Goodwind Development Corporation, Plaintiff-Counterclaim Defendant-Appellant/Cross-Appellee v. West Bay Corporation and 21st Century Corporation, Defendants-Counterclaimants-Appellees/Cross-Appellants

2025 Guam 15

• Court: Supreme Court of Guam
• Decided: December 30, 2025
• Docket: CVA23-015
• Status: Published

Opinion

IN THE SUPREME COURT OF GUAM

GOODWIND DEVELOPMENT CORPORATION, Plaintiff-Counterclaim Defendant-Appellant/Cross-Appellee,

v.

WEST BAY CORPORATION and 21st CENTURY CORPORATION, Defendants-Counterclaimants-Appellees/Cross-Appellants.

Supreme Court Case No. CVA23-015 Superior Court Case No. CV0028-23

OPINION

Appeal from the Superior Court of Guam Argued and submitted on October 17, 2024 Hagåtña, Guam

Appearing for Plaintiff-Appellant/ Appearing for Defendants-Appellees/ Cross-Appellee: Cross-Appellants: Anita P. Arriola, Esq. Louie J. Yanza, Esq. Arriola Law Firm Law Office of Louie J. Yanza, P.C. 259 Martyr St., Ste. 201 MVP Bldg. Hagåtña, GU 96910 862 S. Marine Corps Dr., Ste. 203 Tamuning, GU 96913 Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 2 of 44

BEFORE: ROBERT J. TORRES, Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; and KATHERINE A. MARAMAN, Associate Justice.

TORRES, C.J.:

[1] Plaintiff-Appellant/Cross-Appellee Goodwind Development Corporation (“Goodwind” or

“GDC”) appeals the Superior Court’s decision and order dismissing its complaint against

Defendants-Appellees/Cross-Appellants West Bay Corporation (“West Bay”) and 21st Century

Corporation (“Century” or “21st Century”; together with West Bay, the “Defendants”; and each a

“Defendant”). On appeal, Goodwind argues the trial court erred by: (1) relying on extrinsic matters

when granting the Defendants’ motion to dismiss; (2) failing to convert the Defendants’ motion to

dismiss into a motion for summary judgment; and (3) concluding that Goodwind’s claims were

time-barred based on the unenforceability of statute of limitations waivers contained in two

promissory notes.

[2] The Defendants cross-appeal the Superior Court’s judgment denying their motion for

reconsideration of an order dismissing their counterclaims. The Defendants argue that the trial

court erred by: (1) dismissing their fraud and fraud-related counterclaims for lack of particularity;

(2) applying the parol evidence rule to bar evidence of negligent misrepresentation, breach of

contract, and breach of the covenant of good faith and fair dealing; (3) dismissing their unjust

enrichment counterclaim as time-barred; and (4) denying their request for leave to amend their

counterclaims on the ground of futility.

[3] We affirm.

I. FACTUAL AND PROCEDURAL BACKGROUND

A. Background of the Parties

[4] Goodwind, West Bay, and Century are Guam corporations, duly registered to do business

in Guam, with their principal places of business on the island. Goodwind is owned by Lucio Chua Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 3 of 44

Tan, Sr. (“Tan”), a Philippine citizen. His eldest child, Rowena Tan Chua (“Rowena”), served as

Goodwind’s Treasurer from the early 1990s until 2021. Rowena’s husband, Joseph Chua

(“Joseph”), held various roles at Goodwind, serving as Managing Director from about 1988 until

2021, in addition to serving as President from 2013 until 2021. Rowena and Joseph are also

representatives of West Bay and Century.

B. The Garage Investment

[5] Joseph, as Goodwind’s Managing Director, informed the company of a parking garage in

San Francisco (“Garage”) available for purchase at $6,000,000, intending for Goodwind to acquire

and later sell it for profit. Tan allegedly approved the acquisition. However, Goodwind’s due

diligence revealed that its ownership of the Garage would have “substantial tax implications” if

the property were later sold. Record on Appeal (“RA”), tab 8 ¶ 27 (Defs.’ Answer & Countercl.,

Mar. 7, 2023). Specifically, foreign ownership in Goodwind would trigger a “profits tax” in the

U.S., potentially raising the overall tax rate to over 60%. Id. ¶ 28.

