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OF GUAM
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2 ZBZ3 GCT 23 PS' 2: 27
3 CLERKGF COURT
4 BY
5 IN THE SUPERIOR COURT OF GUAM
6 BRYAN DUENAS, crvlL CASENO CV0309-22 7
8 Petltxoner,
9 VS DECISION AND ORDER
10 PA U L A PEREZ, Re Petltloner's Motion for Settlement Conference and Appolntment of Settlement Respondent Judge, and Respondent's Motion to Compel Discovery and for Adverse Inference Instructions 13 and Leave to Amend Answer
14
15
16 Thls matter came before the Honorable Arthur R Barelnas for a motion hearing on July 17 25, 2023 On March 10, 2023, Plalntlff Bryan Due fas ("Petltloner") tiled a Motion for 18 Settlement Conference and Appolntment of Judge ("Settlement Motlon") On the same day, 19 Respondent Paul A Perez ("Respondent") filed a Motlon to Compel Dlscovery and for Adverse 20 Inference InstructIons and Leave to Amend Answer ("Motlon to Compel") On April 6, 2023, 21 Respondent filed his opposltron to the Settlement Motlon On April 7, 2023, Petitioner filed his 22 opposition to the Motion to Compel On April 20, 2023, Petltxoner Bled his reply to 23 Respondent's opposition On April 21, 2023, Respondent filed his reply to Petltloner's 24 opposltlon Upon consideration of the briefs and arguments at hearing, the Court hereby 25 GRANTS Petltloner's Settlement Motion and DENIES Respondent's Motlon to Compel in its 26 entirety
Declslon and Order C1v1l Case No CV0309-22
l BACKGROUND 2 On or about February 10, 2016, Petitioner and Respondent executed an Operating 3 Agreement govemlng the actlvltles of Monkeypod Enterprises, LLC ("Monkeypod"), a 4 manager-managed Llmlted Llabllrty Company organized under the laws of Guam Petitioner 5 and Respondent each held a tiny percent membership interest In Monkeypod, wlth Petltroner 6 acting as manager for the corporation Pursuant to the Operating Agreement, Monkeypod was 7 established in order to conduct restaurant services, retail and wholesale of food products and 8 prepared food and catering Under Monkeypod, the parties established and operated a restaurant 9 called Pokl-Fry, ofwhrch Petltloner oversaw all operations as the managing member On May 10 24, 2022, Petltloner filed the above-capt1oned Petltxon for dissolution, claiming rrreconcllable differences between the parties 12 Petrtloner alleged that disputes had arisen between the parties regarding the governance 13 of Monkeypod, in part due to matters regarding renovation expenditures and business 14 operations, and in part due to Respondent's alleged past conduct of taking cash dlrectly from the 15 enterprise without authorization, which disrupted banking access and payroll management 16 Poor to thls case, Petrtloner and Respondent participated in mediation proceedings at the 17 Inajiz 'maolek Conclllatlon center The medlatlon resulted in a settlement agreement executed on 18 December 19, 2019, whereln Petltloner would find interested buyers to purchase Respondent's 19 50% interest in Monkeypod, following a reconciliation and booldceeprng process to determine 20 the value of said interest Petltroner moved forward with obtaining valuation of the company 21 On March 5, 2020, the accounting firm of Stanley C Wilson, CPA, P C , issued a valuation 22 showing Respondent's 50% interest in Monkeypod to be worth $67,829 00, with a range 23 between $59,192 00 and $84,288 00 24 On March 17, 2020, Petltloner informed Respondent of the valuation and asked 25 Respondent to fulfill the terms of the settlement agreement by accepting a buyout of hrs interest 26 in Monkeypod, but Respondent did not respond A further company valuation was obtained 27 following the onset of the Cov1d-I9 global pandemic and related government-ordered business 28 shutdowns The second valuatlon rndlcated Monkeypod's value had decllned approximately
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Declslon and Order C1v1I Case No CV0309-22
1 fifty percent to a range between $29,596 00 and $42,144 00 On June 4, 2020, Respondent was 2 informed of the updated valuation, and was again asked to fulfill the terms of the settlement 3 agreement by accepting a buyout of hrs interest in Mondceypod On June 5, 2020, Respondent 4 dented the valuations, and refused to mediate the matter further 5 Instead, on May 24, 2021, Respondent filed a Complaint for InspectIon of Books and 6 Records agalnst Monkeypod and Petltloner, creating related case CV0413-21 On August 16, 7 2021, the Honorable Elyze M Inarte issued an Order Alter Hearing in that case,recogmzlng 8 that the Operating Agreement between the parties requlred submission of dlsputes to mandatory
9 medratlon, and stayed the matter for ninety (90) days to allow the parties to refer the matter to 10 medlatlon
