FILED SUPEPJOR COURT OF GUAM 2020 MI I 3 ?S
CLERK OF &URT IN THE SUPERIOR COURT OF GUAM BY: —-
AES CONSTRUCTION, INC., Superior Court Case No. CV0798-18
Plaintiff, DECISION AND ORDER vs. RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND GUAM WANFANG CONSTRUCTION, CROSS-MOTION FOR SUMMARY LTD., and DOES 1 through 10, inclusive, JUDGMENT
Defendants.
The Court here considers Plaintiff AES Construction, Inc.’s Motion for Summary
Judgment and its Cross-Motion for Summary Judgment on the counterclaims asserted by
Defendant Guam Wanfang Construction, Ltd. (GWC). The Court GRANTS TN PART and
DENIES IN PART both motions.
I. UNDISPUTED FACTS’
A. The Parties’ Agreement
The parties entered into a Standard Form of Agreement Between Owner and
Design/Builder on March 15, 2015, with GWC as the owner of the project and AES as the
design/builder. Deci. John Sherman, Ex. 1 (Dec. 20, 2019).2 The project involved a residential
condominium complex with supporting amenities such as a restaurant, garden, beach sports
facility, beach board-walk, and other facilities. Decl. John Sherman, Ex. 1 at 2. The Agreement
outlined four phases of work:
Simultaneously with this Decision and Order, the Court has issued an Order on AES’ evidentiaiy objections. This “undisputed facts” discussion excludes any evidence for which the Court sustained objections. 2 Unless otherwise indicated, all citations to the Declaration of John Sherman reference his Declaration filed on December 20,2019. CV0798-1$ DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 2 AND CROSS-MOTION FOR SUMMARY JUDGMENT
a. Preliminary Concept Design & GLUC Permitting —
Preliminary Concept Design & GLUC Permitting. Prepare design schematics to submit the GLUC Application. Conduct and prepare calculations and position statements for all site utility requirements. Represent and negotiate development terms with the government agencies.
b. Schematic Design, Preliminary Concept Design & GLUC Permitting. Prepare design schematics to submit the GLUC Application. Conduct and prepare calculations and position statements for all site utility requirements. Represent and negotiate development terms with the government agencies.
c. Design Development, Design Development (DD Phase) -
AfE team will prepare Design Development documents consisting of drawings and other documents to fix and describe the size and character of the entire project for approval by the Owner and reviewed by the approving government agencies
d. Construction Documents From the approved Design -.
Development document, the Construction Documents consist of drawings, specifications, and other documents describing the requirements for construction of the project will be prepared.
Decl. John Sherman, Ex. 1 at 9-10.
GWC agreed to compensate AES in at least five phases. After an initial payment, the
first three payments were:
• $500,000 on June 1, 2015 “Upon Obtaining Approved GLUC Permit”
• $880,000 on August 1, 2015, for “Schematic Design Submittal” and “Obtain Army Corps Engineer’s Wetland and Government of Guam Sea Shore Permit”
• $800,000 on November 1, 2015 for “Design Development Submittal & Conditional HPR Documentation Approval”
Decl. John Sherman, Ex. 1 at 10. The Agreement required any amendments thereto to be in
writing signed by both GWC and AES. Deci. John Sherman, Ex. 1, § 1.2.2, 7.4. CV0798-18 . DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT e Page 3 AND CROSS-MOTION FOR SUMMARY JUDGMENT
B. Initial Submissions to GLUC I Geology and Soils Report
GWC submitted a Zone Variance Application to the Guam Land Use Commission
(GLUC), which then issued an Amended Notice of Action in May 2016. Decl. John Sherman,
Exs. 3, 4. Among other conditions, the Amended Notice of Action required a “soil report and
geology engineering report.” Decl. John Sherman, Ex. 4 at 5. The parties’ Agreement also
required ABS to “furnish and pay for the services of geotechnical engineers. . . when such
services are stipulated in this Part i Agreement or deemed reasonably necessary by the
Design/Builder.” Deci. John Sherman, Ex. 1 at 5.
Neither party pointed to a provision in the Agreement which stipulated when ABS would
furnish and pay for the services of geotechnical engineers. GWC believed that AES would
obtain the geology report during the Schematic Design (SD) Phase. Decl. Qinggao Lan, ¶ 16.
In support, GWC points to AES’ December 2016 Status Update to the GLUC. In that document,
AES advised it would provide a soil report and geology engineering report during “SD” and that
ABS was “In Compliance. ABS contracted soil engineer; testing complete.” Decl. Jeffrey
Cook, Bx. C (Feb. 18, 2020). GWC further points to AES’ May 2017 Status Update to the
GLUC which indicated that “ — Schematic Design (Early Design Phase describing the Basic
Components of the Project.) Completed December 2, 2016” and to the March 2018 Status
Update indicating “testing complete.” Dee!. Jeffrey Cook, Exs. F, G. GWC also references
ABS’s proposal, which specified that geotechnical engineering may become necessary as basic
design services. Decl. Jeffrey Cook, Ex. D at 3, 4.
