls offers no evidence that Blinn lacked partners	Denied judgment on pleadings (pleading adequate), but granted summary judgment on fraud — operating agreement shows other members, so no false statement.
Whether Count II unjust enrichment claim against Blinn may proceed	Blinn unjustly retained benefit by having Ad Walls omit the $25,000 from the Agreement and not paying it	Contract-based defenses and integration clause preclude equitable recovery	Denied judgment on pleadings and denied summary judgment as to unjust enrichment against Blinn — nonparty status and factual disputes preclude relief now but bar double recovery if contract remedy proven.
Whether Count V (fraud about Adwalls Media’s experience) is sufficiently pled	Adwalls Media represented it had an experienced, professional team and Ad Walls relied, terminating prior agent Encompass	Pleading lacks who/when/where; insufficient specificity under Rule 9(b)	Granted judgment on the pleadings for Count V; Ad Walls given leave to amend limited to curing pleading defects.

Key Cases Cited

Pancakes of Haw., Inc. v. Pomare Props. Corp., [citation="85 Haw. 300, 944 P.2d 97"] (Haw. Ct. App. 1997) (parol evidence rule does not bar claim where written agreement was allegedly conceived in fraud).
Honolulu Fed. Sav. & Loan Ass’n v. Murphy, [citation="7 Haw. App. 196, 753 P.2d 807"] (Haw. Ct. App. 1988) (fraud exception to parol evidence rule).
Balogh v. Balogh, [citation="134 Haw. 29, 332 P.3d 631"] (Haw. 2014) (consideration is essential to contract enforceability; forbearance can be adequate consideration).
Ass’n of Apartment Owners of Newtown Meadows v. Venture 15, Inc., [citation="115 Haw. 232, 167 P.3d 225"] (Haw. 2007) (elements of fraudulent misrepresentation).
Celotex Corp. v. Catrett, [citation="477 U.S. 317"] (U.S. 1986) (summary judgment standard and burden on movant).