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1 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 1 of 10 PageID #: 1911 REVERE & ASSOCIATES, LLLC TERRANCE M. REVERE 5857 LAUREN C. M. SHEPPARD N. Kalaheo, Suite A301 Kailua, Hawaii Telephone No.: ( Facsimile No.: ( terry@revereandassociates.com lauren@revereandassociates.com SMITH LAW P. KYLE SMITH N. Kalaheo Avenue, Suite A301 Kailua, Hawaii Telephone No.: ( Facsimile No.: ( kyle@smithhawaii.law Class Counsel UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII CHRISTOPHER ZYDA, On Behalf of Himself and All Others Similarly Situated, vs. Class Plaintiffs, FOUR SEASONS HOTELS AND RESORTS; et al.; and DOES 1-100, Defendants. CIVIL NO LEK-KSC CLASS PLAINTIFFS REPLY IN SUPPORT OF MOTION FOR RECONSIDERATION OF THE MARCH 28, 2017 ORDER DENYING PLAINTIFFS' MOTION FOR REMAND; CERTIFICATE OF SERVICE 1

2 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 2 of 10 PageID #: 1912 CLASS PLAINTIFFS REPLY MEMORANDUM IN SUPPORT OF MOTION FOR RECONSIDERATION OF THE MARCH 28, 2017 ORDER DENYING PLAINTIFFS' MOTION FOR REMAND I. INTRODUCTION Plaintiff CHRISTOPHER ZYDA (hereinafter Plaintiff, by and through his attorneys, REVERE AND ASSOCIATES, LLLC and SMITH LAW, respectfully submits his Reply Memorandum in Support of his Motion for Reconsideration of the March 28, 2017 Order Denying Plaintiffs Motion for Remand, filed April 11, Plaintiff responds to Defendants Opposition as follows: A. The Court has the perpetual obligation to ensure its own subject matter jurisdiction in CAFA cases. B. Reconsideration is Proper Under L.R. 60.1(c. C. The value of homes at Hualalai was known by Defendants with no effort, guesswork, inquiry or investigation due to their capacity as the developer, seller and manager of the homes. D. When Plaintiff s allegations are assumed as true, the amount in controversy under Plaintiff s theory of rescission far exceeds the CAFA Threshold. II. ARGUMENT A. The Court Has the Perpetual Obligation to Ensure its Own Subject Matter Jurisdiction in CAFA Cases. In CAFA cases, as with all cases, the Court has the perpetual obligation to ensure its own subject matter jurisdiction[.] 1 [B]y whatever route a case arrives 1 Vitale v D.R. Horton, 2016 U.S. Dist. LEXIS (DKW-KSC August 9, 2

3 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 3 of 10 PageID #: 1913 in federal court, it is the obligation of both district court and counsel to be alert to jurisdictional requirements. 2 Congress has specifically directed the courts to decline jurisdiction if a purported class action is overwhelmingly a state controversy. There is no precedent prohibiting the Court from raising the applicability of the 1332(d(4 exceptions on its own, relatively early in the case, as courts often do with abstention concerns. 3 [R]emand is required if the Court lacks subject matter jurisdiction at any time. 4 B. Reconsideration is Proper Under L.R. 60.1(c. Plaintiff s Motion is proper under L.R. 60.1(c because it both demonstrates reasons why the court should reconsider its prior decision and sets forth both facts and law of a strongly convincing nature to induce the court to reverse its prior 2016 (order granting remand; See also Reddick v. Glob. Contact Sols., LLC, 2015 U.S. Dist. LEXIS , 2015 WL , at *3-*4 (D. Or. Aug. 26, 2015 ( The question of who bears the burden of persuasion under CAFA in connection with a motion to remand is immaterial to this court's sua sponte determination of whether it may properly exercise federal subject-matter jurisdiction.. 2 Vitale v D.R. Horton, 2016 U.S. Dist. LEXIS at *5 (DKW-KSC August 9, 2016 citing Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 593, 124 S. Ct. 1920, 158 L. Ed. 2d 866 ( Id. at *4 citing Bey v. SolarWorld Indus. Am., Inc., 904 F. Supp. 2d 1103, 1109 (D. Or Id. at *4. (citations omitted. 3