The Agreement was divided in two parts. Part 1 concerned design while Part 2 dealt with construction. Deci. John Sherman, Ex. 1 at 1. Lan’s Declaration is attached to the Declaration of Jeffrey A. Cook re: Electronic Filing, filed on February 18, 2020. CV079$-1$ . e DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 4 AND CROSS-MOTION FOR SUMMARY JUDGMENT
In contrast, AES contends that the soils report completion occurs at the DD Phase. Supp.
Deci. John Sherman, ¶ 11 (Mar. 4, 2020). ABS commissioned Geo Engineering & Testing, Inc.
(“Geo”) for a soil report and made an initial payment to Geo. Supp. Deci. John Sherman, ¶ 6. Geo conducted exploratory soil borings. Supp. Deci. John Sherman, ¶ 7. According to ABS, a
soil report is an essential design requirement “needed to complete the design of a building. The
Project is located on an alluvial soil near the mouth of Pago River.” Supp. Deci. John Sherman,
¶ 5. AES gathered information on the planned foundation type using Island Geological reports by US Geological Surveys and the University of Guam, prior subsoil information, consultations
with Geo, and confirmation of the depth of the soil during exploratory data soil collection
drillings. Supp. Deci. John Sherman, ¶8. According to AES, while preparing the SD package
for GWC, “ABS determined it had sufficient information to submit the total design to the Owner.
While the final soils report is an essential document, the continuous consultation we had with the
geo-technical engineer at [Geo] provided us enough information to submit the SD package” to
GWC. Supp. Decl. John Sherman, ¶ 10. “The test data contained in the final soils report would
have been ultimately used during the subsequent design development phase. . . and for the
design of the storm water management plan as required in section 2(a) of the Amended Notice of
Action but that was not necessary to submit and finalize during the SD package.” Supp. Dccl.
John Sherman, ¶ 10.
It is undisputed that ABS terminated its services before reaching the DD Phase. ABS
believes that because its services terminated at the SD phase, and the design of a stormwater
management plan occurs at the next phase (DD), obtaining the completed soils report became
unnecessary. Supp. Dccl. John Sherman, ¶ 11. ABS has also advised that the “soils report was CV0798-18 e DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 5 AND CROSS-MOTION FOR SUMMARY JUDGMENT
not completed due to non-payment of AES fees by Defendant and AES termination of its
services to the Project.” Deci. John Sherman, ¶ 7 (Nov. 6, 2019).
GWC did not receive a soil report and was not advised by AES that it did not obtain the
report. Deci. Qinggao Lan, ¶J 8, 17.
C. Marina and Boat Launch facility
GWC’s initial project sketches included a commercial marina and boat launch facility.
Deci. John Sherman, Ex. 2. AES claims that at some point, GWC decided not to pursue the
marina due to public opposition to the zone variances, budget limitations, a requirement to
dedicate the land to the Guam Fire Department, and AES’s designs which avoided encroachment
on the wetlands or seashore. Decl. John Sherman, ¶ 10. AES has not provided any written
evidence which indicates that GWC adopted these reasons, however.
In September 2015, months after execution of the Agreement, AES prepared a
supplemental scope of work. That scope of work explicitly excluded marina construction. Deci.
Jeffrey Cook, Ex. H. In October 2016, AES and GWC representatives met in China for AES’
presentation of its schematic design plans. AES’ plans did not include a marina or boat launch
facility. Supp. Decl. James Fang, ¶ 5 (Mar. 4, 2020).
In May 2017, AES submitted a Status Update to the GLUC. The Status Update noted
that the commercial operations of a marina were no longer part of the development. Decl. John
Sherman, Ex. 9 at 55 AES contends that eliminating a marina obviated the need for any
seashore permits. See also Supp. Deci. James Fang, ¶.
AES also provided excerpts of an appraisal dated January 2017 which do not mention a marina. That appraisal appears to be submitted directly to Fang, so it is unclear whether anyone other than Fang knew of the appraisal. Supp. Deci. James Fang, Ex. 1 (Mar. 4, 2020). CV0798-18 e DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 6 AND CROSS-MOTION FOR SUMMARY JUDGMENT
AES claims that GWC—through Fang—advised it would no longer pursue a marina and
boat launch facility. Supp. Deci. John Sherman, ¶ 22. Fang acted as the General Manager of
GWC and GWC’s sole representative on Guam. Supp. Deci. James Fang ¶ 3. Fang’s authority
included executing an Addendum to the Agreement, signing a $475,000 check issued to AES,
and draffing an authorization letter notifying the Government of Guam that AES is authorized to
represent GWC before the GLUC for this project. Deci. John Sherman, Exs. 1 at 000014, 2 at
000089, and 5. According to AES, “All the reasons for not pursuing the marina and boat launch
facility was communicated to Mr. Fang which resulted in his oral permission to submit the
Project Status Update with the GLUC on May 2, 2017, advising GLUC that GWC was no longer
pursuing the marina and boat launch facility development. . . and at no time did Mr. Fang ever
advise AES that GWC had changed its position on this issue.” Supp. Deci. John Sherman, ¶ 22.