On September 16, 2021, Respondent petltroned the Supreme Court of Guam for 12 interlocutory revlew of the August 16, 2021 Order After Hearing, clarmmg on appeal that the
13 dlspute was between a member and a manager, not "among the members" of Monkeypod, and 14 therefore did not tagger the mandatory medlatlon provision of the Operating Agreement Perez 15 v Monkeypod Enterprises, LLC, 2022 Guam 121113 In its August 10, 2022 declslon, the
16 Supreme Court affirmed that Judge Inarte did not make an error of law in holding that 17 Respondent alleged a "dispute among the members" of Monkeypod Id , at 1126 18 Petitioner filed a Mottos for Settlement Conference and Appointment of Settlement 19 Judge in CV0413-21 and the Instant case on March 10, 2023 In a May 13, 2013 Order, Judge 20 Inarte denied the Motlon in CV0413-21, reasoning that a settlement conference would be 21 lneffectrve because Respondent opposed rt Judge Inarte st11l held that Respondent was 22 mandated to mediate the dispute presented in the cases On June 6, 2023, after the parties 23 effecnvely stlpulated to dlsmlssal, CV0413-21 was dismissed wlthout prejudice pursuant to 24 Guam R C1v P 41 (a)(2)
25 Also on March 10, 2023, Respondent tiled In the Instant case the Motion to Compel 111 26 the Motlon to Compel, Respondent requested that the Court 1) grant Respondent leave to
27 amend hrs pleading to Include counterclalms, or order the jury instruction for an adverse 28 inference related to Poke-Fry's daily polnt of sale records, 2) order Petltloner to produce
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Decision and Order C1v11 Case No CV0309-22
1 purchase orders and vendor invoices, or order the jury instruction for an adverse inference 2 related to the purchase orders or vendor rnvolces, 3) order Petrtroner to rmmedlately reimburse 3 Respondent for his out-of-pocket expenses for copies of tax returns and bank statements, and, 4) 4 order Petitioner to pay Respondent's reasonable expenses, rncludmg attorney's fees, to bang the 5 Motlon to Compel 6 On July 25, 2023, the Court held a motlon hearing on the Settlement Motion and the 7 Motlon to Compel, and took both rnotrons under advisement 8
g DISCUSSIQN_ 10 Because Respondent's opposltron to the Settlement Motion turns entirely on an alleged
need for further discovery, the Court wllI first address Respondent's Motion to Compel, to 12 determlne whether further discovery is indeed warranted 13
14 I RESPONDENT'S M O T I O N 15 Respondent seeks for the Court to grant an Order to compel Petitioner to produce 16 documents, to issue Jury rnstructlons for adverse inferences, and to grant Respondent leave to 17 amend hrs Answer 111 his Motion, Respondent ralses the following Issues 18 a Motion to Compel 19 Pursuant to Guam R Calv P 37(a), a party, upon reasonable notice to other parties, may 20 apply for an order compelling disclosure or discovery If a party falls to make a disclosure 21 required by Guam R C1v P 26(a), any other party may move to compel disclosure GRCP 22 37(a)(2)(A) The motion must include a certrtlcatron that the movant has in good faith conferred 23 or attempted to confer wlth the party not madcrng the disclosure in an effort to secure the 24 dlsclosure wlthout court action Id For the purposes of GRCP 37, "an evasive or incomplete 25 disclosure, answer, or response is to be treated as a failure to dlsclose, answer, or respond " 26 GRCP 37(a)(3) 27 Respondent seeks an order to compel discovery on the grounds that Petrtloner is table 28 for spoliation of evidence by allegedly farllng to preserve the books and records of Monkeypod
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Declslon and Order Civil Case No CV0309-22
l as required by the Guam Limited Lrablhty Company Act (the "Act") Specifically, Respondent 2 alleges that Pentroner failed to preserve point of sale ("POC") data, bank statements, purchase 3 orders, and vendor invoices 4 Pursuant to the Act, each LLC, through its manager(s), "shall malntaln at [its offlce], 5 [c]op1es of the iinancral statements of the [LLC], If any, for the six most recent fiscal years" 6 and "[t]he books and records of the [LLC] as they relate to the Internal affairs of the [LLC] for 7 at least the current and past four fiscal years " 15 GCA § 15115(K)(a)(6)-(7) 8 Each member and holder of an economic interest in an LLC has the right, upon 9 reasonable request, for purposes reasonably related to the interest of that member or holder of 10 sald economic interest, to inspect and copy during normal business hours any of the records 11 required to be maintained at the office 15 GCA § 15114(G)(b)(l) Any