[6] The Defendants allege that Goodwind devised a strategy to acquire the Garage while

mitigating the tax burden, based on advice from its tax advisors, Deloitte Touche LLP (“Deloitte”)

and Ernst & Young LLP (“E&Y”). Goodwind’s Chief Financial Officer and Vice President of

Operations, Willy Onglao, emailed Goodwind’s President and Director, James Chiang, and

Joseph, summarizing E&Y’s and Deloitte’s recommendations. According to one email, E&Y

advised that “Rowena will represent GDC Guam in [the] California LLC” and that “GDC will pay

for Rowena’s taxes in California and Guam in so far as [the] California LLC is concerned.” Id. ¶

30; id., Ex. C at 1 (Email, Mar. 3, 2011). The email also outlined Deloitte’s alternative

recommendation to form a California corporation to represent Goodwind in the LLC.

[7] The Defendants assert that Goodwind’s final strategy involved (1) buying the Garage

through a California limited liability company (“California LLC”) owned by a U.S. citizen and (2) Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 4 of 44

having either a California or Guam corporation invest in the California LLC. The Defendants

further claim E&Y advised that Rowena should act as Goodwind’s nominee owner in the

California LLC due to her U.S. citizenship.

[8] The Defendants contend that Rowena agreed to serve as the nominee shareholder “in the

place of” Goodwind based on (1) representations from Onglao and Chiang, (2) advice from

Deloitte and E&Y, and (3) Tan’s “tacit approval.” RA, tab 8 ¶ 34 (Defs.’ Answer & Countercl.).

Acting on further guidance from Deloitte and E&Y, Rowena incorporated West Bay. She is its

sole shareholder. That same day, Rowena and Joseph incorporated Century, of which they are the

sole shareholders.

[9] A week later, a California limited liability company, SF Oakland Bay LLC (“SFOB”), was

formed to acquire the Garage. West Bay acquired a 75% membership interest in SFOB, while

Century acquired a 12% membership interest.

C. The Promissory Notes

[10] The Defendants allege that, to reinforce that West Bay was owned by Rowena rather than

Goodwind, Onglao advised Rowena to have West Bay execute a $750,000 promissory note (“West

Bay Note”) in favor of Goodwind around May 2011.

[11] To finance its ownership interest in SFOB, and allegedly with the consent of Goodwind’s

senior officers, Century borrowed $120,000 from Goodwind and executed a promissory note

(“Century Note”) in favor of Goodwind around May 2011.

[12] Both the West Bay and Century Notes (together, “Promissory Notes” or “Notes”) do not

accrue interest and are payable to Goodwind within 30 days of demand. The Notes also include

identical provisions waiving certain defenses, including the statute of limitations: “The Borrower

. . . to the extent allowable by law waives the benefit of any statute of limitations with respect to Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 5 of 44

any action to enforce, or otherwise related to, this Note.” RA, tab 1 (Compl., Jan. 20, 2023), Ex.

A at 2 (West Bay Note, 2011); id., Ex. C at 2 (Century Note, 2011).

D. The Garage Deposit

[13] The Defendants allege that Goodwind used its own funds to pay the deposit to the seller of

the Garage, which represented West Bay’s 75% capital contribution and Century’s 12% capital

contribution to SFOB. However, Goodwind asserts that Joseph, as Goodwind’s Managing

Director, “used the $750,000 borrowed by West Bay and the $120,000 borrowed by 21st Century

as an earnest deposit to the seller.” RA, tab 13 at 4 (Pl.’s Mem. P. & A. Supp. Mot. Dismiss, Apr.

17, 2023) (citing RA, tab 8 ¶¶ 41, 43 (Defs.’ Answer & Countercl.)). Goodwind further asserts

that, to finance the entire purchase price, Goodwind—through Joseph as its Managing Director—

and SFOB, “executed loan agreements with the Bank of Hawaii for $17,500,000” (“SFOB loan”).

Id. (citing RA, tab 8 ¶ 44 (Defs.’ Answer & Countercl.)).

E. The Lawsuit

[14] Over eleven years after issuing the Notes, Goodwind issued demand letters to West Bay

and Century, requesting full payment of their respective Notes within 30 days of receipt. The

letters warned that if payment was not made within 30 days, Goodwind would initiate legal

proceedings to collect the debts. After the 30-day period passed, Goodwind contended that West

Bay and Century did not pay the amounts due. Goodwind filed a complaint for breach of

promissory note against each Defendant.

