ROOSEBELT BALBOA; BERNALDO BALDONADO; ROLANDO BALDONALDO; FLORDELITO BASOL; FRANCISCO BOCTOT, JR.; GEMMA BOCTOT; DANNY BUMANGLAG; ANSELMA CABICO; ROGELIO CANTORNA; AMELIA COMA; LUZVIMINDA CUANANG; EDWIN DE LOS SANTOS; REYMUNDA JARAMILLO; FU LEE; MINA MACABEO; MAURO MANZANO; JASMINE MARBOU; JONAS MENOR; JUVE MIJARES; NOEL MIJARES; BALTAZAR NAVOR; RONALDO OJEDA; RONALDO ONGCOY; ARNEL PAJAS; GLORIA PALMA; ARTEMIA PATAGUE; ANDRES RAMENTO; CHRISTINA RAMIREZ; ASIS RAQUINIO; JAYSON RAQUINO; MOJEEB RINTON; FEDERICO SAHAGUN; MELANIE (RIVERA) SALVADOR; RUEL SALVADOR; GENEROSA TULIAO, Plaintiffs, v. HAWAII CARE AND CLEANING, INC., Defendant.
Civ. No. 14-00009 ACK-RLP
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII
April 28, 2015
Alan C. Kay, Senior United States District Judge
For the following reasons, the Court hereby GRANTS Defendant Hawaii Care and Cleaning, Inc.‘s Motion for Summary Judgment.
Defendant Hawaii Care and Cleaning, Inc. (“HCC“) contracted with Hilton Hotels Corporation, dba Hilton Hawaiian Village (“Hilton“) to perform certain cleaning services at Hilton beginning in June of 2004. (Def.‘s CSF ¶ 1; Pl.‘s CSF ¶ 1.) Plaintiffs were employees of HCC during the relevant time period and were apparently assigned by HCC to work at Hilton, performing the services set forth in the services agreements between Hilton and HCC.
Specifically, HCC entered into three written agreements with Hilton beginning in June 2004 (collectively referred to as the “Services Agreements“). The agreements are: (1) a Public Area & Window Cleaning Contract effective June 2004 to May 2007, (Def.‘s CSF, Ex. A); (2) a Kitchen Night Cleaning Services Agreement effective June 2004 to May 2007, (Id., Ex. B); and (3) a Services Agreement effective August 2009 to March 31, 2011, (Id., Ex. D.) After the 2009 Services Agreement expired, HCC and Hilton did not sign another written contract until July of 2013; however, during the time between written contracts, the parties operated on a month-to-month basis under the terms of the 2009 Agreement until the new contract was signed. (Pl.‘s CSF, Ex. 15
The Public Area & Window Cleaning Contract and the Kitchen Night Cleaning Services Agreement both contain clauses stating: “[t]his Agreement is by and between Hilton and Contractor and there are no other third party beneficiaries to this Agreement.” (Def.‘s CSF, Ex. A at § 13; Id., Ex. B at § 13.) Similarly, the August 2009 Services Agreement has a clause stating: “[t]his Agreement is by and between Hotel and Contractor and, other than as specifically set forth in Section F, there are no other third party beneficiaries to this Agreement.” (Id., Ex. D at § 14.) Section F, in turn, states that Hilton affiliates are third party beneficiaries of the agreement. (Id. §§ F, 15.)
Hilton has a collective bargaining agreement (“CBA“) with Unite Here Local 5 (“Local 5“), pursuant to which Hilton must require all of its contractors, including HCC, to pay employees who perform bargaining unit work at least the rates specified in the Hilton CBA. (Compl. ¶¶ 42-43; Mot. at 1.) Plaintiffs admit that they were not bargaining unit members of Local 5 at any relevant time, and were not covered by the CBA between Hilton and Local 5. (Pl.‘s CSF ¶ 7.)