4 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 4 of 10 PageID #: 1914 decision. 5 Here, the Court s prior decision mistakenly concluded that Defendants were required to make assumptions about an amount in controversy based simply on the wealth of the individuals involved. 6 This is decidedly not the case. Rather, the key variable that drives the amount in controversy is the total value of class homes at Hualalai, which far exceeds $5 million dollars. C. The Value of Homes at Hualalai Was Known by Defendants. The value of the Homes at Hualalai was known by Defendants with no effort, guesswork, inquiry, or investigation due to their capacity as the developer, seller and manager of the homes. Here, there is no necessity to inquire as to what Defendants knew or should have known. Opposition at page 8. It is indisputable that Defendants, in their capacity as the developer, seller and manager of the homes, knew the total value of homes well exceeded $5 million dollars. D. When Plaintiff s Allegations Are Assumed as True, the Amount in Controversy Under Plaintiff s Theory of Rescission Far Exceeds the CAFA Threshold. Defendants try to confuse this analysis by listing the different remedies or measures of damages available under a recession theory. Opposition at page 10. Defendants ignore, however, two important realities. 5 Bruser v. Bank of Hawaii, 2016 WL , at *1 (D. Haw. Feb. 16, 2016 (citing Pac. Radiation Oncology, LLC v. Queen s Med. Ctr., 2015 WL , at *2 (D. Haw. Jan. 21, 2015 (citation omitted. 6 Order Denying Plaintiffs Motion for Remand [ECF 36] at 7 (emphasis added. 4

5 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 5 of 10 PageID #: 1915 First, a defendant must establish, under a preponderance of the evidence standard, that the potential damages could exceed the jurisdictional amount. 7 [T]he amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability. 8 The ultimate inquiry is what amount is put in controversy by the plaintiff's complaint, not what a defendant will actually owe. 9 In making this inquiry, CAFA tells the District Court to determine whether it has jurisdiction by adding up the value of the claim of each person who falls within the... proposed class and determin[ing] whether the resulting sum exceeds $5 million. 10 Thus, Class claims are aggregated together. Here, while all of Plaintiffs claims clearly place the total value of homes at Hualalai into dispute, rescission in particular makes clear that Four Seasons could face refunding the purchase value of homes for not just Zyda, but the entire Class. As Defendants concede, a plaintiff entitled to rescission may secure a money judgment, for repayment of cash consideration previously paid, or in lieu of other consideration that, for some reason, is incapable of specific restoration, in which 7 Rea v. Michaels Stores Inc., 742 F.3d 1234, 1239 (9th Cir (internal quotation marks and citation omitted; see also Rodriguez, 728 F.3d at 982 (applying preponderance standard. 8 Lewis v. Verizon Communications, Inc., 627 F.3d 395, 400 (9th Cir (emphasis added. 9 Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal Standard Fire Ins. Co.v. Knowles, 133 S. Ct. 1345, 1348 (