[15] The Defendants filed an answer, asserting 28 affirmative defenses and nine counterclaims,

including (1) fraud in the inducement, (2) intentional misrepresentation, (3) negligent

misrepresentation, (4) constructive fraud, (5) breach of the implied covenant of good faith and fair Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 6 of 44

dealing, (6) rescission based on fraudulent inducement, (7) breach of contract, and (8) unjust

enrichment.1

[16] The Defendants allege that Goodwind assured West Bay and Century that (1) the West Bay

Note was never intended to be repaid; (2) Rowena was the “nominee holder” in West Bay for

Goodwind; (3) Goodwind would pay “its share of any operating expenses, taxes, and loans” related

to the Garage; and (4) Goodwind would reimburse West Bay and Century for the SFOB loan and

other expenses. RA, tab 8 ¶¶ 35-37, 61 (Defs.’ Answer & Countercl.). Goodwind argues that

these claims are barred by the parol evidence rule and that Defendants’ fraud claims are “deficient

and without merit.” Appellant’s Reply Br. at 2-3 (Sep. 16, 2024); accord RA, tab 13 at 4-5 (Pl.’s

Mem. P. & A. Supp. Mot. Dismiss).

[17] The Defendants also allege that Century paid off the Century Note by November 30, 2011,

“through some form of a payroll deduction of Joseph’s salary,” and Century is “no longer

indebted” to Goodwind. RA, tab 8 ¶¶ 42, 45 (Defs.’ Answer & Countercl.). However, Goodwind

asserts that it has not received payments from Century, and that the Note remains unpaid in the

amount of $120,000.

[18] Goodwind filed a Guam Rule of Civil Procedure (“GRCP” or “Rule”) 12(b)(6) motion to

dismiss the Defendants’ counterclaims, and the Defendants filed a motion to dismiss Goodwind’s

complaint. The trial court granted both motions. The Defendants moved for reconsideration of

the trial court’s dismissal of their counterclaims. The trial court denied this motion. Having

dismissed the Plaintiff’s complaint and the Defendants’ counterclaims, the court issued a revised

judgment.

1 The ninth counterclaim is for abuse of process. The Defendants have not raised this counterclaim on appeal. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 7 of 44

[19] Goodwind filed a timely notice of appeal. The Defendants filed a timely notice of cross-

appeal.

II. JURISDICTION

[20] This court has jurisdiction over appeals from a final judgment of the Superior Court of

Guam. 48 U.S.C.A. § 1424-1(a)(2) (Westlaw through Pub. L. 119-59 (2025)); 7 GCA §§ 3107,

3108(a) (2005). Typically, an order granting a motion to dismiss for failure to state a claim is a

final judgment. Cruz v. Cruz, 2023 Guam 20 ¶ 15 (quoting Portis Int’l, LLC v. Marquardt, 2018

Guam 22 ¶ 6).

III. STANDARD OF REVIEW

[21] This appeal involves questions of law, which are reviewed de novo. See id. ¶ 10 (reviewing

dismissal for failure to state claim); id. ¶ 11 (citing Gayle v. Hemlani, 2000 Guam 25 ¶ 22)

(reviewing claim barred by statute of limitations); M Elec. Corp. v. Phil-Gets (Guam) Int’l Trading

Corp., 2012 Guam 23 ¶ 21 (reviewing application of parol evidence rule); Duenas v. George &

Matilda Kallingal, P.C., 2012 Guam 4 ¶ 37 (interpreting contract).

[22] When evaluating a motion to dismiss under GRCP 12(b)(6), a court’s review is limited to

the complaint, attached exhibits, incorporated documents, and materials heavily relied upon in the

complaint. Newby v. Gov’t of Guam, 2010 Guam 4 ¶ 14. The court “must accept all the well-

pleaded facts as true, ‘construe the pleading in the light most favorable to the non-moving party,

and resolve all doubts in the non-moving party’s favor.’” Cruz, 2023 Guam 20 ¶ 10 (quoting

Guam Police Dep’t v. Guam Civ. Serv. Comm’n (Charfauros), 2020 Guam 12 ¶ 8). “Dismissal

for failure to state a claim is appropriate only ‘if it appears beyond doubt that the [non-moving

party] can prove no set of facts in support of his claim which would entitle him to relief.’” Id.

