Goodwind Dev. Corp. v. West Bay Corp.

Opinion

T" i L Ll

supERioR COLJT?

r"&":' MI GUN' re

28230127 2023 OCT 2oh4 pr

Pi{ 4: i}. 'TIU3

cwzéi UF IURT

IN THE IN THE SUPERIOR

SUPERIOR COURT

COURT OF

OF GUAM

GUAM CLEHc: URTc'r-i6 GOODWIND DEVELOPMENT CIVIL CIVIL CASE no. cv0%h;23

CASE NO. cvoi~~:.23"~---- I

CORPORATION, CORPORA

Plaintiff, DECISION AND ORDER GRANTING DEFENDANTS' RULE

RULE 12(B)(6)

12(B)(6) MOTION

vs. TO DISMISS WEST BAY BAYCORPOARTION CORPOARTIONand 21 st

and21st

CENTURY CORPORATION,

Defendants.

I WEST BAY WEST BAYCORPOARTION CORPOARTION 21 st

and21st and

CENTURY CORPORATION,

Counterclaimants,

vs.

GOODWIND DEVELOPMENT CORPORATION,

Counterclaim Defendants.

INTRODUCTION

This matter came came before the

the Honorable

Honorable John

John C. Terlaje

Terlaje on

onSeptember 29th 2023,

September29th, 2023, for a

Motion Motion Hearing Hearing on on West

West Bay

Bay Colporation's

Corporation'sand 2rstCentury and 21" Century Co1*poration's ("Defendants"')

Corporation's ("Defendants"')

Motion to to Dismiss.

Dismiss. Louie J. Yanza

Louie J. Yanza appeared

appeared for West

West Bay

Bay Corporation

Corporation and 2!51 Century and 21" Century

Corporation. Anita P Corporation. Anita P.. Arriolia Arriolla appeared

appeared for

for the

the G o o d w i n Development Goodwind Development Corporation Corporation

("Plaintiff"). ("Plaintiff''). Based Based on

onthe

the relevant

relevant law

lawand

and authorities

authorities the

the Court

Court now issues

issues the

the following

decision decision and and order GRANTING Defendant's Motion Motion to Dismiss.

Dismiss.

CV0028-23 DECISION AND ORDER GRANTING GRANTINGRULE

RULE 12(8)(6)

I2(B)(6) MOTION

MOTION TO DISMISS Page2 Page

I. 1. FACTUAL AND PROCEDURAL BACKGROUND

Goodwin GoodwindDevelopment DevelopmentCorporation

Corporation("GDC")

(''GDC")initially

initially filed

filed their

their Verified

Verified Complaint

Complaint on

on

January, 2023, January, 2023, alleging alleging two

two separate breaches of

separate breaches of two separate promissory two separate promissory notes notes by West Bay

Corporation ("West Bay'') zpt Century Corporation ("Century") respectively. West Bay and Bay") and 21"

Answer and Counterclaim

Century then filed an Answer Counterclaim to to GDC's

GDC'scomplaint

complainton

onMarch 71\ 2023, alleging March7th,

several counterclaims for relief including fraud and misrepresentation. In response, GDC filed a

Counterclaims and an Alternative Motion Motion to Dismiss Counterclaims Motion to to Strike

Strike on

on April

April 17,

17, 2023. Finally,

21 st Century

West Bay and 21st Century filed their own own Motion

Motionto

toDismiss

Dismisson

onJuly

July26th,

26th, 2023

2023.

The relevant facts regarding the Motion to Dismiss are as follows:

follows:

1. The 1. Thetwo twopromissory

promissorynotes

noteswere

wereprepared

preparedand

andsigned

signed"in

"inororaround May201

aroundMay l."Con

201I." 1

pl. 1] Compl.

5, 5, 10 (Jan. 19, 10 (Jan. 2023).

19, 2023).