6 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 6 of 10 PageID #: 1916 case the damages awarded should be the monetary equivalent of the specific property..... When both parties cannot be restored to their former positions, the innocent party is the one entitled to be made whole, and if the defendant s gains exceeded the plaintiff s losses, the plaintiff is entitled to the excess. 11 Importantly, no investigation is needed by Defendants to know that the total value of Hualalai homes exceeds $5 million dollars. While Defendants argue that a plaintiff might recover less than the their total purchase price at trial, CAFA s amount in controversy is simply an estimate of the total amount in dispute, not a prospective assessment of defendant's liability. 12 Second, Plaintiff s allegations must be assumed as true. When Plaintiff s allegations are assumed as true, the damages owed under Plaintiff s theory of rescission far exceeds the CAFA threshold. In calculating the amount in controversy, a court must assume that the allegations in the complaint are true and that a jury will return a verdict for plaintiffs on all claims alleged. 13 Moreover, the claims of class members may be aggregated to determine whether the amount in controversy requirement has been satisfied. 14 Plaintiff has not alleged mistake, 11 Opposition at 11, citing 12A C.J.S. Cancellation of Inst. 174 ( Lewis, 627 F.3d at Korn v. Polo Ralph Lauren Corp., 536 F. Supp. 2d 1199, 1205 (E.D. Cal Id.; 28 U.S.C. 1332(d(6; Page v. Luxottica Retail N. Am., Inc., 2015 U.S. Dist. LEXIS (E.D. Cal March 3,

7 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 7 of 10 PageID #: 1917 duress, or incapacity or mutual agreement which Defendants assert would result in rescission relief other than damages equal to the aggregate value of the home or lot purchase contracts. Opposition at page 10. Instead, Plaintiff alleges unfair and deceptive trade practices and unfair competition under Haw. Rev. Stat. 480 which provides the remedy of rescission of a contract as a non-discretionary result 15. H.R.S plainly states, [ajny contract or agreement in violation of this chapter is void and is not enforceable at law or in equity. 16 The Hawaii Supreme Court confirms this conclusion in 808 Dev. LLC v. Murakami, explaining that a contract reached by unfair or deceptive practice in violation of chapter 480 of Hawaii Revised Statutes is void and may not be enforced against the innocent party. 17 The result of rescission is to return both parties to the status quo ante, i.e. each side is to be restored to the property and legal attributes that it enjoyed before the contract was entered and performed. 18 Rescission reverses the fraudulent transaction and returns the parties to the position they occupied prior to the fraud. It restores the status quo 15 Haw. Rev. Stat Id Del'. LLC v. Murakami, III Haw. 349,356 (2006. Similarly, contracts induced by fraud or material misrepresentations are voidable. See also, Exotics Haw.-Kona, Inc. v. E.l. Du Pont De Nemours & Co., 116 Haw. 277, 288 ( Exotics Haw.-Kona, Inc. v. E.l. Du Pont De Nemours & Co., 116 Haw. 277, 288 (

8 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 8 of 10 PageID #: 1918 ante. 19 Importantly, under rescission, "the plaintiff returns to the defendant the subject of the transaction...and the defendant returns to the plaintiff the consideration furnished, plus interest. 20 As such, when Plaintiff s allegations are assumed as true, the total amount in controversy under rescission, not to mention Plaintiffs other claims, 21 far exceeds the CAFA threshold. E. Defendant s Challenge to Rob Kildow s Deposition is Misplaced. Defendants challenge to Plaintiffs reference to Rob Kildow s deposition is also misplaced. The fact of the matter is the parties undisputedly knew without any investigation that the total amount in controversy of this case exceeded CAFA s $5 million dollar threshold and the only reason that Defendants later sought remand was to escape Judge Fujino s class certification order for the perceived haven of the federal court. The mistaken conclusion of the Court s order, however, is that Plaintiffs rely on [their] general wealth to insinuate that Defendants should have guessed the amount in controversy. 22 Mr. Kildow s 19 Id. at 289 citing Ambassador Hotel Co. v. Wei-Chaun Inv., 189 F.3d 1017, 1031 (9th Cir Id. (emphasis added. 21 For example, Plaintiffs also allege violation of the Uniform Sales Practices Act which pursuant to Haw. Rev. Stat (a allows a purchaser to recover the consideration they paid. 22 Order at 9. 8

