Opinion ID: 2582211
Heading Depth: 2
Heading Rank: 2

Heading: Whether the Circuit Court Abused Its Discretion in Denying the Plaintiffs' Motion to Amend

Text: The plaintiffs next contend that the circuit court erred in denying their motion for leave to amend their first amended complaint. They contend that the revised second amended complaint sought justiciable declaratory relief and that, therefore, they should have been accorded a chance to pursue justiciable relief[.] Furthermore, although the plaintiffs acknowledge that a court may deny a motion for leave to amend a complaint when the amendments are futile, they argue that [t]he requested amendments were not futile because [the plaintiffs'] claims for declaratory relief and other non-damages relief was not `frivolous' or `legally insufficient on its face.['] The State argues: There is no abuse of discretion in denying a motion for leave to amend when the proposed amendment would be futile. Here, the proposed amendments could not begin to overcome [the plaintiffs'] failure to state viable claims for breach of contract or breach of trust, the non-justiciability of the complaint, the jurisdictional bars of sovereign immunity and the statute of limitations, the constitutional separation of powers that requires legislative rather than judicial action to fill the Act 304 void, and the legal consequences of the prior adjudication in OHA I. The circuit court properly exercised its discretion in denying leave to re-amend. HRCP Rule 15(a) (2000) governs the plaintiffs' request to amend their complaint and provides in pertinent part: Amendments. A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served or, if the pleading is one to which no responsive pleading is permitted and the action has not been placed upon the trial calendar, the party may so amend it at any time within 20 days after it is served. Otherwise a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires[.] (Italicized emphasis in original.) (Underscored emphasis added.) Inasmuch as HRCP Rule 15(a) is identical to FRCP Rule 15(a), this court has looked to the general standard applied by federal courts in interpreting this rule. Gonsalves v. Nissan Motor Corp. in Hawai`i, Ltd., 100 Hawai`i 149, 160, 58 P.3d 1196, 1207 (2002) (noting that, [i]n interpreting [HRCP Rule 15(a)], this court has looked to the general standard applied by federal courts). For example, In [ Bishop Trust Co., Ltd. v. Kamokila Dev. Corp., 57 Haw. 330, 555 P.2d 1193 (1976)] . . . we referred to the following statement of the general standard employed under Rule 15(a) by the federal courts: In the absence of any apparent or declared reason  such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc.  the leave sought should, as the rules require, be freely given.  ( Foman v. Davis, 371 U.S. 178, at 182, 83 S.Ct. 227, at 230, 9 L.Ed.2d 222). Fed. Home Loan Mortgage Corp. v. Transamerica Ins. Co., 89 Hawai`i 157, 162, 969 P.2d 1275, 1280 (1998) (citing Assoc. Eng'rs & Contractors v. State, 58 Haw. 187, 218-19, 567 P.2d 397, 417 (1977)) (ellipses in original) (emphases added); see also Gonsalves, 100 Hawai`i at 160, 58 P.3d at 1207. Therefore, where the proposed amendments to a complaint are, inter alia, futile, a court may deny a motion for leave to file the amended complaint. See, e.g., Lucente v. Int'l Business Machines Corp., 310 F.3d 243, 258 (2d Cir. 2002) (One appropriate basis for denying leave to amend is that the proposed amendment is futile. (Citations omitted.)). Federal courts have further explained that [a]n amendment to a pleading is futile if the proposed claim could not withstand a motion to dismiss [for failure to state a claim] pursuant to [FRCP Rule] 12(b)(6). Id. (citation omitted); see also Bradley v. Val-Mejias, 379 F.3d 892, 901 (10th Cir.2004); Vargas-Harrison v. Racine Unified Sch. Dist., 272 F.3d 964, 974-75 (7th Cir.2001), cert. denied, 537 U.S. 826, 123 S.Ct. 120, 154 L.Ed.2d 38 (2002); Alvin v. Suzuki, 227 F.3d 107, 121 (3d Cir.2000). In the instant case, the plaintiffs twice sought to amend their first amended complaint  once prior to the circuit court's oral dismissal of the first amended complaint and once thereafter. However, the claims presented in each proposed amended complaint were identical. Specifically, both deleted the claim for misrepresentation and non-disclosure and added a claim alleging that the State breached the covenant of good faith and fair dealing implied in the Act 304 Settlement[.] Inasmuch as we have already analyzed and concluded that the claims in the first amended complaint were properly dismissed, we now examine the sole new claim alleged in the proposed second amended complaints to determine whether it could survive a motion to dismiss. The plaintiffs' claim for breach of good faith and fair dealing is based on their belief that the State's failure to oppose the FAA's position not only constitutes a breach of the Act 304 Settlement as a contract but also the covenant of good faith and fair dealing implied in the Act 304 Settlement[.] In other words, the new claim is inextricably linked to the plaintiffs' allegation that Act 304 constituted a settlement agreement or contract. However, as previously discussed, neither the language nor circumstances surrounding Act 304's enactment evinces the clear and unambiguous legislative intent to contractually bind the State to Act 304's terms and, as such, it cannot be said that Act 304 constituted a settlement agreement. Inasmuch as the plaintiffs cannot establish that the State entered into a valid, enforceable, and binding settlement agreement with the plaintiffs, we conclude that the plaintiffs can prove no set of facts entitling them to relief based on this new claim. Therefore, the proposed claim of breach of good faith and fair dealing, like the other claims in the second amended complaints, fails to state a claim upon which relief could be granted and would not have survived a motion to dismiss. Consequently, the proposed complaints are futile. Accordingly, we hold that the circuit court did not abuse its discretion in denying the plaintiffs' motion to amend.