request, inspection, or 12 copying by a member or a holder of an economic interest may be made by that person or that 13 person's agent 15 GCA § 15114(G)(1) 14 Respondent stated that, on February 26, 2021 , Respondent requested that he or his agent 15 be allowed to inspect or copy, on March 8, 2021 at the LLC's office"al l the records or the 16 books of the LLC, including but not limited to paper or electronic point of sale recur ds 17 bank statements Income tax returns, Monthly Gross Receipts, [and] Use and Occupancy Tax 18 Returns " Resp 's Mot to Compel, at 3 (emphasis oneal) On March 29, 2021, Respondent 19 further requested that he or hrs agent be allowed to Inspect, or copy, on April 7, 2021 at the 20 LLC's office "wallpaper or electronic dolly point of sale records, bank statements purchase 21 orders, [and] vendor mvozces " Id , at 4 (emphasis ongrnal) After the Instant action was filed, 22 Respondent served upon Petrtloner the Respondent's Flrst Requests for Productron of 23 Documents to Petltloner dated November 7, 2022 In the Requests for Productron of 24 Documents, Respondent again requested"al l of the records or the books of, relating to, or 25 concemrng, Monkeypod Enterprises, LLC, a Guam halted llablllty company, since January I, 26 2016," whlch again included "dally point of sales records bank statements purchase 27 orders vendor invoices income tax returns that were tiled wlth the Department of 28 Revenue and Taxatlon Government of Guam, and Monthly Gross Receipts, Use and
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Decision and Order C1v11 Case No CV0309-22
1 Occupancy Tax Returns " Id , at 6 (emphasis onglnal) Respondent alleges that, because 2 Petltloner provided summaries or reports of the dally POS records rather than the raw POS 3 maclnne data, Pet1t10ner did not meet the burden of production Respondent further alleges that, 4 on January 17, 2023, Petltloner stated that the POS machines were returned to the POS machine 5 vendor and that Petltloner's understanding was that there was no iilrther data to obtain from sald 6 machines Respondent claims that the return of sald machines constitutes spollage of the 7 evldence and provides the basls for Respondent's proposed counterclanns 8 Petltloner malntalns that, for all requests by Respondent, he has provlded all documents 9 regarding Monkeypod in ins possesslon, and has elther provided all books and records to 10 Respondent or has made them otherwise avallable for revlew by Respondent The Court, upon 11 conslderatlon of the record and briefings, agrees that Petltloner has met his burden of 12 productlon and did not fall to meet hrs fiduclary duty to malntaln the records of Monkeypod as 13 required by 15 GCA § 151l5(K) 14 Pursuant to GRCP 26(b)(I), all dlscovery is subject to the llmltatlons imposed by GRCP 15 26(b)(2)(1), (11), and (111), which state that "[t]he frequency or extent of use of the discovery 16 methods otherwise permitted under the [GRCP] and by any local rule shall be llmlted by the 17 court if it detemlnes that " 1) the dlscovery sought is unreasonably cumulative or duplicative, 18 or is obtainable from some other source that is more convenient, less burdensome, or less 19 expenslve, 2) the party seeking dlscovery has had ample opportunity by discovery in the actlon 20 to obtain the information sought, or 3) the burden or expense of the proposed discovery 21 outwelghs its likely benefit, taking Into account the needs of the case, the amount in 22 controversy, the paltles' resources, the importance of the Issues at stake in the lltlgatlon, and the 23 importance of the proposed discovery in resolving the Issues Guam R Calv P 26(b) 24 The body of financial records provlded by Petltloner renders sald recelpts duphcatlve, 25 Petltloner has given Respondent an open invitation to Inspect said financlal records, and the 26 Court does not tend that the extraneous evxdentlary benefit provlded by the POS data would 27 outweigh the effort requlred to retrieve sald data 28
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Decision and Order C1v1I Case No CV0309-22
l Even If the Court were to find that Petltloner did spohate any evldence by falIlng to 2 malntaln all records requested by Respondent, the Court finds that the information whlch 3 Respondent seeks in its Motron to Compel Dlscovery falls under, If not all, then at least the first 4 and thlrd categories outlined in GRCP 26(b)(2) Moreover, as Petltloner notes, even if the raw 5 POS data is unable to be retrieved, the POS data is not lost to tlme, nor Is it off-l1m1ts to 6 Respondent, rnakmg thls effectively a motlon for Respondent to have the mformatron brought to 7 him rather than hum going to it It also appears from the Reply to the Motion to Compel that 8 Petltloner did, in fact, malntaln all of the requested documents, he simply allegedly did not