At some point in 2006, Local 5 initiated a grievance with Hilton under the CBA, presumably involving wages paid to subcontractors, including HCC. To resolve the grievance, HCC was asked to execute an addendum specifically providing that HCC
Thus, on December 4, 2006, Hilton and HCC executed an Addendum Agreement (the “2006 Addendum“) to the Public Area & Window Cleaning Contract to provide that HCC comply with the subcontracting clause of CBA between Hilton and Local 5. The 2006 Addendum states, inter alia, that “[i]t is the Contractor‘s responsibility to follow all requirements of Sections 6.3B, 6.3D and 6.3E (“Subcontracting Clause“) of the collective bargaining agreement (“CBA“) (portions of which are currently in a memorandum of agreement) between Local 5 of Unite/HERE! and Owner as to all work to be performed under the Services Agreement.” (Def.‘s CSF, Ex. C at ¶ 2.) It also states that the standard wage schedule (taken from the CBA) will be applicable to HCC until the expiration of the Agreement on May 31, 2007. (Id. ¶ 1.) Pursuant to the 2006 Addendum, HCC paid its employees according to the minimum union rate schedule on two occasions: in November of 2006 and in May of 2007. (Pl.‘s CSF, Ex. 1 (Allen Depo.) at 24.) HCC was compensated for the November 2006 wage increase through a price increase from Hilton, but William Allen, the President of HCC, testified that he was not sure if HCC was so compensated for
Plaintiffs assert in the instant suit that HCC failed to pay them the bargaining unit wage rates specified in the Hilton CBA, as they allege HCC was required to do by the 2006 Addendum and 2009 Services Agreement. (See generally Compl.) Specifically, Plaintiffs allege that HCC failed to pay the required wage rates during the time period from December 7, 2007 to June 30, 2013.
PROCEDURAL BACKGROUND
On December 6, 2013, Plaintiffs filed a Complaint in the Circuit Court of the First Circuit, State of Hawaii, alleging three causes of action against Defendant Hawaii Care and Cleaning and Doe Defendants 1-50. (Doc. No. 1, Ex. A.) On January 8, 2014, HCC timely removed the action to this Court pursuant to
The Complaint asserts three causes of action: (1) a third party beneficiary breach of contract claim for breach of the Services Agreements between the Hilton and HCC; (2) a
On August 14, 2014, HCC filed the instant Motion for Summary Judgment, along with a concise statement of facts and supporting exhibits. (Doc. Nos. 17 & 18.) On April 2, 2015, Plaintiffs filed their memorandum in opposition to the motion, supported by a concise statement of facts and a number of exhibits. (Doc. Nos. 34 & 35.) HCC filed its reply on April 9, 2015. (Doc. No. 36.) A hearing on the motion was held on April 23, 2015.2/
STANDARD
Summary judgment is appropriate when a “movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
The moving party bears the initial burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If that burden has been met, the nonmoving party must then come forward and establish the specific material facts in dispute to survive summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 588 (1986). The Court must draw all reasonable inferences in favor of the nonmoving party. Id. at 587.
In supporting a factual position, a party must “cit[e] to particular parts of materials in the record . . . or show[] that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.”
DISCUSSION
In the instant motion, HCC seeks summary judgment as to all of the claims in the Complaint. The Court will address the viability of each claim in turn.
I. Breach of Contract
As their first cause of action, Plaintiffs bring a breach of contract claim, asserting that they are third party beneficiaries of the Services Agreements between HCC and Hilton. (Compl. ¶¶ 46-50.) Specifically, Plaintiffs assert that they were intended third party beneficiaries of the Services Agreements, that HCC breached those agreements by failing to pay the bargaining unit wage rates to Plaintiffs, and that HCC is therefore liable to Plaintiffs for the breach. (Id.) HCC asserts in the instant motion that Plaintiffs cannot bring an action to enforce the Services Agreements because Plaintiffs were not intended third party beneficiaries of the agreements. The Court agrees.
Generally, “third parties do not have enforceable contract rights. The exception to the general rule involves
A third party beneficiary is “one for whose benefit a promise is made in a contract but who is not a party to the contract.” Pancakes of Hawaii, 944 P.2d at 106 (quoting Black‘s Law Dictionary 1480 (6th ed. 1990)). “The rights of the third party beneficiary must be limited to the terms of the promise,” and this promise “may be express or it may be implied from the circumstances.” Remington Typewriter Co. v. Kellogg, 19 Haw. 636, 640 (1909) (internal quotation marks and citation omitted). “[A] prime requisite to the status of ‘third party beneficiary’ under a contract is that the parties to the contract must have intended to benefit the third party, who must be something more than a mere incidental beneficiary.” Hunt v. First Ins. Co. of Hawaii, 922 P.2d 976, 980 (Haw. App.), cert. dismissed, 925 P.2d 374 (Haw. 1996).