(alteration in original) (quoting Taitano v. Calvo Fin. Corp. (Taitano II), 2009 Guam 9 ¶ 6). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 8 of 44

[23] Fraud claims “are subject to a heightened pleading standard.” Ukau v. Wang, 2016 Guam

26 ¶ 35. While fraud need not be proven at the pleading stage, GRCP 9(b) requires that the

claimant plead the circumstances constituting the alleged fraud with sufficient particularity to

notify the opposing party of the claimed misconduct. Id. ¶ 47 (citing Taitano v. Calvo Fin. Corp.

(Taitano I), 2008 Guam 12 ¶ 16).

[24] If a complaint fails to state a claim or lacks particularity in alleging fraud, “[d]enial of leave

to amend is reviewed for abuse of discretion.” Taitano I, 2008 Guam 12 ¶ 9 (alteration in original)

(quoting United States ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1051 (9th Cir.

2001)). Although leave to amend “shall be freely given when justice so requires,” Guam R. Civ.

P. 15(a), amendment may be denied as futile if the complaint would still be subject to dismissal,

Lujan v. Calvo Fisher & Jacob LLP, 2018 Guam 27 ¶ 13. A trial court abuses its discretion if it

denies leave to amend “based on clearly erroneous factual findings or an incorrect legal standard.”

M Elec. Corp. v. Phil-Gets (Guam) Int’l Trading Corp., 2016 Guam 35 ¶ 41 (quoting Agana Beach

Condo. Homeowners’ Ass’n v. Untalan, 2015 Guam 35 ¶ 12). A finding is clearly erroneous if “it

is not supported by substantial evidence,” leaving the reviewing court with a “definite and firm

conviction that a mistake has been made.” Id. (quoting Ptack v. Ptack, 2015 Guam 5 ¶ 24).

IV. ANALYSIS

A. We Reject Goodwind’s Arguments Raised on Appeal

[25] Goodwind argues that the trial court erred by: (1) relying on matters extrinsic to the

complaint when granting the Defendants’ motion to dismiss; (2) not converting the Defendants’

motion to dismiss into a motion for summary judgment under GRCP 12(c); and (3) finding that

Goodwind’s claims were time-barred due to the invalidity of the Notes’ statute of limitations

waivers under Guam law. We reject each of these contentions as unfounded. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 9 of 44

1. The trial court did not rely on extraneous matters in granting the Defendants’ motion to dismiss and therefore did not err in declining to convert the motion to one for summary judgment

[26] Goodwind argues that (1) the trial court considered matters extraneous to its complaint

when granting the Defendants’ Rule 12(b)(6) motion to dismiss and (2) the trial court was therefore

required under Rule 12(c) to convert the motion to dismiss into a Rule 56 motion for summary

judgment. Appellant’s Br. at 7, 10-11 (July 17, 2024). We disagree.

[27] Generally, in ruling on a Rule 12(b)(6) motion, courts may consider only the complaint,

attached exhibits, “statements or documents incorporated in the complaint by reference,” and

materials heavily relied upon in the complaint. See Newby, 2010 Guam 4 ¶ 14 (citing Mercado

Arocho v. United States, 455 F. Supp. 2d 15, 19 (D.P.R. 2006)). Because GRCP 12 is modeled on

its federal counterpart, see Guam R. Civ. P. 12, SOURCE, we look to federal case law as

persuasive. Under GRCP 12(c), if “matters outside the pleadings are presented to and not excluded

by the court” in ruling on a Rule 12(b)(6) motion, the motion must be treated as one for summary

judgment, and all parties must be given a reasonable opportunity to present relevant material under

Rule 56. Guam R. Civ. P. 12(c); Core Tech Int’l Corp. v. Hanil Eng’g & Constr. Co., 2010 Guam

13 ¶ 29. However, a court’s “failure to treat [a motion to dismiss] as one for summary judgment

does not require reversal if the error was harmless.” Federated Mut. Ins. Co. v. Coyle Mech. Supply

Inc., 983 F.3d 307, 313 (7th Cir. 2020). A court’s reference to extraneous matters is harmless if

(1) the court does not factor such extraneous matters into its rationale for dismissal and (2) the

dismissal can instead be explained “without reference to any extraneous matters.” See Bates v.

