ORDER DENYING THIRD-PARTY DEFENDANT’S MOTION FOR PARTIAL SUMMARY JUDGMENT AS TO COMPLAINT COUNTS TV AND V, THIRD-PARTY COMPLAINT COUNT I, AND COUNTERCLAIM COUNT III; ORDER DENYING PLAINTIFF’S MOTION TO FILE SUPPLEMENTAL DECLARATIONS
J. MICHAEL SEABRIGHT, District Judge.
I.
INTRODUCTION
Third-Party Defendant Southern Food Group, L.P. (“SFG”) moves for partial summary judgment as to Counts IV and V of Plaintiff Jeffrey Lindner’s (“Lindner”) Complaint and, by extension, Count I of Defendant and Third-Party Plaintiff Meadow Gold Dairies, Inc.’s (“Meadow Gold”) Third-Party Complaint and Count III of SFG’s Counterclaim. At issue is whether Meadow Gold is liable for failing to remove certain permanent improvements and restore the land to its pre-Lease condition when it terminated its Lease with Lindner. The court finds that there are genuine issues of material fact as to both Count IV (regarding the removal of certain structural improvements) and Count V (restoration of the premises). The court thus DENIES SFG’s Motion for Partial Summary Judgment. The court also DENIES Lindner’s Ex Parte Motion for Leave to File Supplemental Declarations.
II.
BACKGROUND
Two prior rounds of motions for partial summary judgment have been decided by the court in this case.
See Lindner v. Meadow Gold Dairies, Inc.,
2007 WL 1430373 (D.Haw. May 14, 2007);
Lindner v. Meadow Gold Dairies, Inc.,
515 F.Supp.2d 1154, 2007 WL 2320669 (August 9, 2007): Order Granting Pi’s. Mot. for Partial Summ. J. and Denying Defs. Countermotion for Partial Summ. J. as to Count III (Liquidated Damages).
A. Factual Background
Lindner is the fee simple owner of land located on the island of Kauai. Lindner acquired the land from Amfac Property Development Corporation (“Amfac”). In 1988, Amfac had leased a portion of the land to Meadow Gold (“Lease”) for the operation of a dairy farm (“Moloa’ a Dairy Farm”). When Lindner acquired the land in 1996, Amfac also assigned him its interests and obligations under the Lease.
In 1997, Meadow Gold exercised its renewal options under the Lease, thereby extending the Lease until September 30, 2013. Shortly thereafter, Meadow Gold assigned its interests under the Lease to SFG.
The Moloa’ a Dairy Farm had the highest density of cows on a dry lot dairy on Kauai.
See
Pi’s. Mem. in Opp’n, Ching Decl. ¶ 8. Meadow Gold utilized a portion of the land as a “cattle graveyard,” burying over twelve hundred carcasses onsite.
In June 1999, Lindner sent Meadow Gold a letter complaining that the dead and decomposing cattle were polluting Papa’ a Stream, which bordered the leased land, and demanding that Meadow Gold “[i]m-mediately cease its practice of disposing cattle carcasses other than in a manner which meets practices of good husbandry and all applicable laws and regulations.” SFG’s Mot. for Partial Summ. J. Ex. H. The Lease’s “Practice of Good Husbandry” covenant provides:
In the use of the premises for dairy operations and related pasture use, Lessee, except insofar as it may be prevented from doing so by an Act of God, the public enemy, fire, strikes or other unavoidable casualty or cause, shall practice good husbandry as defined in this Lease. Lessee shall use the premises in such a manner as to maintain the fertility of the soil and shall continue so to do during the term of this Lease with all reasonable skill, care, prudence and diligence.
SFG’s Mot. for Partial Summ. J. Ex. A, Art. IV § 13 (hereinafter “Lease”). The Lease defines “good husbandry” as:
The phrase “practice of good husbandry” shall mean good husbandry as practiced generally by the sugar and cattle industry in the State of Hawaii and shall, without being restricted thereto, include the prevention or elimination of waste; the employment of routine soil conservation practices to prevent or arrest loss of soil by erosion; the fertilization of areas subject to cultivation with organic and inorganic fertilizers; the control of “noxious weeds” as defined herein; the taking of all steps reasonably necessary to assure against any damage to the water or other natural resources of the premises by the activities of Lessee; and compliance with the highest applicable standards made or adopted pursuant to law in prevention of air and water pollution.