On the other hand, Qinggao Lan, President of GWC, claims that he did not receive direct
information about the elimination of the marina and boat launch facility. Decl. Qinggao Lan, ¶f 7, 14. “Fang did not have authority to make such a unilateral change in the project without
approval of high ups in the company including me.” Decl. Qinggao Lan, ¶7. GWC claims that
it never informed AES that it wanted to forego the marina and boat launch facility. Deci.
Qinggao Lan, ¶J 4, 12. Had it been so advised, it “would have requested a revision of the
contract to remove the cost for obtaining the permits.” Decl. Qinggao Lan, ¶ 13.
Instead, according to Lan, AES informed GWC that the Government of Guam would
fund $1,000,000 for a boat launch facility. “Acquiring the two permits are time and money
consuming processes. If GWC had given up seeking these two permits, the company would
have definitely asked AES to deduct the relevant fees from the design fees set out in the CV0798-18 a DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 7 AND CROSS-MOTION FOR SUMMARY JUI)GMENT
contract” Decl. Qinggao Lan, ¶ 5. AES never provided a change order to eliminate costs
related to the permits. Decl. Qinggao Lan, ¶ 13.
Finally, according to Lan, GWC never accepted the quality of the completed SD
drawings. Deci. Qinggao Lan, ¶6.
D. Foundation Issues
GWC claims that AES tendered no written information to him about pilings and
foundation, including at their meetings in August 2016 in Guam and in October 2016 in China.
Deci. Qinggao Lan, ¶ 8, 11. Also, “AES never provided GWC with any documentation
regarding the issue of increased cost for the project due to the depth of pilings and number of
pilings that would be required based on the proposed design of the building” or with foundations
drawings showing the depth and number of the pilings. DecI. Qinggao Lan, ¶J 9, 10. This
despite AES agreeing that it would provide updated costs. Deci. Qinggao Lan, ¶ 10. The Agreement tasks AES with providing revisions to the budget. Decl. John Sherman, Ex. 1 § 1.4.2.
E. Payments
AES claims that it received $774,880 in payments between May 2016 and January 2018.
Deci. John Sherman, ¶J 13, 24. Also, in January 2018, Fang advised AES that substantial
additional payments were forthcoming, and AES should continue to work on the project. Decl.
John Sherman, ¶ 25. On March 30, 2018, AES advised the Department of Land Management
that it no longer represented GWC. Decl. Jeffrey Cook, Ex. E; Decl. John Sherman, ¶ 32. GWC construes AES’s letter to DLM as AES’s termination of services. CV0798-1$ DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page $ AND CROSS-MOTION FOR SUMMARY JUDGMENT
AES claims damages of $757,927.63, not inclusive of prejudgment interest. Deci. John
Sherman, ¶J 34, 35.
F. Mechanic’s Lien
AES recorded a Mechanic’s Lien on May 31, 2018. Deci. John Sherman, Ex. 18. The
Lien referenced AES’ claim for $757,927.93 plus interest against GWC.
Fang is GWC’s designated agent for service of process. Deci. I. Bronze, ¶ 16, Exs. 12,
Art. 8, 13 (Dec. 20, 2019). AES mailed the Notice of Lien to GWC’s mailing addresses in Guam
and China and served Fang personally at his residence. Deci. I. Bronze, Exs. 7-9. AES also
received a return receipt. Decl. J. Bronze, Ex. 7.
G. Complaint/Service
AES filed a Complaint for Damages and Foreclosure of Mechanic’s Lien against GWC.
Compl. (Aug. 20, 2018). The Complaint alleges claims for breach of contract, quantum meruit
and quantum valebant, and foreclosure of mechanic’s lien. AES personally served the
Complaint on Fang. Decl. Serv. (Sept. 5, 2018).
GWC’s Answer listed seven affirmative defenses: AES failed to file and protect its lien;
AES failed to allege viable claims; estoppel; laches; AES failed to obtain an approved height
variance; insufficient service of process of the Complaint; and insufficient service of the
Mechanic’s lien. GWC also raises counterclaims for breach of contract. Answer and Countercl.
(Sept. 20, 2018).
II. LAW AND DISCUSSION
A. Summary Judgment Standard
A court may grant summary judgment “if the pleadings, depositions, answers to CV0798-18 e DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 9 AND CROSS-MOTION FOR SUMMARY JUDGMENT
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” GRCP 56(c). A genuine issue of fact exists when “there is ‘sufficient evidence’
which establishes a factual dispute requiring resolution by a fact-finder.” lizuka Corp. v.
Kawasho Int’l (Guam), Inc., 1997 Guam 10 ¶ 7 (citing T W Etec. Serv., Inc. v. Pacflc Elec.
Contractors Ass ‘n, 809 f.2d 626, 630 (9th Cir. 1987)). “A ‘material’ fact is one that is relevant
to an element of a claim or defense and whose existence might affect the outcome of the
suit.. .Disputes over irrelevant or unnecessary facts will not preclude a grant of summary
judgment.” lizuka Coip., 1997 Guam 10 ¶ 7. “If the movant can demonstrate that there are no
genuine is sues of material fact, the non-movant cannot merely rely on allegations contained in
the complaint, but must produce at least some significant probative evidence tending to support
the complaint.” Edwards v. Facfic Fin. Corp., 2000 Guam 27 ¶ 7. finally, the “Court must
view the evidence and draw inferences in the light most favorable to the non-movant.” Id.