9 produce them as timely as Respondent requested Reply to Mot to Compel, at 4 10 Finally, the proponent of a motlon to compel discovery typically bears the initial burden
ofprovmg that the Information sought is relevant See, e g, First Niagara Risk Mgmt, Inc v 12 F o l i o , 317 F R D 23 (E D Pa 2016), O'Malley v NaphCare, Inc , 311 F R D 461 (S D Ohio 13 2015) The Court does not find that Respondent sufficiently demonstrated that the POS data 14 would provide any deeper insight Into the financial records that Petrtloner has already produced
15 for Respondent's revlew, and consequently tends that Respondent has not sufficiently met the 16 burden of demonstrating thelr relevance
17 Therefore, for the sake of preserving the Court's and the poMes' resources, the Motlon 18 to Compel is DENIED
19 b Jury InstructIons for Adverse Inferences 20 Respondent addltlonally seeks multiple adverse inference jury lnstructrons based on the 21 alleged spolratlon of evidence of the records named above However, the test for an adverse 22 inference 1nstn1ct1on based on spoliation of evidence is predicated on evldence actually havlng 23 been destroyed, and the record seems to indicate that llttle to no actual destnLlctlon of the 24 evidence occurred 25 Where a party seeks an adverse instruction based on spoliation of evidence, that party 26 must demonstrate 1) that the party having control over the evidence had an obllgatlon to 27 preserve it at the time it was destroyed, 2) that the records were destroyed wlth a culpable state 28 of mlnd, and 3) that the evidence was relevant to the party's claim or defense such that a
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Declslon and Order C1v1I Case No CV0309-22
1 reasonable tier of fact could find that It would support that c1a1m or defense See, e g Apple, 2 Inc v Samsung Electronics Co , Ltd , 881 F Supp ad 1132 (N D Cal 2012) 3 In the instant case, Petltloner did have a statutory obllgatron to preserve the above 4 records at the tune of their alleged destruction, but Respondent provldes no substantial evidence 5 of that destructlon Furthermore, even if the Court assumed the named records were destroyed, 6 and the records were relevant to Petltloner's claim for dlssolutlon, Respondent has not 7 sufficiently demonstrated that the alleged destructlon was done wlth a culpable state of mind If 8 anytlung, the breadth of the body of evidence only demonstrates Petltloner's intent to keep the 9 record as Intact as possible 10 For this reason, the Court DENIES. Respondent's request for adverse inference jury lnstxuctrons 12 c Motion for Leave to Amend Answer 13 Florally, Respondent seeks leave to file and serve an amended Answer and append a 14 counterclaim Respondent's motion for leave is largely dependent on Respondent's allegations 15 that Petltloner collated the aforementioned evidence 16 GRCP 15 allows for amendment to pleadings "by leave of court or by wrltten consent of 17 the adverse party" and states that "leave shall be freely given when justice so requires " Guam 18 R C1v P l5(a) The Guam Supreme Court has previously interpreted thls to mean that, "in 19 matters ofpleadxng, leave to amend should always be liberally granted "Arashz & Co v 20 Nakashzma Enters, Inc , 2005 Guam 21 'H 16 However, the Supreme Court has slnce held that 21 when a party seeks to amend a pleading alter the pretrial scheduling order's deadIlne for 22 amending the pleadings has expired, the moving party must satisfy the "good cause" standard 23 under GRCP l 6(b)(4), not the standard under GRCP 15(a) Palmer v Mariana Stones Corp , 24 2021 Guam 5 1]22 (citingJohnson v Mammoth Recreations, Inc , 975 F 2d 604, 609 (9th Cir 25 I 992)) "Unllke Rule 15(a)'s liberal amendment policy whlch focuses on the bad falth of the 26 party seeking to interpose an amendment and prejudice to the opposing party, Rule 16(b)'s 27 'good cause' standard unmanly conslders the dlllgence of the party seeking the amendment " 28 Id Amendment should not be permitted if the moving party cannot show dlllgence Id
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Declslon and Order C1v11 Case No CV0309-22