Green Farms Condo. Ass’n, 958 F.3d 470, 484 (6th Cir. 2020) (quoting 5C Wright & Miller’s

Federal Practice & Procedure § 1364 (3d ed. Supp. 2019)); accord Hawk Tech. Sys., LLC v.

Castle Retail, LLC, 60 F.4th 1349, 1360-61 (Fed. Cir. 2023) (treating error as harmless where trial

court failed to expressly reject extraneous materials, because dismissal justified without them). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 10 of 44

[28] In their motion to dismiss, the Defendants included allegations from their counterclaims,

which were not part of Goodwind’s complaint. See RA, tab 23 at 2 (Defs.’ Mot. Dismiss, July 27,

2023). Goodwind objected and asked the trial court to disregard those allegations. RA, tab 25 at

4-5 (Pl.’s Opp’n Mot. Dismiss, Aug. 24, 2023). Acknowledging this objection, the court explicitly

stated that it would not consider extraneous matters. RA, tab 33 at 3 (Dec. & Order, Oct. 24,

2023). Although the trial court specifically indicated that it would “disregard[] facts not included

in the original complaint,” id., it also included extraneous facts in its list of “relevant facts

regarding [Defendants’] Motion to Dismiss” along with citations to the Defendants’ counterclaims,

see id. at 2-3.2

[29] Despite these references, the trial court (1) stated it would disregard facts not included in

Goodwind’s complaint and (2) did not rely on any extraneous facts in its legal analysis. Id. at 3-

6. Instead, it based its ruling on facts alleged within the complaint, including the execution of two

promissory notes in May 2011, each lacking a maturity date and waiving the statute of limitations

“to the extent allowable by law.” Id. at 5-6 (citing RA, tab 1 at 2 (Compl.); id., Ex. A (West Bay

Note); id., Ex. C (Century Note)). In its discussion and application of the law, the trial court refers

to the Defendants’ counterclaims in only two instances. The first is when noting that the “statute

of limitations for the Promissory Notes started in May of 2011, and this action was not brought

until eleven years and eight months later.” RA, tab 33 at 5-6 (Dec. & Order) (citing RA, tab 8

2 The list of relevant facts included in the October 24, 2023 Decision and Order is identical to the list of relevant facts that the trial court included in its October 11, 2023 Decision and Order granting Goodwind’s motion to dismiss the Defendants’ counterclaims. Compare RA, tab 33 at 2-3 (Dec. & Order, Oct. 24, 2023) (quoting RA, tab 8 (Defs.’ Answer & Countercl., Mar. 7, 2023)), with RA, tab 29 at 2-3 (Dec. & Order, Oct. 11, 2023) (quoting RA, tab 8 (Defs.’ Answer & Countercl.)). The Defendants contend that the trial court “simply cut and pasted the ‘Factual and Procedural Background’ from its October 11, 2023 Decision and Order, which included facts alleged in the Defendants’ Counterclaim that were relevant to its earlier decision granting Goodwind’s motion to dismiss that Counterclaim but not to its decision on the Defendants’ motion to dismiss.” Appellees’ Br. at 25-26 (Aug. 16, 2024) (comparing RA, tab 33 at 2-3 (Dec. & Order, Oct. 24, 2023), with RA, tab 29 at 2-3 (Dec. & Order, Oct. 11, 2023)). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 11 of 44

(Defs.’ Answer & Countercl.)). The second is when distinguishing from a case cited by Goodwind:

“The facts before this Court are very different, because the Plaintiff before us waited almost twelve

years before making any demands on the Promissory Notes or bringing any legal action.” Id. at 6

(citing RA, tab 8 at 19 (Defs.’ Answer & Countercl.)). The matters referenced in these two

instances are not extraneous because the fact that this action was brought eleven years and eight

months after the Notes’ issuance can also be determined by looking only at Goodwind’s complaint.

See RA, tab 1 at 1-2 (Compl.); id., Ex. A (West Bay Note); id., Ex. C. (Century Note).