Here, as HHC points out, the Services Agreements all contain express provisions stating that the contracting parties do not intend to create any third party beneficiaries to the agreements. Specifically, the Public Area & Window Cleaning
The Court concludes that the express language in the Services Agreements stating that the contracting parties did not intend to make Plaintiffs third party beneficiaries is controlling here. See Laeroc Waikiki Parkside, LLC v. K.S.K. (Oahu) Ltd. Partnership, 166 P.3d 961, 975 n.15 (Haw. 2007) (noting that, even if the plaintiffs were claiming to be third party beneficiaries (which they conceded they were not), any such argument would fail because the express terms of the contract at issue stated that the contracting parties did not intent to
Plaintiffs have not shown that, notwithstanding the express provisions stating otherwise, the Service Agreements represented an agreement between HCC and Hilton “to bestow a benefit upon [Plaintiffs.]” See Blair, 21 P.3d at 460. Indeed, Plaintiffs have presented no evidence to suggest that they were anything more than “incidental” beneficiaries of an agreement that was entered into for the purpose of mutually benefitting HCC and Hilton. See GECCMC 2005-C1, 671 F.3d at 1033 (“The fact that a third party may incidentally benefit under a contract does not confer on him the right to sue; instead, the parties must have
Plaintiffs nevertheless argue that, by signing the 2006 Addendum,4/ HCC and Hilton evinced an intention to benefit Plaintiffs by agreeing to the bargaining unit wage rate schedule. (Opp‘n at 5-6.) Plaintiffs point out that the indemnification provision in the 2006 Addendum states that HCC will indemnify Hilton for any claims arising out of any failure by HCC to comply with the terms of the Addendum. (Def.‘s CSF, Ex. C at § 4.) Plaintiffs assert that this indicates that the contracting parties anticipated that third parties would be able to bring claims seeking to enforce the bargaining unit wage rate schedule.
(Opp‘n at 5.) The Court disagrees for several reasons.
First, the 2006 Addendum contains no language altering or addressing in any way the express provision in the Public Area & Window Cleaning Contract stating that the agreement creates no third party beneficiaries. (See Def.‘s CSF, Ex. C.) Thus, as discussed above, the express terms of the Services Agreements foreclose any argument that Plaintiffs are third party beneficiaries.
Further, the indemnification provision in the 2006 Addendum does not indicate an intention to nevertheless create a third party beneficiary. The indemnification provision obligates HCC to pay for any penalties or other claims that Hilton might incur for a violation of Hilton‘s CBA until the termination of the services agreement on May 31, 2007. (Id. ¶ 4.) The provision is clearly intended to protect Hilton from claims brought by the Local 5 union, not those brought by non-union workers such as Plaintiffs. The purpose of the subcontracting clause of the Hilton CBA is to discourage Hilton from hiring non-union workers by increasing the cost of doing so. (See Def.‘s CSF, Ex. E ¶ 6.3A.) The CBA therefore obligates Hilton to require its subcontractors to pay wages at a certain level when it subcontracts bargaining unit work to non-union workers. (Id.) A breach of the wage provisions of the CBA would give rise to a claim by Local 5 against Hilton. Hilton‘s penalty for violation
Indeed, the January 2007 Memorandum Agreement between Hilton and Local 5 indicates that Local 5 withdrew a previous grievance against Hilton (for contracting with HCC in violation of the subcontracting clause of the CBA) in exchange for Hilton applying the subcontracting clause to its Public Area & Window Cleaning Contract with HCC. (Def.‘s CSF, Ex. E (CBA) ¶ 6.3A; Ex. F (Memorandum Agreement) at 6.) The indemnification provision in the 2006 Addendum is therefore clearly intended to protect Hilton from any further claims by the union arising out of HCC‘s failure to adhere to the CBA wage rate provisions. (Id., Ex. C.)
