Reading International, Inc. v. the Malulani Group, Limited
694 F. App'x 571
| 9th Cir. | 2017Background
- Reading International and The Malulani Group litigated over breaches of a Settlement Agreement related to loan collateral and obligations; Reading sought acceleration of the loan under the Mortgage.
- Malulani relied on cure provisions in related Pledge Agreements to argue it could cure alleged Settlement-Agreement breaches and avoid acceleration under the Mortgage.
- The Mortgage and the Pledge Agreements contained different language about what constitutes a Loan Document and what defaults are subject to cure.
- The district court held for Malulani on breach-related relief and granted summary judgment against Reading on several ancillary claims (mediation privilege, supplementation of the record, and adequacy of produced records).
- On appeal, Reading challenged the district court’s interpretation that the Mortgage allowed Malulani to cure a breach of the Settlement Agreement; the Ninth Circuit reviewed contract text and Hawaiian law on contract interpretation and remanded the material-breach question to the district court.
Issues
| Issue | Plaintiff's Argument (Reading) | Defendant's Argument (Malulani) | Held |
|---|---|---|---|
| Whether the Mortgage permitted cure of a Settlement-Agreement breach that triggered acceleration | Mortgage does not permit cure; only acceleration remedy available for Settlement-Agreement breach | Mortgage (and §7.11(x)) allows cure analogous to Pledge Agreements; cure should prevent acceleration | Reversed district court: Mortgage does not permit cure for breach of the Settlement Agreement; remanded to decide whether breach was material |
| Whether §7.11(x) creates a general cure right for all Events of Default under the Mortgage | §7.11(x) is not a blanket cure provision; its text creates a distinct Event of Default subject to cure | §7.11(x) provides a general cure mechanism for defaults, including Settlement-Agreement breaches | Held for Reading: §7.11(x) does not create a general right to cure other Events of Default; it creates an additional, separate Event of Default |
| Whether Hawaii law supports reading cure rights into the Mortgage based on related agreements | Contract language controls; differences among agreements must be given effect | Overall contract context and parties’ intent (as shown in Pledge Agreements) permit cure under Mortgage | Court applied Hawaii law but gave effect to differing language; did not infer cure right for Mortgage from Pledge Agreements |
| Whether district court correctly granted summary judgment on ancillary claims (mediation privilege, discovery supplementation, record adequacy) | Mediation statements not privileged because Hawaii Mediation Act is not retroactive to mediations; district court properly exercised discretion; Reading failed to show existence of additional records | Sought suppression/privilege and to supplement record based on mediation statements and alleged missing records | Affirmed: Mediation privilege did not apply; denial to supplement record was not abuse of discretion; Reading failed to prove additional records existed (and waived one asserted item) |
Key Cases Cited
- Haw. Med. Ass’n v. Haw. Med. Serv. Ass’n, Inc., 148 P.3d 1179 (Haw. 2006) (court may consider overall contract context in interpreting terms)
- Stanford Carr Dev. Corp. v. Unity House, Inc., 141 P.3d 459 (Haw. 2006) (contracts should be interpreted to give meaning and effect to each term)
- United Pub. Workers AFSCME, Local 646, AFL-CIO v. Dawson Int’l, Inc., 149 P.3d 495 (Haw. 2006) (statutory interpretation of mediation/arbitration provisions and retroactivity)
- Navellier v. Sletten, 262 F.3d 923 (9th Cir. 2001) (trial-court management and discovery-reopening reviewed for abuse of discretion)
- United States v. Zolin, 491 U.S. 554 (1989) (in camera disclosure of privileged materials to determine privilege does not terminate it)
- Panatronic USA v. AT&T Corp., 287 F.3d 840 (9th Cir. 2002) (standards for in camera review and discovery disputes)
- Chance v. Pac-Tel Teletrac Inc., 242 F.3d 1151 (9th Cir. 2001) (movant must diligently pursue prior discovery to show abuse of discretion in denying reopening)