B. AES’ Breach of Contract Claim
1. GWC may raise the issue of the conditions precedent even if it did not raise them as affirmative defenses.
AES claims that GWC has waived the defense that AES failed to satisfy certain
conditions precedent. Specifically, AES claims that GWC failed to assert an affirmative defense
contending that AES did not obtain the wetland and seashore permits. Reply at 12 (Mar. 12,
2020). Although Guam Rule of Civil Procedure 8(c) requires any matter constituting an
avoidance to be raised as an affirmative defense, the waiver of such a position depends on
fairness. As explained in Citizens Security Bank v. Bidaure, 1997 Guam 3, the court must
examine whether the opposing party suffered prejudice. CV0798-18 DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 10 AND CROSS-MOTION FOR SUMMARY JUDGMENT
GWC’s Answer and Counterclaim allege that AES failed to obtain necessary permits.
Such a counterclaim placed AES on notice of GWC’s position early on in this litigation. Thus,
while GWC did not raise any failure of conditions precedent as affirmative defenses, AES has
not suffered prejudice. The Court therefore will proceed to consider GWC’s defense.
2. Rule 9(c) does not bar GWC from raising arguments regarding conditions precedent.
AES further asks to bar GWC from arguing that AES failed to satisfy a condition
precedent because it failed to plead such failure with particularity under Guam Rule of Civil
Procedure 9(c). According to AES, “AES has been prejudiced by failing to explore further
through discovery the facts relating to GWC’s current position that it never intended not to
pursue the marina and boat launch facility. Thus, all arguments relating to the failure to obtain
the Permits by AES cannot be considered by the Court” Reply at 14.
While it appears correct that GWC’s Answer (and its Counterclaim) did not particularly
address AES’ failure to obtain permits, AES again has not been prejudiced. For example, AES’
Motion points to the deposition of GWC’s Rule 30(b)(6) representative, during which AES
inquired whether a marina or boat launch facility was mentioned in two separate documents.
Supp. Decl. Jacques Bronze, Ex. 20. AES had enough notice of GWC’s position to pose these
questions.
Courts also show some leniency on a Rule 9(c) deficiency as consistent with Rule 15’s
liberal pleading standard. Odyssey Reinsurance Co. v. Cal-Regent Ins. Servs. Corp., 123 F.
Supp. 3d 343, 353 (D. Conn. 2015) (citing federal cases). “Where defendants failed to deny with
particularity in their pleadings the performance of conditions precedent, and raised particular
failures of performance for the first time at summary judgment, courts in this Circuit have CV0798-18 DECISION AD ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 11 AND CROSS-MOTION FOR SUMMARY JUDGMENT
allowed defendants to amend their pleadings.” Id. The Court finds that AES would not be
unduly prejudiced in allowing GWC to present this defense and permits leave of court to amend
its Answer.
3. Whether there are genuine issues of material fact concerning GWC’s breach of contract.
It is undisputed that the Agreement terminated prior to the fulfillment of all terms. AES
asks the Court to find that there is no genuine issue of material fact that GWC breached the
contract by failing to pay the amounts owed to AES. GWC responds by pointing to three alleged
breaches by AES: failure to obtain a geotechnical report; failure to design a marina and boat
launch facility, and relatedly, failure to obtain permits; and failure to provide information and a
revised budget about foundational issues.
a. The Geotechnical/Soils Report
GWC claims that there is an issue of fact regarding whether the SD phase was completed
absent a soils report. AES responds that by submitting the SD plans, it satisfied the conditions
for payment. AES further argues that the SD phase did not require a completed soils report and
also that there was no requirement for a soils report prior to payment.
In the plain language of the contract, the SD phase’s scope of work required AES to
“prepare design schematics to submit the GLUC Application.” Dee!. John Sherman, Ex. A at 9.
Payment for the SD phase was contingent upon “Schematic Design Submittal.” DecY. John
Sherman, Ex. A at 9-10 (emphasis added). GWC does not dispute that AES presented its
schematic designs to GWC in China in October 2016, though it complains about the quality of
the product, implying that GWC did not consider AES’s SD phase work to be completed. Deci.
Jacques Bronze, Ex. 5 at 33 (Depo. Tr. Longzhi Sun); Decl. Qinggao Lan, ¶ 6. CV0798-1$ DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 12 AND CROSS-MOTION FOR SUMMARY JUDGMENT
The Agreement does not define “submit” nor does it provide a mechanism whereby
GWC approves of what AES presents in the SD Phase prior to payment. In a business context,
the term “submit” means “to formally send a document, plan, etc. to a person or group in
authority so that they can make a decision about it.” Cambridge Dictionary, https://dictionary.
cambridge.org/dictionary/englishlsubmit (last visited Aug. 5, 2020). In other words, “to submit”
is not the same as “to complete” nor does it require approval. Given the definition of “submit,”
the lack of any approval mechanism by GWC as a condition for payment, and the undisputed
fact that AES presented its schematic designs to GWC, it appears that AES satisfied the
contractual condition of submitting its schematic designs in the SD phase.