9 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 9 of 10 PageID #: 1919 deposition is therefore properly cited to correct the Court s misunderstanding that Defendants have to investigate to know the approximate values of Hualalai homes. Rather, as Mr. Kildow s deposition confirms, Defendants know without any research or investigation of any kind that annual sales exceed $100 million dollars and the average value of a Hualalai home in 2014 was $9.7 million. Therefore, CAFA s threshold is met the moment the Complaint threatened rescission because there is simply no way to claim that Defendants were not aware that the total value of Class homes exceeds $5 million. As this Court notes in its Order, the Ninth Circuit has stated that defendants need not make extrapolations or engage in guesswork, but they must apply a reasonable amount of intelligence in ascertaining removability. 23 Here, Defendant did not have to make any assumptions about an amount in controversy based simply on the wealth of the individuals involved, Defendants needed only to apply its existing and undisputed knowledge of home sales that far exceed CAFA s threshold. V. CONCLUSION Due to the undisputed knowledge of all parties that the individual and collective value of Class homes exceed CAFA s $5 million threshold without any investigation or effort at all Class Plaintiffs respectfully request the Court to 23 Order at 7, citing Kuxhausen v. BMW Fin. Servs. NA LLC, 707 F.3d 1136, 1140 (quoting Whitaker v. Am. Telecasting, Inc., 261 F.3d 196, 206 (2d Cir

10 Case 1:16-cv LEK-KSC Document 51 Filed 05/09/17 Page 10 of 10 PageID #: 1920 reconsider its March 28, 2017 Order Denying Plaintiffs Motion for Remand, grant Plaintiffs' Motion for Remand and order that this case be remanded to State Court. DATED: Kailua, Hawaii, May 9, /s/ Terrance M. Revere TERRANCE M. REVERE LAUREN C. M. SHEPPARD P. KYLE SMITH Attorneys for Plaintiffs CHRISTOPHER ZYDA, On Behalf of Himself and All Others Similarly Situated 10

11 Case 1:16-cv LEK-KSC Document 51-1 Filed 05/09/17 Page 1 of 2 PageID #: 1921 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAII CHRISTOPHER ZYDA, On Behalf of Himself and All Others Similarly Situated, vs. Class Plaintiffs, FOUR SEASONS HOTELS AND RESORTS; FOUR SEASONS HOLDINGS, INC.; FOUR SEASONS HUALALAI RESORT; HUALALAI RESIDENTIAL, LLC (dba HUALALAI REALTY; HUALALAI INVESTORS, LLC; KAUPULEHU MAKAI VENTURE; HUALALAI DEVELOPMENT COMPANY; HUALALAI VILLAS & HOMES; HUALALAI INVESTORS, LLC; HUALALAI RENTAL MANAGEMENT, LLC; and DOES 1-100, Defendants. CIVIL NO LEK-KSC CERTIFICATE OF SERVICE CERTIFICATE OF SERVICE The undersigned hereby certifies that, on May 9, 2017, a file-marked copy of CLASS PLAINTIFFS REPLY MEMORANDUM IN SUPPORT OF MOTION FOR RECONSIDERATION OF THE MARCH 28, 2017 ORDER DENYING

12 Case 1:16-cv LEK-KSC Document 51-1 Filed 05/09/17 Page 2 of 2 PageID #: 1922 PLAINTIFFS' MOTION FOR REMAND was duly served electronically on the following individuals via CM/ECF as follows: WILLIAM MEHEULA, ESQ. BARRY A. SULLIVAN, ESQ. NATASHA L.N. BALDAUF, ESQ. DOROTHY P.H. MEISNER, ESQ. Sullivan Meheula Lee, LLLP 745 Fort Street, Suite 800 Honolulu, Hawaii meheula@smlhawaii.com sullivan@smlhawaii.com baldauf@smlhawaii.com meisner@smlhawaii.com Attorneys for Defendants FOUR SEASONS HOTELS LIMITED, FOUR SEASONS HOLDINGS, INC., HUALALAI Investors, LLC, HUALALAI RESIDENTIAL, LLC, and HUALALAI RENTAL MANGEMENT, LLC DATED: Kailua, Hawaii, May 9, /s/ Terrance M. Revere TERRANCE M. REVERE LAUREN C. M. SHEPPARD P. KYLE SMITH Attorneys for Plaintiffs CHRISTOPHER ZYDA, On Behalf of Himself and All Others Similarly Situated 2