[30] Concluding that the statute of limitations began running upon execution of the Notes in

May 2011, the trial court applied the four-year limitations period under 7 GCA § 11303(a) and

determined Goodwind’s claims were time-barred. RA, tab 33 at 5-6 (Dec. & Order). Its reasoning

for granting the motion to dismiss is grounded in facts that may be gleaned from the four corners

of Goodwind’s complaint. Because (1) the trial court did not factor extraneous matters into its

rationale for dismissal and (2) the dismissal can instead be justified without reference to any

extraneous matters, any alleged error in referring to extraneous facts is harmless. Accordingly, it

was appropriate for the trial court to treat the motion as one for dismissal under GRCP 12. The

court was not required to convert the motion to dismiss into a motion for summary judgment.

2. The trial court did not err in finding the Notes’ statute of limitations waivers were unenforceable under Guam law

[31] Goodwind’s next argument is that the trial court erred in dismissing its complaint on the

grounds that its claims were barred by the statute of limitations. Appellant’s Br. at 12-13.

Goodwind contends that the Notes included waivers of the statute of limitations that are valid

under Guam law and its claims should not be time-barred. Id. at 13-16.

//

// Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 12 of 44

a. Statutory framework for the statute of limitations on promissory notes

[32] Under Guam law, the statute of limitations for an action upon a promissory note is four

years.3 See 7 GCA § 11303(a) (2005) (establishing four-year statute of limitations for “[a]n action

upon any contract, obligation or liability founded upon an instrument in writing”). For a demand

promissory note without a maturity date, the limitations period begins to run (1) “upon its date,”

or (2) “if no date is stated, on the date of issue.” See 13 GCA § 3122(1)(b) (2005). The four-year

statute of limitations period in 7 GCA § 11303(a) falls under the purview of 7 GCA § 11101:

“Civil actions, without exception, can only be commenced within the periods prescribed in this

Chapter, after the cause of action shall have accrued, unless where, in special cases, a different

limitation is prescribed by law.” 7 GCA § 11101 (2005) (emphases added).

[33] Goodwind’s claims arise from two promissory notes, the West Bay Note and the Century

Note, which are instruments in writing. Since both Notes are demand instruments without maturity

dates and were issued around May 2011, the four-year statute of limitations period began running

at that time and expired around May 2015. Both Notes have identical waivers of the statute of

limitations, stating: “The Borrower . . . to the extent allowable by law waives the benefit of any

statute of limitations with respect to any action to enforce, or otherwise related to, this Note.” RA,

tab 1, Ex. A at 2 (West Bay Note); id., Ex. C at 2 (Century Note). Thus, central to this case is

whether these waivers allow Goodwind to bring its actions upon the Notes over seven years after

the expiration of the statute of limitations period.

b. Interpretation of “to the extent allowable by law”

[34] At issue are the meaning and impact of the phrase “to the extent allowable by law”

contained within the waivers. “Guam’s case law is clear that the ‘plain meaning’ or traditional

3 California enacted a law that explicitly allows for the extension of the statute of limitations by an additional four years when the waiver is in writing and signed by the person obligated. See Cal. Civ. Proc. Code § 360.5. Guam has not enacted a similar law. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 13 of 44

approach is what we are bound to follow in matters of contract interpretation.” Wasson v. Berg,

2007 Guam 16 ¶ 17. The plain meaning of “to the extent allowable by law” is that the waivers

were limited by Guam’s controlling law. As the trial court noted, “It is not clear what this

limitation, ‘to the extent allowable by the law’ would mean, if not that the parties could only waive

the statute of limitations to the maximum extent allowed by Guam law.” RA, tab 33 at 5 (Dec. &

Order).