Lease Art. VI § 6(a).
By return letter dated July 6, 1999, Meadow Gold asserted that the “dead animals, a dog and a cock” buried near the Papa‘a Stream were actually on Lindner’s property, not the portion of land leased by Meadow Gold. Further, Meadow Gold claimed that it “ha[d] invested several thousand dollars in an improved system for disposing of animal carcasses. This include[d] digging a large ten-foot-deep trench, well away from Papa‘a Stream, in which carcasses are buried. Lime is applied to the carcasses that are buried in the trench to speed the natural process of decomposition.” SFG’s Mot. for Partial Summ. J. Ex. J.
In 1999, Meadow Gold’s release of cattle manure and wastewater into the Papa'a Stream lead downstream neighbor Peter Guber (“Guber”), principal of Mandalay Inc. and current chairman and owner of film production company Mandalay Entertainment, to file a complaint with the State of Hawaii Department of Health. The Department of Health fined Meadow Gold.
See
Pi’s. Mem. in Opp’n Ex. 7. The Department of Health also requested that Meadow Gold apply for a National Pollution Discharge Elimination System permit and to submit a “comprehensive animal waste management plan.”
See
Pi’s Mem. in Opp’n Ex. 5. Guber also threatened to sue Lindner and Meadow Gold, alleging that the practices of the Moloa'a Dairy Farm violated various environmental laws and regulations and seeking the maximum civil penalty of $25,000 per day per violation. Following these incidents, Meadow Gold constructed several berms and swales across the property, apparently without Lindner’s consent, to contain the cattle waste.
In July 2000, Meadow Gold informed Lindner that it would be terminating the Lease and abandoning its tenancy effective December 31, 2000, a little under thirteen years early. SFG’s counsel, C. Michael Heihre (“Heihre”), apparently acting for Meadow Gold, wrote several letters to Lindner asking for an “election” as to the structures Lindner wanted removed from the property.
See
SFG’s Mot. for Partial Summ. J. Exs. B, C, D, E & F. SFG claims that Lindner did not make the required election prior to Lease’s termination on December 31, 2000. At the time that it surrendered the premises, Meadow Gold left behind various roads, a milking barn, a hospital barn, utilities, underground irrigation systems, a white water tank, and a green metal tank. Meadow Gold argues that such action was appropriate under Article IV § 16 which required Meadow Gold to surrender its possession of the premises, “together with the possession of and title to all buildings and other permanent improvements.”
Lindner asserts that he verbally communicated his desire that these structures be removed to Heihre sometime in 2000. Lindner attests that he and Heihre also discussed arranging for Lindner to undertake the demolition at Meadow Gold’s cost. Pi’s. Mem. in Opp’n, Lindner Decl. ¶¶ 42-45;
Id.
Ex. 1. In a January 2, 2001 letter, Lindner asked Meadow Gold to remove certain underground irrigation systems, excavate and clear the cattle graveyard, regrade the berms and swells, and the like. The included list was not meant to be exhaustive and additional issues were anticipated pending Lindner’s inspection of the premises. Pi’s. Mem. in Opp’n Ex. 3. Lindner thus argues that Meadow Gold’s failure to remove the structures or pay for their demolition was a breach of Article IV § 16 which requires “that in Lessor’s discretion Lessor may require that all buildings, building pads, foundations, fences or other improvements constructed by Lessee during the term shall be removed.”
Lindner also asserts that Meadow Gold’s failure to remove the cattle carcasses from the cattle graveyard constitutes waste in contravention of Article IV § 8: “Lessee shall not make or suffer any strip or waste or any unlawful, improper or offensive use of the premises or of any part thereof or improvements thereon.”
For its part, SFG argues that Lindner’s claims are barred because he failed to give proper notice of default under Article V § 1. That provision allows Lindner to reenter the premises, expel Meadow Gold from the land, and terminate the Lease in circumstances in which Meadow Gold has breached the Lease but failed to cure its defaults after receiving written notice from Lindner.