"Pursuant

2. "Pur sua toto the the Pa

Parties'

r ties' aagreement, they were to eement, they to invest in aa Sa invest in n FrFrancisco San garage

a ncisco ga ra

("Garage")." ("Garage")."Dens'

Defs'Ccls.

Ccls.1112-13

112-13(March

(March61115 2023).

6th , 2023).

WestBay, 3. West Bay,whose whosesole

soleshareholder

shareholderisis Rowena

Rowena Tan

Tan Chua,

Chua, was the nominee shareholder on

behalfofGDC.

of GDC.GDC

GDCinvested

invested$750,000.00

$750,000.00 in

in SF Bay, LLC

SF Oakland Bay, LLC ("SFOB"), ("SFOB"), the

the owner

of the Garage, so of so that that West

West Bay

Bay owned 75% of

of the shares in SFOB. The promissory note

executedby

was executed byWest WestBay

Baytotoreflect

reflect that

that West

WestBay

Baywas

wasmajority

majority owner

owner of

of SFOB

SFOB for tax

purposes." Id. purposes." Id.

4. Century Centurydid

didininfact

factborrow

borrow$120,000.00

$120,000.00and

andexecuted

executed its

its respective

respective promissory

promissory note in

favor of Id. 117-19.

of GDC. Id. 1117-19.Counterclaim Counterclaim Defendants

Defendants allege

allege that the note has not been paid

November 2011.l. Id.

since November Nevertheless, Counterclaimants Id Nevertheless, Counterclaimants allege that CDG demanded the

Century note be paid within a year and that "Century "Century paid off the

the note by November 30,

CV0028-23 DECISION AND ORDER GRANTING RULE 12(B)(6)

12(8)(6) MOTION

MOTION TO DISMISS Page 33 Page

2011, through 2011, through some form of some form of payroll deduction of [Joseph Chua, Chua, Rowena's husband's]

salary," and that Century is no longer longer indebted

indebted to

to GDC. ld.1]119.

GDC. Id 19.

TheWest 5. The WestBay Baynote

notehas

hasnot

notbeen

beenpaid

paidsince

sinceexecuting

executing the

the promissory

promissory note.

note. Dens'

Defs' Ccls.

Ccls.

(March (March6***, 2023).

6th, 2023 ).

"Aftereleven 6. "After eleven(11)

(11)years

years and

and eight

eight (8)

(8) months,

months, GDC

GDC has

has now

now filed

filed suit

suit to recover on the

two promissory notes." Id.

promissory notes." did not Id GDC did not make

make any

any other

other demands

demands for

for repayment

repayment of

of the

promissory notes promissory notes during duringthe

theabove

abovetime period.Id.Id.#H timeperiod. 119.

19.

II. 11. LAW AND DISCUSSION

"ARule "A Rule I12(b)(6) motion tests 2(b)(6) motion tests the sufficiency of a claim."

claim." Navarro v. Block, 250 F.3d 729, Navarro v.

Cir. 2001).

732 (9th Cir. 2001). When reviewing a Rule Rule 12(b)(6)

12(b)(6) motion, the Court Court must

must "construe

"construe the

pleading in the light most favorable to the non-moving party, favorable to party, and resolve all doubts in the non-

moving party's favor."

favor." First Hawaiian

Hawaiian Bank

Bank v.

v. Manley,

Manley, 2007 Guam 2 1] 9 (citation omitted).

11

Dismissal is appropriate appropriate only

only when the non-moving

non-moving party can prove party "can prove no

no set

set of

of facts

facts in support of

of

his claim which would entitle entitle him to

to relief."

relief." Taitano

Taitano v. Calve Fin. Corp., 19 12 'ti

Corp., 2008 Guam 12

v. Los Angeles

(quoting Vasquez v. City., 487 F.3d 1246, 1249 (9th Cir. 2007)).