GWC further contends that the SD Phase was not complete absent a soils report
conducted by geotechnical engineers. Under the Agreement, AES was responsible to “furnish
and pay for the services of geotechnical engineers. . . when such services are stipulated in this
Part 16 Agreement or deemed reasonably necessary by the DesigmfBuilder.” Deci. John
Sherman, Ex. 1 § 2.1.5. Neither party has shown that “such services” were stipulated elsewhere
in the Agreement, thus, AES possessed the discretion to determine when the services of
geotechnical engineers were reasonably necessary. AES explains that the soils report would
have been used during the DD phase for the design of a stormwater management plan. GWC
counters that AES informed the GLUC on at least two occasions that the soils report was
completed. Decl. Jeffrey Cook, Exs. C,7 G. However, those references do not specifically
indicate the soils report as being part of the SD phase work.
6 The Agreement was divided in two parts. Part 1 concerned design while Part 2 dealt with construction. Deci. John Sherman, Ex. 1 at 1. The Court acknowledges that there is a separate line item in the same Status Report that says a “comprehensive soil analysis” was “Ongoing. awaiting report” but that line item appears to pertain to storm water issues. See Deci. . .
Jeffrey Cook, Ex.C. CV0798-18 DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 13 AND CROSS-MOTION FOR SUMMARY JUDGMENT
In conclusion, there is no genuine is sue of material fact that AES submitted its schematic
design. It is a further undisputed fact that the soils report, which was determined by AES to be
necessary for a later phase of the project, did not preclude GWC from paying AES for work
performed in the SD phase.
b. Marina and Boat Launch facility/Wetland and Seashore Permits
In its second counterargument to AES’ Motion for Summary Judgment, GWC claims that
AES did not complete the penniffing portion of its SD phase responsibilities—specifically to
“Obtain Army Corps Engineer’s Wetland and Government of Guam Sea Shore Permit”—
separate requirements from submitting the schematic designs. Decl. John Sherman, Ex. A, §
1.2.3. AES claims that GWC waived the permitting requirements through its agent, Fang, who
advised AES that GWC decided not to build a marina.
The initial project sketches include a marina. The Agreement does not contain a specific
reference to a “marina” or boat launch facility, though AES’ earlier proposal indicated that it
would design a “potential marina and boat launch facilities.” Decl. Jeffrey Cook Ex. D. Months
after the Agreement, AES prepared a supplemental scope of work which excluded a
marina—however there is no evidence showing that this change was approved by GWC. In
2016, AES presented design plans to GWC which did not include a marina. In May 2017, AES’
Status Update to the GLUC also omitted mention of these facilities.
Despite the indications that AES left out the marina from its designs, AES presents
nothing in writing from GWC that approves eliminating the marina from the design or
consenting to eliminating the requirement that AES pursue the permits. The only evidence stems
from AES’ claim—supported by Fang—that GWC agreed to eliminate the marina and boat CV0798-18 . DECISION AND ORDER RE PLMNTIFF’S MOTION FOR SUMMARY JUDGMENT Page 14 AND CROSS-MOTION FOR SUMMARY JUDGMENT
launch facility. AES claims that Fang orally approved the change; GWC counters that fang
lacked the authority to make this change. Also, AES claims that eliminating these facilities
obviated the need to obtain a seashore and wetland permit as required under the Agreement;
GWC counters that the contract price should have reduced accordingly.
Thus, the question is whether there is a genuine issue of material fact as to whether GWC
consented to eliminating the contractual requirement for the permits, and thus, the design of the
marina; and if not, whether Fang had the ability to bind GWC with an oral approval. First,
obtaining the permits is an explicit condition of the contract; if the contract scope was to change,
the changes had to be in writing. Decl. John Sherman, Ex. 1, § 1.2.2, 7.4. AES has pointed to
caselaw that indicates that if a contract provides that a writing is necessary to amend it, the
parties—by their conduct—may waive such provision. See Biren v. Equal. Emergency Med.
Group, 125 Cal. Rptr. 2d 325, 335 (Cal. App. 2002).8 In Biren, the court found a waiver where
the parties engaged in oral waivers in the past. Therefore, to find a waiver, courts look to the
parties’ course of conduct. The court in Gitmarten Bros., Inc. v. Kern, 916 S.W.2d 324, 329
(Mo. Ct. App. 1995) agrees that the parties’ informal communications, actions, and dealings
inferred waiver of literal compliance with the provision that changes be in writing. Courts also
suggest that the preeminent question is whether the parties possessed the intent to waive a
contractual requirement to place changes in writing and that the waiver be clear and unequivocal.
Douglas v. Benson, 439 A.2d 779, 783 (Pa. Super. Ct. 1982); 336 Green Rd. Co., Ltd. v.