13 Page 1 of 2 5/9/2017 This is an automatic message generated by the CM/ECF system. Please DO NOT RESPOND to this because the mail box is unattended. ***NOTE TO PUBLIC ACCESS USERS*** Judicial Conference of the United States policy permits attorneys of record and parties in a case (including pro se litigants to receive one free electronic copy of all documents filed electronically, if receipt is required by law or directed by the filer. PACER access fees apply to all other users. To avoid later charges, download a copy of each document during this first viewing. However, if the referenced document is a transcript, the free copy and 30 page limit do not apply. Notice of Electronic Filing U.S. District Court District of Hawaii The following transaction was entered by Revere, Terrance on 5/9/2017 at 3:47 PM HST and filed on 5/9/2017 Case Name: Christopher Zyda, et al v. Four Seasons Hotels and Resorts, et al Case Number: 1:16-cv LEK-KSC Filer: Christopher Zyda Document Number: 51 Docket Text: REPLY Memorandum in Support of Motion for Reconsideration of the March 28, 2017 Order filed by Christopher Zyda. (Attachments: # (1 Certificate of Service (Revere, Terrance 1:16-cv LEK-KSC Notice has been electronically mailed to: Barry A. Sullivan sullivan@smlhawaii.com, sandi@smlhawaii.com, shelly@smlhawaii.com, syndi@smlhawaii.com Donald M. Falk dfalk@mayerbrown.com Dorothy-Jean P. H. Meisner dorothy.meisner@hawadvocate.com Nickolas A. Kacprowski nkacprowski@ahfi.com, jyanagawa@ahfi.com, notice@ahfi.com Patrick Kyle Smith kyle@smithhawaii.law, tina@smithhawaii.law Terrance M. Revere terry@revereandassociates.com, alex@revereandassociates.com, andrew@revereandassociates.com, clarisse@revereandassociates.com, kalina@revereandassociates.com, lauren@revereandassociates.com, main@revereandassociates.com, malia@revereandassociates.com William Meheula meheula@smlhawaii.com, baldauf@smlhawaii.com, sandi@smlhawaii.com, shea@smlhawaii.com, shelly@smlhawaii.com, snow@smlhawaii.com

14 Page 2 of 2 5/9/2017 1:16-cv LEK-KSC Notice will not be electronically mailed to: Natasha L.N. Baldauf Sullivan Meheula Lee, LLP 745 Fort Street, Suite 800 Honolulu, HI The following document(s are associated with this transaction: Document description:main Document Original filename:n/a Electronic document Stamp: [STAMP dcecfstamp_id= [Date=5/9/2017] [FileNumber= ] [3eb4f3b4f160389d66d2947e99b12ee1bf00459b e564f68d4cf73af3f1c c23911a3b705c d67bfb883a0462fc832f2b80002ecc396dadcd5]] Document description:certificate of Service Original filename:n/a Electronic document Stamp: [STAMP dcecfstamp_id= [Date=5/9/2017] [FileNumber= ] [99d1f62163c4fda741d58e679b1a177323c87cc7491df81cc07e271431b763b63987 d9e52447ffa8d ceb b6903a0f4e9531a49e602fb7e7a61]]

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAI`I

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF HAWAI`I Case 1:10-cv-00436-SOM-KSC Document 194 Filed 09/30/14 Page 1 of 5 PageID #: 3198 DAVID M. LOUIE 2162 Attorney General State of Hawai`i ADAM T. SNOW 8389 HOLLY T. SHIKADA 4017 Deputy Attorneys General