Angeles City.,

A. The

TheCourt

CourtDisregards

Disregards Facts

Facts Not Included

Included in

in The

The Original

Original Complaint

The Court may not consider any material outside the the pleadings

pleadings in ruling

ruling on

on aa Rule

Rule 12(b)(6)

l2(b)(6)

motion. See Newby v.v. Gov 't'r of See Newby of Guam, Guam, 2010 1 14,

IO Guam 4 1[ 14,citing

citing Lee v.

v. City ofL.A.,

of L.A.,250

250 F.3d

F .3d 688

688

th Cir, 2001). Accordingly, (9"' Cir. 2001). Accordingly, the Court disregards the second, third, third, and fourth

fourth paragraphs

paragraphs of

of Part

Part

II, Motion at 2, and the facts alleged in pages pages 88 and

and 99 of

ofthe

the Motion.

Motion. Mot.

Mot. to

to Dismiss 1 8-9.

Dismiss112,

CV0028-23 DECISION AND ORDER GRANTING RULE 12(B)(6)

12(8)(6) MOTION

MOTION TO DISMISS Page4 Page

An Unlimited B. An Unlimited Waiver

Waiver Violates

Violates Guam Public

Public Policy

Both parties encourage this Court to look to California law and and California codes

codes regarding

the question of whether whether an

an unlimited

unlimited waiver

waiver would policy.l1 Plaintiff cited would violate public policy. cited Brownrigg Brownrigg

v. v, Defreees, 196 Cal. 534, Defreees, 196 534, 23 238 (1925)

1925) to

to argue

argue that

flat an

an unlimited

unlimited waiver would not violate public

policy, but this case was superseded by a statute that supports supports the

the opposite

opposite approach. See Cal. First

Bankv.

v. Braden, Braden,215 Cal. App. ad 3d 672, 676-677 ("this

("this amendment intended not amendment was intended not only only to require

that waivers waivers of of the statute be

be in

in writing

writing but

but that

that no

no one

one could waive

waive the

the statute for a period of more

than four years years beyond

beyond the time

time when the statute would run," referring to the Senate would otherwise have Mn,"

Committee). This

Interim Judiciary Committee). This code code is

is current

current as of

of January 2023

2023 in California and maintains maintains

that no no waiver waiver can can exceed

exceed more

more than

than four

fouryears

yearsbeyond

beyondthe

thestatute limitations2 Thus, following statuteofoflimitations.

California's lead, this Court Court finds

finds that

that an

an unlimited

unlimited waiver that extends four years years beyond the

statute oflimitations limitations would violate violate public policy

policy on

on litigation

litigation rights,

rights, "which

"wllich find

find their justification

theirjustification

in necessity and convenience convenience and

and serve

serve the

the practical

practical purpose

purpose of

of sparing courts from litigating stale

claims and people from from being put to the defense defense of

of claims

claims after

after memories fade

fade and

and witnesses

witnesses

disappear."See See First Security

Security Bank

Bank v.

v. Buehne,

Buehne, 314

314 Kan. 507, 501

501 P.3d 362 (2021).

C. The

TheStatute

Statuteof

ofLimitations

LimitationsBars

Bars GDC's

GDC'sBreach

Breachof

ofPromissory

Promissory Notes Claims

Notes Claims

A negotiable instrument must: "(a) be signed by the maker or drawer' and and (b)

(b) contain

contain an

unconditional promise unconditional promise or or order

order to

to pay

pay a swn certain in money and sum certain and no no other

other promise,

promise, order,

order,

obligation or power obligation power given by the maker or drawers..., ... ; and

and (c)

(c) be payable on demand

demand or

or at a definite

definite

time; a nd (d) time, and (d) be be pa ble to

payable to or

order or

or to

to bea r

bearer." 13 21 (2005).

3104(1) 21

GCA §§ 3104(l) 13 GCA (2005). Negotia Negotiable

11 Plf's Plf's Opp.

Opp. to to Defy'

Defs' Mot.

Mot.totoDismiss

Dismiss 1]

,i 11 and Defs'

Defs' Rep.