The Court therefore concludes that the indemnification provision in the 2006 Addendum does not, as Plaintiffs argue, indicate an intent on the part of Hilton and HCC to acknowledge that non-union third parties may enforce the 2006 Addendum. Rather, it simply protects Hilton from liability should HCC breach the wage rate provisions in the CBA. Thus, Plaintiffs are
II. Withholding of Wages in Violation of Hawaii‘s Wage and Hour Law
In their second cause of action, Plaintiffs assert that HCC‘s alleged failure to pay the wages mandated by the 2006 Addendum violated Chapter 388 of the Hawaii Revised Statutes. (Compl. ¶¶ 51-55.)
Importantly, however, Plaintiffs may only recover under Hawaii‘s Wage and Hour Law for the willful withholding of wages that are legally due. See Misc. Service Workers, Drivers & Helpers, Teamsters Local No. 427 v. Philco-Ford Corp., WDL Div., 661 F.2d 776, 783 (9th Cir. 1981) (stating that Chapter 388 “serve[s] to prevent the employer from withholding sums or benefits to which the employee has rights by virtue of his contract with his employer . . ..“). Here, Plaintiffs do not seek to recover withheld wages pursuant to a contractual arrangement between them and HCC. Indeed, there appears to be no dispute that Plaintiffs were paid the wages that were agreed upon between them and HCC. Nor, as discussed above, can they assert a legal right (as third party beneficiaries) to the amounts allegedly withheld by virtue of HCC‘s failure to pay the bargaining unit wage rates as set forth in the 2006 Addendum.
Thus, because Plaintiffs seek to recover wages to which they have failed to demonstrate that they are legally entitled, they cannot bring a statutory claim under Chapter 388. See id.; see also Casumpang v. ILWU Local 142, 121 P.3d 391, 401 (Haw. 2005) (affirming dismissal of a Chapter 388 claim where the plaintiff sought payment for unused vacation, which the court determined did not constitute “wages” because an employee is not entitled to payment for unused vacation leave); Timpe v. WATG Holdings Inc., Civ. No. 07-00306 JMS-KSC, 2008 WL 2355611, at *7 (D. Haw. June 10, 2008) (holding that plaintiff could not bring a Chapter 388 claim to recover benefits to which she was not entitled). The Court therefore GRANTS the motion as to Plaintiffs’ second cause of action.
III. Unjust Enrichment
Finally, Plaintiffs’ third count asserts that HCC‘s failure to pay the bargaining unit wage rates constitutes unjust enrichment under Hawaii common law. (Compl. ¶¶ 56-60.) To recover on an unjust enrichment claim, a plaintiff must prove: (1) the defendant received a benefit without adequate legal basis; and (2) unjustly retained the benefit at the expense of the plaintiff. Chapman v. Journal Concepts, Inc., 2008 WL 5381353, at *21 (D. Haw. 2008) (citing Small v. Badenhop, 701 P.2d 647, 654 (Haw. 1985); Durrette v. Aloha Plastic Recycling, Inc., 100 P.3d 60, 61 (Haw. 2004). Unjust enrichment is a “broad and imprecise term.” Durrette, 100 P.3d at 72 (internal citation and quotation marks omitted). In reviewing unjust enrichment claims, courts must be guided by the “underlying conception of restitution, the prevention of injustice.” Id.