B. Procedural Background
Lindner filed suit on July 19, 2006, seeking in Count IV removal of permanent
improvements and in Count V restoration of the premises to their pre-Lease condition, On December 1, 2006, Meadow Gold filed a Third-Party Complaint against SFG, seeking in Count I contributions and ir.Jemnification for its potential liability. On January 8, 2007, SFG filed a Counterclaim against Meadow Gold, claiming in Count III that it had met its obligations with respect to Lindner’s removal and restoration claims.
On February 7, 2007, SFG filed a Motion for Partial Summary Judgment as to Counts I and II of Lindner’s Complaint, which Meadow Gold joined. This court granted in part and denied in part SFG’s Motion for Partial Summary Judgment as to Counts I and II, finding that some, but not all of Lindner’s claims for additional rent were time-barred under Hawaii law. The court ordered the parties into arbitration as to the remaining claims for additional rent due.
See generally Lindner v. Meadow Gold Dairies, Inc.,
2007 WL 1430373 (D.Haw. May 14, 2007).
Lindner and SFG both moved for partial summary judgment as to Lindner’s claim for liquidated damages (Count III). The court granted Lindner’s Motion for Partial Summary Judgment and denied SFG’s Motion for Partial Summary Judgment finding that Lindner was entitled to a liquidated damages payment because SFG prematurely terminated the Lease and SFG’s breach was not excused by frustration or rendered null by Lindner’s failure to provide notice of default.
See Lindner v. Meadow Gold Dairies, Inc.,
515 F.Supp.2d 1154, 2007 WL 2320669 (August 9, 2007): Order Granting Pi’s. Mot. for Partial Summ. J. and Denying Defs. Countermotion for Partial Summ. J. as to Count III (Liquidated Damages).
Presently before the court is SFG’s Motion for Partial Summary Judgment as to Counts IV and V of Lindner’s Complaint; Count I of the Third-Party Complaint; and Count III of the Counterclaim on April 20, 2007. Lindner filed his Memorandum in Opposition on May 31, 2007. SFG filed its Reply on June 7, 2007. On June 12, 2007, Lindner filed an Ex Parte Motion for Leave to File Supplemental Declarations of S.K. Djou and Tim O’Byrne, two of Lindner’s expert witnesses upon whose reports Lindner relied in his Memorandum in Opposition. SFG filed its Opposition on June 13, 2007. Lindner filed his Reply on June 15, 2007. Meadow Gold filed a joinder to SFG’s Motion for Partial Summary Judgment with respect to Lindner’s Count IV and V claims on June 18, 2007. The court heard oral arguments on that same day.
III.
STANDARDS OF REVIEW
A. Summary Judgment Standard
A party is entitled to summary judgment where there is no genuine issue of material fact. Fed.R.Civ.P. 56(c). When reviewing a motion for summary judgment, the court construes the evidence— and any dispute regarding the existence of facts — in favor of the party opposing the motion.
Snead v. Metro. Prop. & Cas. Ins. Co.,
237 F.3d 1080, 1086 (9th Cir.2001). “One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses.”
Celotex Corp. v. Catrett, 477
U.S. 317, 323-24, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Thus, summary judgment will be mandated if the non-moving party “ ‘fails to make a showing sufficient to establish the existence of an element essential to that party’s case.’”
Broussard v. Univ. of Cal. at Berkeley,
192 F.3d 1252, 1258 (9th Cir.1999)
(quoting Celotex, 477
U.S. at 322, 106 S.Ct. 2548).
B. Choice of Law in Diversity Cases Brought Under 28 U.S.C. § 1332
The court has diversity jurisdiction over Lindner’s claims under 28 U.S.C.
§ 1332. Under
Erie R.R. Co. v. Tompkins,
304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), federal courts sitting in diversity cases apply federal procedural rules and substantive state law. “In the absence of controlling state law, a ‘federal court sitting in diversity must use its own best judgment in predicting how the state’s highest court would decide the case.’ ”
Tirona v. State Farm Mut. Auto. Ins. Co.,
812 F.Supp. 1083, 1085 (D.Haw.1993) (citations omitted).
IV.