Rep. 117-8.

,i 7-8.

2 z "No waiver executed executed prior

prior to

to the

the expiration of the time limited for for the the commencement

commencement of of the action action by this title

effective for

shall be effective for a period period exceeding

exceeding four

four years

yearsfrom

fromthe dateof

thedate ofexpiration

expiration of

ofthe

thetime

timelimited

limited for

for commencement

commencement

of of the action action by this title and and no

no waiver executed

executed after

after the

the expiration

expiration of

of such

such time shall

shall be effective for a period exceeding exceeding fourfour years from the years from the date

date thereof,

thereof, butbut any

any such

such waiver

waiver may

may bebe renewed

renewed for for aa further further period

period of not

exceeding four years exceeding four years from from the

the expiration

expiration ofof the

the immediately

immediatelypreceding

precedingwaiver."

waiver."Cal.Cal.Civ.

Civ. Pro. 360.5.

Pro.§ 360.S.

CV0028-23 DECISION AND ORDER ORDER GRANTING

GRANTINGRULE

RULE12(8)(6)

l2(B)(6) MOTION

MOTION TO DISMISS Page 5

instruments are are governed

governed by

by Article

Article 33 of

of the

the Uniform

Uniform Commercial ('UCC')33 internalized in Commercial Code ('UCC')

Guam Guam as the Guam as the Guam Uniform Uniform Commercial

Commercial Code

Code§ 3122,

3122, which

which holds

holds that,

that, "(1)

"(1) aa cause

cause of

of action

action

against a maker rnadcerororananacceptor

acceptoraccrues

accrues... (2)ininthe

... (2) thecase

case of

of aa demand

demand instrument upon its date or,

if no date date is is stated,

stated, on the date of issue." 13 of issue." 13 GCA

GCA §§ 3122

3122 (2022).

(2022). The

The promissory

promissory notes

notes are

are

negotiable instruments, as negotiable instruments, as they are: (I)

they are: (1) signed by their their makers,

makers, (2)

(2) contain

contain an

an unconditional

unconditional

promise to pay promise to pay certain certain money

money to

to Goodwind,

Goodwin, and

andare (3) payable

are (3) payable on

on demand

demand or

or at

at aa definite

definite time.

time.

Compl. (Jan. Compo. (Jan. 19, 19, 2023).

2023). Given

Given that

that the

the promissory

promissory notes

notes are

are negotiable instruments that do not

have a maturity dates, the notes accrued when they date4, the they were were executed

executed ininMay

May2011. Compl.1]~ 5, 10 2011.Comal. 10

(Jan. 19, 19, 2023).

Both promissory

promissory notes include language that waives the statute statute of

of limitations,

limitations, "to the

extend extend allowable by law."

law." Comal.

Compl.Exs. andC,C,11~ 5-6, Exs.AAand ~ 10-12.

5-6, 1] 10-12. Both

Both parties

parties agree

agree that this

language creates limitation on the waiver.55 It creates a limitation It is is not clear what this limitation, limitation, "to the extent extent

allowable by the law" would would mean,

mean, ifif not

not that the parties could only only waive the statute of limitations limitations

the maximum extent allowed by Guam law. According to Guam law, when promissory to the promissory notes

do not contain do not contain aa maturity maturity date,

date, the

the statute

statute of limitations isis four of limitations fouryears.

years.See

See77GCA

GCA§§1Il303(a)

l ("An

("An

action upon any contract, obligation, obligation, or liability

liability founded

founded upon an instrument in writing"). Taking

our lead from California, perhaps the parties could have waived four four years

years beyond

beyond Ute

the statute of

of

limitations (eight years in total), but not indefinitely. Thus, it appears that the parties parties could only

waive the statute of of limitations up to four years or maybe eight eight years. If this was not the parties'

intent in including this language, language, then

then the waiver would be unlimited and and violate

violate public policy.