As an initial matter, HCC argues that Plaintiffs’ unjust enrichment claim is barred in the face of an express contract covering the subject of the claim. The Court agrees. Generally, “[a]n action for unjust enrichment cannot lie in the
Here, HCC asserts, and Plaintiffs do not dispute, that at all relevant times HCC paid Plaintiffs for all hours worked at the rate agreed upon by HCC and Plaintiffs. (Def.‘s CSF ¶ 8; Pl.‘s CSF ¶ 8.) During the hearing on the instant motion, counsel for HCC stated that no written employment contract existed between HCC and Plaintiffs, but that Plaintiffs were paid in accordance with an agreed-upon amount between the parties. Thus, the relationship between HCC and Plaintiffs was governed by an express agreement between them as to the same subject matter (their wages) at issue in the instant suit. It is therefore “well settled” that Plaintiffs’ unjust enrichment claim cannot lie. See, e.g., AAA Hawaii, LLC v. Hawaii Ins. Consultants, Ltd., Civ. No. 08-00299 DAE-BMK, 2008 WL 4907976 at *3 (D. Haw. Nov. 12, 2008) (“It is . . . well settled in federal courts that equitable remedies are not available when an express contract exists between the parties concerning the same subject matter[.] Hawaii
Even assuming Plaintiffs’ unjust enrichment claim weren‘t barred by the express agreement as to wages between HCC and Plaintiffs, there is simply no evidence before the Court to support such a claim. Plaintiffs assert that an unjust benefit was conferred upon HCC because HCC did not pay Plaintiffs the bargaining unit wage rates set forth in the 2006 Addendum, even while Hilton paid HCC amounts which were based upon that bargaining unit wage rate. HCC counters that, after 2007, Hilton never increased contract payments to HCC for the purpose of increasing Plaintiffs’ wages.
Plaintiffs have introduced evidence that after the 2009 Services Agreement expired, HCC‘s proposed contract renewals included language suggesting that HCC was seeking price increases to compensate it for the mandatory union wage rate schedule. For example, in a June 7, 2007 letter to Hilton enclosing a proposed new contract, HCC Vice President Laura Valhuerdi writes “[i]t is understood that the pricing schedule (in consideration for the contracted scope of work described herein) is and shall remain consistent and directly proportionate to the mandatory union wage rate schedule in place . . . .” (Pl.‘s CSF, Ex. 2 at 1.) This language is also included in the contract proposal itself. (Id. at 69, 76, 83.) Several subsequent revised proposals governing
HCC points out, however, that all of these statements are taken from pricing proposals and bids that HCC sent to Hilton, rather than actual contracts. (Reply at 11.) Plaintiffs have produced no evidence that Hilton actually accepted any of the bids and paid higher prices so that HCC would pay higher wages. (Id.) Moreover, William Allen, the President of HCC, testified in his deposition that he was not aware of any occasion on which Hilton paid HCC to compensate it for the union wage rate schedule, but HCC kept the money instead of paying it to its employees. (Pl.‘s CSF, Ex. 1 (Allen Depo.) at 24.) In his deposition, Mr. Allen stated that he believed that HCC had paid
Thereafter, Mr. Allen states, HCC did not give any further wage increases based on the union wage rates between 2007 and 2013.8/ (Id. at 26, 51.) Mr. Allen testified that, after the first two wage rate increases, Hilton was “unwilling[] to give us any type of increases” and, therefore, HCC stopped making wage increases pursuant to the union wage rate schedule at that point. (Id. at 28, 32.) Plaintiffs have introduced no evidence to
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant Hawaii Care and Cleaning, Inc.‘s Motion for Summary Judgment.
IT IS SO ORDERED.
DATED: Honolulu, Hawaii, April 28, 2015
Alan C. Kay
Senior United States District Judge
Balboa et al. v. Hawaii Care and Cleaning Inc., Civ. No. 14-00009 ACK RLP, Order Granting Defendant‘s Motion for Summary Judgment.
Notes
Arguably, all of these exhibits containing contract discussions between HCC and Hilton from 2011 to 2013, indicate an understanding that HCC‘s pricing would include union wage rate increases, and Hilton would compensate HCC for the same; however, as discussed herein, there is no evidence that any of the bids were actually accepted. William Allen‘s declaration and deposition testimony reflect that Hilton never compensated HCC for union wage rate increases after 2007. (Def.‘s CSF, Allen Decl.; Pl.‘s CSF, Ex. 1.) Thus, HCC never received from Hilton an additional amount for union wage rate increases which could be characterized as being held in constructive trust for the benefit of HCC‘s employees under a claim of unjust enrichment (although, as noted below, such a claim would be barred by the express (continued...)
(...continued) agreement of the parties) or as intended third party beneficiaries (a claim that, as discussed herein, is barred by the express language of the contracts between HCC and Hilton).