ANALYSIS
A. Motion for Leave to File Supplemental Declarations
Lindner filed a motion requesting leave to file certain declarations that he had neglected to attach when filing his Memorandum in Opposition to SFG’s Motion for Partial Summary Judgment. Specifically, Lindner sought to include additional declarations and background information from S.K. Djou and Tim O’Bryne, two experts upon whose opinion Lindner’s Memorandum in Opposition relies. Lindner fails to set forth the reasons for his original oversight. Seeing no good cause for the delay and in light of the potential prejudice to SFG, the court DENIES Lindner’s Motion for Leave to file Supplemental Declarations. Further, this Order does not rely on the Djou or O’Bryne reports in reaching its conclusion.
B. Notice Requirement
SFG argues that Plaintiffs claims in Counts IV and V fail as a matter of law because Lindner neglected to give proper notice of Meadow Gold’s performance defects under Article V § 1 and that Meadow Gold was denied the resulting opportunity to cure. Article V § 1 provides:
This demise is upon the express condition that ... if Lessee shall fail to observe or perform any of the other covenants by Lessee herein contained, and such default shall continue for thirty (30) days after written notice thereof is given to Lessee (unless such default is of such a nature so as to reasonably require a longer period to cure, but in no event longer than ninety (90) days from the giving of the notice by Lessor) ... Lessor may ... at once re-enter the premises or any part thereof in the name of the whole, and, upon or without such entry, at its option terminate this Lease, and may expel and remove from the premises Lessee and any persons claiming by, through or under Lessee and their effects without being deemed guilty of any trespass or becoming liable for any loss or damaged occasioned thereby, all without service of notice or legal process and without prejudice to any other remedy or right of action, including summary possession, which Lessor may have for arrears of rent or for the same or any preceding or other breach of contract.
Lease Art. V § 1. SFG argues that under the Hawaii Supreme Court’s interpretation of similar language in
Aickin v. Ocean View Investments Co.,
84 Hawai'i 447, 935 P.2d 992 (1997), Plaintiff was required to give Meadow Gold notice of default as to any and all performance defects, including alleged failure to properly remove structural improvements (as contained in Count IV) and failure to remove cattle carcasses, berms and swells, and the like (as contained in Count V). SFG does not argue that it was entirely unaware of Plaintiffs demands, but instead submits that Plaintiffs failure to provide specific written notice of default constitutes a procedural failure sufficient as a matter of law to deny Plaintiff recourse under the terms of the Lease.
The court rejects SFG’s argument.
See also Lindner v. Meadow Gold Dairies,
Inc.,
515 F.Supp.2d 1154, 2007 WL 2320669 (August 9, 2007): Order Granting Pi’s. Mot. for Partial Summ. J. and Denying Defs. Countermotion for Partial Summ. J. as to Count III (Liquidated Damages) (rejecting SFG’s argument that Lindner’s failure to provide a specific notice of default barred his claim for liquidated damages).
Aickin
is ultimately unavailing to SFG. In
Aickin,
the court was asked to determine whether, under equitable principles, the lessees’ defaults constituted a material breach sufficient to justify the lessor’s repossession of the property.
The Court reasoned that because the lessor did not give the lessees notice of their default as required by the terms of the lease — and because the lessees did not have a thirty-day opportunity to cure their defective performance — -the lessees’ defaults did not constitute material breaches of the lease and the lessor was not entitled to repossess the property.
Aickin,
84 Hawaii at 459 n. 20, 935 P.2d at 1004 n. 20.
Aickin
thus holds that where the relevant language of a lease requires notice of default prior to a lessor’s re-entry and repossession of land, a lessor must provide a notice of default specifying the lessee’s performance defects and a meaningful opportunity to cure before the lessor may terminate the lease and evict the lessee. The notice requirement is a condition precedent to a lessor’s entry and repossession of the land. As such, it protects the pos-sessory interests of the lessee from unintentional, inadvertent, or negligent waiver. However, nothing in
Aickin
holds that lessors are
always
required to give notice to lessees of any and all breaches before pursuing means of redress other than reentry, expulsion of the lessee, and repossession of the land.