The statute oflimitations limitations for the Promissory Promissory Notes

Notes started

started in

in May

May of I, and this action was not of2011,

33 See Ecube v. RK Incorporation, 2021 Guam 2, 11 See £cube v. RK Incorporation, Guam 2, 'I] 19. 4 4 Compo.

Com Exs.AAand pl. Exs. and C, c, 11 S-6,1110-12.

11 5-6, 11 10-12.(Jan.

(Jan.19.

19.2023).

2023).

s5 Plf's Plf's Opp.

Opp. to Defs'

Defs' Mot.

Mot.totoDismiss

Dismiss'H,i 66 and

and Defs'

Defs'Rep.

Rep.11 3-4.

11 3-4.

CV0028-23 DECISION ANDORDER DECISION AND ORDERGRANTING GRANTINGRULE

RULE12(B)(6)

I2(8)(6) MOTION DISMISS MOTION TO DISMISS Page66 Page

brought until eleven eleven years

years and

and eight

eightmonths

monthslater.

later.Dens'

Defs'Ccls.

Ccls.(March 6th , 2023).

(March61*', 2023). Therefore, Therefore, even

even

using the eight-year limit limit from

from California, this claim is stale.

Plaintiff GEDA v.v. Mailloux Plaintiff cites GEDA Maillol as as authority for the notion that the statute of limitations

waiver is binding here, but Mailloux Mai l l ol is a case

case from

from almost forty

forty years

years ago

ago that

that has

has never

never been

been cited

and merely holds that the defendant defendant objectively

objectively manifested

manifested assent

assent to

to aa waiver,

waiver, not

not that

that the statute

of of limitations waiver did not require a time limit. See GEDA v.v. Mailloux, See GEDA Maillol, 1986 1986 WL 68510. The

issue of whether the statute statute of limitations could be waived indefinitely was was not

not addressed.

addressed. Id.

Further, unlike Further, unlike the facts before the facts this Court, before this Court, the Defendant in Malloux made payments the Defendant yments on a

promissory note for promissory note for six years years before

before defaulting,

defaulting, at

at which

which point

point the

the Plaintiff

Plaintiff quickly filed action.

Id. ,r1]2.

2. The The facts

factsbefore

before this

this Court

Court are

arevery

very different,

different, because

because the

the Plaintiff

Plaintiff before

before us

us waited

waited almost

before making any demands on the Promissory Notes twelve years before Notes or bringing any legal action.

Dens' Cols. ,r119 Defs' Ccls. 19 (March 6th , 2023).

(March6'h, 2023). The

The situation

situation before

before us

us is

is strange and untimely

strange and untimely and prejudices

the Defendants Defendantswho who will

will have

have to

to End

find witnesses with memory witnesses with memory of

ofevents

events from

fromover

overaadecade

decade ago.

ago.

As a consequence, the Court grants the motion to dismiss the two causes of action to enforce the

Promissory Notes. Given that the statute of limitations bar these causes of of actions, the Court does

not need to address the Defendant's Defendant'sassertion

assertionof Lashes. See

ofLaches. See Mot.

Mot. to

to Dismiss ,r

Dismiss117-9.

III. 111. CONCLUSION AND ORDER GRANTS the

Based on the foregoing, the Court GRANTS the Motion Motion to

to Dismiss.

Dismiss.

S0 SO ORDERED 24 October October 2023

2023..

re \

\

HON OHN I. TERLAJE TERLAJE

Judge tor Court of Guam

Appearing Attorneys:

Attorneys:

Anita P. Arriola, Esq., Arriola Anita P. Arriola, Esq., ArriolaLaw LawFirm,

Firm,for

forPlaintiff

PlaintiffGoodwind

Goodwin Development

Development Corp.

Corp.

Louie J. Yanza, Esq., Esq., Law Office of Louie J. Yanza, Yanza, for Defendants West Bay Corporation Corporation and

st Century Corporation 2151 Century Corporation