Specialized Component Sales Co., Inc., 69 NE.3d 1083, 1092 (Ohio Ct. App. 2016). Ultimately,
8 AES also cited Epic Med. Mgmt., LLCv. Paquette, 198 Cal. Rptr. 3d 28, 35 n.5 (Cal. App. 2015), however, this case did not have a substantive discussion on the principal of waiving a contractual provision that changes must be in writing. CV0798-18 DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 15 AND CROSS-MOTION FOR SUMMARY JUDGMENT
whether the parties’ conduct constitutes a waiver is a question of fact. Richard F Kline, Inc. v.
Shook Excavating & Hauling, Inc., $85 A.2d 381, 390 (Ct. Special App. Md. 2005).
ABS has not pointed to or discussed a course of conduct which amounted to GWC’s
waiver of the contractual provision to place modifications in writing. In other words, there is no
information about whether GWC orally or informally waived other terms or conditions. What
ABS does point to is the number of occasions that GWC would have known that the marina was
no longer part of the project. However, the Court is not persuaded that any of those examples
clearly and unequivocally show that GWC consented to either waiving the
modifications-in-writing provision or eliminating the marina. For example, AES’ supplemental
scope of work (Decl. Jeffrey Cook Ex. H) excludes the marina—but it is unclear what this 9. document is, if it is a final document as opposed to a draft, if it amounted to a modification of
the contract, and whether GWC accepted it. ABS also points to having presented the SD designs
to GWC in China in October 2016, and AES’ submission to the GLUC in May 2017—neither of
which included the marina. However, ABS has not offered any evidence that GWC (other than
through Fang) consented to the SD designs, or to the GLUC submission, or to allowing ABS to
drop a portion of its contractually mandated work. Finally, ABS lists various reasons GWC did
not proceed with the marina—such as public opposition and budgeting reasons—but fails to
offer evidence that GWC in fact was motivated by any of those reasons. So aside from any oral
consent by Fang, discussed below, the Court does not find that ABS has presented enough
evidence to convince the Court that GWC consented to waiving the permit requirements.
There are two incomplete lists on this document, suggesting it is unfinished. CV0798-18 DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 16 AND CROSS-MOTION FOR SUMMARY JUDGMENT
Moving on to the oral consent from Fang, AES contends that it was entitled to rely on
Fang’s apparent authority to authorize the elimination of the marina. According to AES, “All the
reasons for not pursuing the marina and boat launch facility was communicated to Mr. Fang
which resulted in his oral permission to submit the Project Status Update with the GLUC on May
2, 2017, advising GLUC that GWC was no longer pursuing the marina and boat launch facility
development.” Supp. Decl. John Sherman, ¶ 22.
In Guam, an agent has apparent, or ostensible, authority when a principal intentionally, or
by want or ordinary care, causes or allows a third person to to believe the agent to possess. 18
GCA § 20214. This contrasts with an agent’s actual authority, which occurs when a principal
intentionally or by wants or ordinary care, allows the agent to believe he possesses certain
authority. 18 GCA § 20213. “The significance of finding an agency relationship is that the
agent’s acts and representations to a third party are imputed” to the principal. Leong v. Deng,
2002 Guam 2 ¶ 12. Whether agency exists is a question of fact. Id. ¶ 10. However, as AES
points out, if a principal rests on legal conclusions of lack of actual authority without selling
forth specific facts to dispute apparent authority, summary judgment may be proper in favor of
the third party. Lockwood v. Wolf Corp., 626 F.2d 603, 609 (9th Cir. 1980).
In this case, GWC disputes Fang’s actual authority, but has not presented facts to dispute
AES’ claims of Fang’s apparent authority to instruct AES to cease work on the marina. The
evidence indicates that GWC tasked Fang with communicating with AES, executing at least one
large payment to AES, signing an Addendum to the Agreement, and representing to the GLUC
that AES represented GWC. Based on this evidence, there appears to be no genuine issue of
material fact that Fang had the apparent authority to direct AES on major project decisions. CV0798-18 . DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 17 AND CROSS-MOTION FOR SUMMARY JUDGMENT
But that is a separate question from whether fang had the apparent authority to waive the
requirement that all changes be in writing. GWC raises a valid point that if it intended to
eliminate the marina, it would have sought to reduce the overall contract price. AES fails to
respond to this point and continues to seek the full contractual amount even though it did not
complete the permitting items for which it would have been paid.
Given the lack of any evidence of an informal or oral process of communicating
instructions from GWC to AES, or any evidence that prior oral changes were consented to by
both parties, there remains issues of fact whether Fang had the apparent authority to eliminate
and thereby modify that all changes to the Agreement be in writing. Whether the change also
amounts to a modification of the contract price remains a factual issue. These matters must still
be determined by the trier of fact.
c. The Revisions to the Budget
GWC also claims that AES failed to provide revised budget estimates for the project.
According to GWC, AES may have withheld the information because it would have caused
GWC to rethink the project. Opp’n. at 10. AES responds that it was not contractually required
to provide budget estimates as a condition to being paid for the SD phase work. It also points to
GWC’s Business Plan, though it’s unclear whether AES references the Business Plan as evidence
that it did not need to do financial revisions or because GWC already did revisions.