1 However, the existence or degree of prejudice to the party opposing modlficatlon may supply 2 additional reasons to deny the motion Mammoth, 975 F ad at 609 3 Respondent moves for leave to amend hrs pleading based on "addltlonal relevant facts 4 revealed during [Respondent's] discovery efforts thus far that [Petitioner] tortuously destroyed, 5 srgmficantly altered, or failed to preserve the LLC's property or evidence " Mot to Compel, at 6 17 Respondent alleges that "good cause has been shown that [Respondent] has been diligent in '7 dlscovery," which he claims would necessitate the modlficatlon of dates in the Thlrd Strpulatron 8 to Extend Times and [Proposed] Order, filed on February 7, 2023 9 The Court does not find this argument compelling In the Scheduhng Order signed by 10 both parties and filed on September 9, 2022, it was established that "motlons to amend 11 pleadings shall be filed no later than October 7, 202[2] Thereafter, parties may be joined and/or 12 pleadings amended only upon leave of court and for good cause shown " Scheduhng Order, 13 CV0302-22, at 2 (Sept 9, 2022) After the rmtral Scheduling Order, Respondent stipulated to 14 extend the dates for discovery and for the dispositive motlons three tunes on the basls of 15 discovery disputes In none of those stxpulatrons, nor any other motion poor to March 10, 2023, 16 did Respondent indicate any attempt to extend the deadline for motlons to amend the pleadings 17 Thls includes the Thlrd Stipulation, which was filed nearly three weeks after Respondent alleges 18 that Petitioner stated that he returned the POS machines, and at which point Respondent should 19 have been aware that Respondent was planing to tile a counterclaim The Court does not find 20 thls mdrcatrve of drllgence on Respondent's part, and therefore DENIES Respondent's motion 21 for leave to amend the pleading 22
23 II PETITIONER'S SETTLEMENT MOTION 24 Petltloner seeks an Order pursuant to Local Rule CVR 16 6, grantlng a conference for
25 the purposes of settlement and appointing a settlement judge in the Instant case 26 At any tune after an action or proceeding has been filed, any party may file a request for 27 a settlement conference Local Rule CVR 16 6(a) Said conference may be held before the judge 28 trying the case, another judge, or a pro tempore Judge Id If the judge trying the case agrees to
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Declsloxl and Order C1v1l Case No CV0309-22
1 conduct the conference, a written stlpulatlon by all counsel shall be filed poor to the settlement 2 conference Id The parties, and the attorneys unmanly responsible for the lltlgatlon, are 3 required to attend Id The judge conducting the settlement conference may excuse a party from 4 personally appearing based on good cause, but the party may be requlred to participate by 5 telecommumcatlon at the party's expense CVR 16 6(a)(6) The fallure of any person to appear 6 at or participate in a settlement conference, unless good cause is show for any such fallure, may 7 result in the tr1a1 judge imposing appropriate sanctlons in his or her discretion upon motlon of 8 the opposing party Id 9 Respondent opposes Petltloner's Settlement Motion, arguing that Petltloner's request for 10 a settlement conference and appointment of a settlement judge is premature Respondent argues that, "[u]nt1l discovery or the amendment of pleadrngs is or are completed, or dlsposltlve 12 motions or filed, heard, and ruled upon, any settlement conference would be premature 13 because the purpose of discovery is to appose [the pomes] of the facts so that settlement 14 negotiations can even take place " Resp 's Opp to Settlement Motion, at 7 15 As noted above, the Court finds that Petltloner has met the burden of production, and no 16 amendment of pleadings will be forthcoming Further, the Guam Supreme Court has held that 17 the dispute between the parties quahfles as a "dispute among the members" under Monkeypod's 18 LLC, agreement, whlch activates the mandatory medlatron requirement Perez v Monkeypod 19 Enterprises, LLC, 2002 Guam 12 118 The Court finds that Respondent cites no law in his 20 opposltlon that would mitigate the settlement conference attendance requirement of 21 CVRI6 6(a), or that would contravene the Supreme Court's tlndlng that medlatlon is necessary 22 in thls matter 23 Therefore, the Court now GRANTS Petltloner's Motlon for Settlement Conference and 24 App01ntment of Settlement Judge 25 26 CONCLUSION 27 Based upon the foregoing, the Court hereby DENIES Respondent's Motlon to Compel 28 Dlscovery and for Adverse Inference Instnuctlons and Leave to Amend Answer, and GRANTS
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Declslon and Order C1v1I Case No CV0309-22
1 Petltloner's Motlon for Settlement Conference and Appolntment of Settlement Judge, 2 appomtlng the Honorable Jonathan R Quam to serve as settlement judge in this matter 3
4 IT IS so ORDERED 0CT 23 2823 5
6 7
8 HONORABLE ARTHUR R. BARCINAS 9 Judge, Superior Court of Guam
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