The Lease language at issue here — largely identical to that in
Aickin,
but without its caveat that a commencement of cure of the breach prevents the Lessee from being in default — provides that notice is required before Lindner undertakes certain actions, namely reentry, expulsion, and repossession of the land. “Absent an ambiguity, contract terms should be interpreted according to their plain, ordinary, and accepted sense in common speech.”
Found. Int’l, Inc. v. E.T. Ige Const., Inc.,
102 Hawaii 487, 495, 78 P.3d 23, 31 (2003). Under the plain language of the Article V § 1, the notice of default requirement is a condition precedent
only
to Lindner “re-enter[ing] the premises,” “terminate[ing] the Lease,” and/or “expel[ing] and remov[ing]” Meadow Gold from the premises.
Article V § l’s language does not extend the notice requirement to other, unlisted acts by the Lessor. Nor is there any indication elsewhere in the Lease that the notice of default requirement was contemplated as a bar to the Lessor’s right to pursue damages subsequent to, and resulting from, the early termination of the Lease.
See Maui Land & Pineapple Co. v. Dillingham Corp.,
67 Haw. 4, 10, 674 P.2d 390, 394 (1984) (“[A]n agreement should be construed as a whole and its meaning deter
mined from the entire context and not from any particular word, phrase, or clause”) (citation omitted);
accord Hawaii Med. Ass’n v. Hawaii Med. Serv. Ass’n, Inc.,
113 Hawai'i 77, 92, 148 P.3d 1179, 1194 (2006);
Hawaiian Isles Enters., Inc. v. City & County of Honolulu,
76 Hawaii 487, 491, 879 P.2d 1070, 1074 (1994).
Finally, Meadow Gold’s assertion that it did not have an opportunity to investigate and cure the defects in its performance and to thereby minimize damages (including avoiding the expense of litigation) prior to the filing of the present suit is unconvincing. While Lindner may or may not have given notice of his desire to have certain structures and organic remains removed before the December 31, 2000 termination of the Lease, it is quite clear that Meadow Gold knew of Lindner’s expectations at the latest by early January 2, 2001, only two days after the termination of the Lease and approximately 5.5 years prior to the filing of the present suit.
C. Count IV: Removal of Permanent Improvements
Lindner alleges that Meadow Gold failed to remove a milking barn, hospital barn, various roads, a white water tank, a green metal tank, utilities, and underground irrigation systems as required by the Lease.
See
Compl. ¶24. The Lease provides:
At the expiration of the term or sooner termination, Lessee shall peaceably surrender and deliver up to Lessor possession of the premises, together with the possession of and title to all buildings and other permanent improvements of whatever kind or nature thereon, but not including automotive or portable machinery or equipment which in a dairy operation and related pasture use is customarily moved from place to place upon said premises, in substantial good order and condition, reasonable wear and tear and damage by the elements or other unavoidable casualty not herein required to be insured against excepted; provided, however, that in Lessor’s discretion Lessor may require that all buildings, building pads, foundations, fences or other improvements constructed by Lessee during the term shall be removed and the premises restored, to the greatest extent possible, to the condition they were in at the commencement of this Lease.
Lease Art. IV § 16. SFG argues that Lindner’s claim should be denied as a matter of law because Lindner failed to elect the items that he wished removed until after the Lease had been terminated. The court rejects this argument.
There is a genuine issue of material fact as to whether Lindner gave Meadow Gold sufficient notice of his expectations
before
the termination of the Lease. Lindner argues that he gave Heihre verbal notice of his demands in a telephone conversation sometime in September 2000 and that the two engaged in negotiations as to whether Meadow Gold would remove the structures or would pay Lindner to have them demolished. Pi’s. Mem. in Opp’n, Lindner Decl. ¶¶ 42-45. Although SFG argues that written correspondence suggests no such communication took place, the court does not weigh evidence at the summary judgment stage. Lindner also provides permit applications for the demolition of buildings filed in October of 2000, which may indicate that some sort of discussion or planning regarding demolition activity occurred pri- or to the termination of the Lease.