In any event, this particular issue is not well-developed by either party. If the core issue
is whether AES was required to provide certain budget revisions, the Agreement seems to
support that. According to the Agreement, AES shall make revisions to the budget when such
revisions are necessary due to adjustments. Deci. John Sherman, Ex. A, § 1.4.2. If AES’s work CV0798-18 . DECISION AND ORDER RE PLANTIFF’S MOTION FOR SUMMARY JUDGMENT Page 18 AND CROSS-MOTION FOR SUMMARY JUDGMENT
indicated new information regarding the depth and number of pilings, then there remain issues of
fact as to whether AES needed to adjust the budget prior to being paid for the SD phase work.
C. Mechanic’s Lien Issues
AES seeks summary judgment on the timeliness and standing of its Mechanic’s Lien and
on GWC’s Seventh Affirmative Defense challenging the service of the Mechanic’s Lien notice.
1. AES’s Standing
AES claims it is a qualified person under 7 GCA § 3301 to file a Mechanic’ Lien as it
bestowed skills or other necessary services. The record supports that AES furnished such work
for GWC. GWC does not introduce any facts to dispute AES’ standing to file a Mechanic’s
Lien. For that reason, the Court determines as a matter of law that AES has standing.
2. AES’s Proper Service of its Mechanic’s Lien on GWC (GWC’s 7th Affirmative Defense)
In its Seventh Affirmative Defense, GWC claims that service of the Mechanic’s Lien was
defective. In its Motion, AES provided evidence that it served the Mechanic’s Lien both by mail
and personally upon GWC’s designated resident agent for service of process, which complies
with 7 GCA § 33106. Although GWC alleges that service of process was insufficient, GWC
failed to furnish any evidence that disputes AES’ efforts to properly serve the Mechanic’s Lien.
As there are no facts in dispute on this issue, the Court determines as a matter of law that
AES properly served its Mechanic’s Lien on GWC.
3. The Timeliness of the Mechanic’s Lien (GWC’s 1st Affirmative Defense)
On the timeliness of the Mechanic’s Lien, AES claims it filed its claim under the 120-day
deadline. 7 GCA § 331 04(a)( 1). first, it ceased work on March 27, 2018. Second, it filed its CV079$-18 DECISION AND ORDER RE PLAiNTIFF’S MOTION FOR SUMMARY JUDGMENT Page 19 AND CROSS-MOTION FOR SUMMARY JUDGMENT
Claim of Mechanic’s Lien with the Department of Land Management on May 31, 2018, and
mailed GWC a copy to its Guam address on June 1, 201$, which was received ten days later.
However, GWC’s first Affirmative Defense asserts that “AES failed and neglected to file
and protect its lien within the time required under Guam law. Consequently, AES has forfeited
any lien rights or claims that it might have in or to GWC’s real property.” Answer and
Countercl. at 2. But GWC has not provided any evidence to buttress its position. In discovery,
ABS asked GWC to identify all facts in support of this affirmative defense. Decl. Jacques
Bronze, Ex. 10. In response, GWC provided the conclusory statement that “Plaintiff did not
work on the project pursuant to the contract within 258 days of filing his mechanic’s lien.” Decl.
Jacques Bronze, Ex. 11 at 4.
ABS now moves for summary judgment on the timeliness issue and on GWC’s First
Affirmative Defense. GWC has not come forth with evidence to contradict ABS’s chronology,
nor did it argue that its first Affirmative Defense should stand. For those reasons, summary
judgment is warranted in favor of ABS on GWC’s First Affirmative Defense.
D. Affirmative Defense
GWC’s Second Affirmative Defense claims that “ABS has failed to allege[] facts
sufficient to constitute a viable legal claim or cause of action against GWC on any of the causes
of action set forth in the Complaint.” Answer and Countercl. at 2. Under Guam Rule of Civil
Procedure 1 2(b)(6), if a party contends that a pleading fails to state a claim for relief, it must file
such motion before any further pleading. By pleading and answering the Complaint, GWC
waived its position that ABS failed to state a viable claim for relief. Also, GWC fails to oppose CV0798-18 DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 20 AND CROSS-MOTION FOR SUMMARY JUDGMENT
AES’s motion for summary judgment on this point. Summary judgment is thus warranted in
favor of AES on the Second Affirmative Defense.
E. 3 Affirmative Defense
GWC’s Third Affirmative Defense asserts that AES is estopped from asserting its claims
or seeking damages. Answer and Countercl. at 2. “Equitable estoppel is defined as the doctrine
by which a person may be precluded by his act or conduct, or silence when it is his duty to
speak, from asserting a right which he would have otherwise have had.” Mobil Oil Guam, Inc. v.
Young Ha Lee, 2004 Guam 9 ¶ 24.
GWC’s Opposition fails to address or introduce facts in support of its Third Affirmative
Defense asserting estoppel. On that basis, summaiy judgment is warranted in favor of AES.
F. 4’ Affirmative Defense
GWC claims that AES ‘s claims are barred by laches and other equitable time limitations.
Answer and Countercl. at 2. As already discussed, GWC’s Opposition makes no substantive
arguments regarding the timeliness of AES’ claims. Having failed to raise a genuine issue of
material fact on these points, summary judgment is warranted in favor of AES on laches.
G. Affirmative Defense
GWC’s fifth Affirmative Defense states that “AES breached the contract by failing to
obtain an approved height variance for the project as required by the contract between AES and
GWC.” Answer and Countercl. at 2. GWC’s Opposition addresses AES’s alleged failure to
obtain certain permits, such as the seashore clearance permit and wetland permit. However,
nowhere in its Opposition does GWC take a position as to the AES’ alleged failure to obtain an
approved height variance. On the other hand, AES produces facts that show that the Agreement CV0798-18 . DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 21 AND CROSS-MOTION FOR SUMMARY JUDGMENT
did not specify any specific height for the project and also that the GLUC approved a height
variance. There being no facts presented in support of GWC’s Fifih Affirmative Defense,
summary judgment is warranted in favor of AES.
H. 6’ Affirmative Defense — Insufficient Service of Process
In its Sixth Affirmative Defense, GWC claims that ABS failed to effectuate service of
process of the Complaint. AES first correctly points out that Rule 12 requires a party raising a
defense of insufficient service of process must do so by motion prior to pleading. GRCP
12(b)(5). Since GWC did not raise this issue by Motion, it is deemed to have waived it.
Regardless, AES has demonstrated to the Court that it has properly effectuated service. It
served GWC’s designated resident agent for service of process, Fang. Moreover, there has been
nothing filed with the Department of Revenue and Taxation indicating revocation of this
designation. In addition, GWC does not offer any response to this argument that service of
process was proper. For that reason, the Court finds proper service is undisputed as a mailer of
law.
I. GWC’s Counterclaim
GWC’s counterclaim against ABS claims that ABS made mistakes in the design and
failed to comply with the conditions of the Agreement. As a result, the project was delayed,
GWC lost financing, and GLUC revoked GWC’s conditionally approved variance. Answer and
Countercl. at 5.
ABS moves for summary judgment on the Counterclaim and asserts that GWC has
demonstrated neither damages nor proximate cause. Damages is one of the elements in a breach
of contract action. Gov ‘t of Guam v. Kim, 2015 Guam 15 ¶ 60. Damages are not recoverable for CV079$-18 • . DECISION AND ORDER RE PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 22 AND CROSS-MOTION FOR SUMMARY JUDGMENT
a breach of contract unless they are clearly ascertainable in both their nature and origin. 20 GCA
§ 2202. Also, causation is an essential element of damages in a breach of contract action. See Nat. Market Share, Inc. v. Sterling Nat. Bank, 392 F.3d 520, 525 (2d Cir. 2004).
In a summary judgment proceeding, the party seeking damages must provide evidence of
such. However, even if damages cannot be proved with reasonable certainty, or if they cannot
prove causation, a party may still be entitled to nominal damages for the breach of contract.
Rest. (Second) of Contracts § 346 1981 cmt (b). A “plaintiff is entitled to recover nominal
damages for the breach of a contract, despite inability to show that actual damage was inflicted
upon him... since the defendant’s failure to perform a contractual duty is, in itself, a legal wrong
that is fully distinct from the actual damages.” Sweet v. Johnson, 337 P.2d 499, 500 (Cal. App. 2d
1959).
Here, GWC has failed to establish with reasonable certainty any amount of damages
sought. GWC’s Opposition does not address the issue of damages at all. However, GWC has
furnished sufficient material facts to support its counterclaim that AES breached the Agreement
and may still recover nominal damages. Since there is no genuine issue of material fact as to
damages, however, summary judgment is warranted in ABS’ favor on the actual damages
element of the counterclaim.
III. CONCLUSION
The Court GRANTS summary judgment in favor of ABS on the following issues:
1. There is no genuine issue of material fact that AES satisfied the condition of submitting
the schematic designs.
2. There is no genuine issue of material fact that the absence of a soils report did not affect CV079$-18 e DECISION AND ORDER RB PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT Page 23 AND CROSS-MOTION FOR SUMMARY JUDGMENT
AES from receiving payment for work on the SD phase.
3. There is no genuine issue of material fact that AES properly and timely served its
Mechanic’s Lien and has standing to record a lien.
4. There is no genuine issue of material fact that fang had the apparent authority to waive
the requirement that AES obtain the seashore and wetland permit.
5. All affirmative defenses.
6. GWC’s request for actual damages in its counterclaim for breach of contract.
The Court DENIES summary judgment on the following issues, which must be
determined by the trier of fact along with any other issue not addressed by the summary
judgment motion:
1. Whether GWC waived the contractual requirement that all changes be in writing.
2. Whether AES was required to provide budget estimates prior to being paid for the SD
phase work.
3. GWC ‘s counterclaim for breach of contract, except for actual damages.
SO ORDERED this 13th day of August
HO/ ELYZE M. IRIARTE Judge, Superior Court of Guam
Appearing Attorneys: Jacques G. Bronze, Esq., Law Offices of Jacques G. Bronze, P.C., for Plaintiff AES Construction, Inc. Jeffrey A. Cook, Esq., Law Offices of Cunliffe & Cook, for Defendant Wanfang Construction, Inc.