Id.
Ex. 1. SFG’s Motion for Partial Summary Judgment as to Count IV is DENIED.
D. CountV: Restoration of Premises
Lindner claims that Meadow Gold was required to remove the parts or re
mains of the over twelve hundred dead cattle and related matter it buried on the premises over the years; regrade the berms and swales; and restore other areas to their pre-Lease condition. According to Lindner, Meadow Gold’s failure to do so violates various covenants of the Lease.
See
Compl. ¶ 60.
In response, SFG asserts that its burial of the cattle and grading practices on the leased premises comported with Hawaii state law and the “Use of the Premises and Practice of Good Husbandry” Lease covenant, and, as such, constituted “normal wear and tear” of a dairy operation. The good husbandry provision provides:
In the use of the premises for dairy operations and related pasture use, Lessee, except insofar as it may be prevented from doing so by an Act of God, the public enemy, fire, strikes or other unavoidable casualty or cause, shall practice good husbandry as defined in this Lease. Lessee shall use the premises in such a manner as to maintain the fertility of the soil and shall continue so to do during the term of this Lease with all reasonable skill, care, prudence and diligence.
Lease Art. IV § 13. The Lease defines “good husbandry” as:
The phrase “practice of good husbandry” shall mean good husbandry as practiced generally by the sugar and cattle industry in the State of Hawaii and shall, without being restricted thereto, include the prevention or elimination of waste; the employment of routine soil conservation practices to prevent or arrest loss of soil by erosion; the fertilization of areas subject to cultivation with organic and inorganic fertilizers; the control of “noxious weeds” as defined herein; the taking of all steps reasonably necessary to assure against any damage to the water or other natural resources of the premises by the activities of Lessee; and compliance with the highest applicable standards made or adopted pursuant to law in prevention of air and water pollution.
Because the Lease required that the premises be used for “dairy operations and related pasture use,”
see
Lease Art. IV § 13, SFG argues that lawful burial of cattle and grading is an incidental, anticipated, and common occurrence of dairy and pasture operations. SFG thus argues that Meadow Gold was not required to remove the cattle remains.
While Meadow Gold’s practices may have been consistent with state law,
the Lease does not limit practice to those made lawful but requires
good husbandry as practiced generally by the sugar and cattle industry in the State of Hawaii ... the taking of all steps reasonably necessary to assure against any damage to the water or other natural resources of the premises by the activities of Lessee; and compliance with the highest applicable standards made or adopted pursuant to law in prevention of air and water pollution.
Lease Art. VI § 6(a). Although SFG has produced evidence that they did not run afoul of the law, they have not shown that the practiced “good husbandry” as defined in the Lease.
Moreover, contrary to SFG’s arguments, burial of the cattle on the leased property was not an inevitable result of a dairy farming operation since there were other disposal methods (including offsite burial sites or burning of the carcasses) available. SFG has thus failed to demonstrate, at the summary judgment stage, that no genuine issue of material fact exists as to whether Meadow Gold’s use of the leased land as a cattle graveyard constituted good husbandry. Moreover, SFG has also failed to show that it restored the land in the condition required by Article IV § 16 (requiring Meadow Gold to “deliver up to Lessor possession of the premises ... in substantial good order and condition.... ”). The questions of whether Meadow Gold’s cattle disposal methods were good husbandry, and whether Meadow Gold sufficiently restored the leased land, are questions for the trier of fact to decide. SFG’s Motion for Partial Summary Judgment as to Count V is DENIED.
V.
CONCLUSION
The court DENIES the Plaintiffs Motion for Leave to File Supplemental Declarations. The court also finds that there are genuine issues of material fact as to Plaintiffs claims in Counts IV and V. As such, the Third-Party Defendant’s Motion for Partial Summary Judgment is DENIED.
The claims remaining in Plaintiffs Complaint include: Count I (as to minimum rent originally due on October 1, 2000; issue submitted to arbitration); Count II (as to percentage rent originally due on January 30, 2001; issue submitted to arbitration); Count IV (removal of permanent improvements); and Count V (restoration of the premises).
IT IS SO ORDERED.