[35] Under Guam law, civil actions may be commenced after the statute of limitations only

“where, in special cases, a different limitation is prescribed by law.”4 7 GCA § 11101. Guam has

no statute expressly permitting the waiver or extension of the statute of limitations for instruments

in writing. Therefore, this is not a special case where a different limitation is prescribed by law,

and the four-year limitations period applies.

c. The Mailloux case and its limitations

[36] To support its argument that the statute of limitations can be waived, Goodwind relies on

an opinion issued by the Appellate Division of the District Court of Guam in Guam Economic

Development Authority v. Mailloux, Nos. CV 80–0200A, CV 80–0219, 1986 WL 68510 (D. Guam

App. Div. 1986). See Appellant’s Br. at 13-16; Appellant’s Reply Br. at 17-20. In Mailloux, the

defendants signed a guaranty contract that included a waiver of the four-year statute of limitations

established by Guam’s 1970 Code of Civil Procedure (“GCCP”) section 337. 1986 WL 68510, at

*1. When the borrower defaulted, the plaintiff sued the defendants as guarantors. Id. The

4 Examples of such “special cases” include: (1) 5 GCA § 7108, which imposes a five-year limitation for claims under 5 GCA Chapter 7 but eliminates the limitations period entirely for enforcement of judgments obtained under that chapter; (2) 7 GCA § 52109, which limits actions to recognize foreign-country judgments to the earlier of fifteen years from effectiveness or the period of enforceability in the originating jurisdiction; and (3) 7 GCA § 50551, which tolls all limitations periods for claims involving a debtor’s estate while insolvency proceedings are pending. Another example is 21 GCA § 47309, which sets a distinct limitations period for challenges to a public offering statement or time-share purchase contract. That statute imposes a four-year period from the contract date and a rolling four-year period for breaches of ongoing service obligations. Additionally, it expressly permits parties to agree to a shorter period, provided it is not reduced below two years. 21 GCA § 47309 (2005). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 14 of 44

defendants argued that the waiver was an “adhesive provision to which they had not agreed” and

of which they had not been aware when signing the contract. Id. The trial court ruled against them

on the issue, and the Appellate Division affirmed, finding that defendants were bound by the

waiver, despite their subjective awareness of it when signing the contract. Id., at *1-3.

[37] While Appellate Division decisions are binding on the trial courts of Guam absent a ruling

from this court,5 they are not controlling precedent for this court. People v. Quenga, 1997 Guam

6 ¶ 13 n.4; People v. Palomo, 1998 Guam 12 ¶ 6. However, this court has stated that “it will not

deviate from precedent of the Appellate Division of the District Court of Guam if it was well

established in law and well reasoned, or ‘unless reason supports such deviation.’” Limtiaco v.

Guam Fire Dep’t, 2007 Guam 10 ¶ 46 n.9 (citations omitted). In Limtiaco v. Guam Fire

Department, this court found that there was sufficient reason to support deviation from the

Appellate Division’s decision when the Appellate Division did not root its reasoning in known

authority. See 2007 Guam 10 ¶ 46 & n.9.

[38] Mailloux lacks a strong legal foundation. It relied on broad references to “fundamental

contract and guaranty law” to hold that “the evidence could reasonably support only the conclusion

that [defendant] was bound by the limitations waiver.” Mailloux, 1986 WL 68510, at *3. The

Appellate Division also cited the Eighth Circuit and the Kansas Court of Appeals to assert that

“[i]n the absence of fraud, misrepresentation, or mutual mistake, one who executes a contract

cannot avoid it because he failed to read it or because the contract’s terms were supposedly

5 While the trial court differentiated this case from Guam Economic Development Authority v. Mailloux, 1986 WL 68510 (D. Guam App. Div. 1986), on both the issue and facts, it erred to the extent it rejected Mailloux as precedent on the grounds that it is “a case from almost forty years ago that has never been cited.” See RA, tab 33 at 6 (Dec. & Order, Oct. 24, 2023). Because Mailloux was an Appellate Division case, its decision was binding on the trial court with respect to any law upon which this court has yet to rule, regardless of its age or lack of citing references. However, we find this error harmless because we affirm the trial court’s judgment on other grounds supported by the record. See People v. San Nicolas, 2001 Guam 4 ¶ 29. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 15 of 44

different.” Id., at *2 (citing N&D Fashions Inc. v. DHJ Indus., Inc., 548 F.2d 722, 727 (8th Cir.

1976); Squires v. Woodbury, 621 P.2d 443, 446 (Kan. Ct. App. 1980)).

[39] The Mailloux court did not consider GCCP § 312, the source of 7 GCA § 11101 and the

governing statute at the time.6 Even in its discussion of persuasive authority from other

jurisdictions, the Mailloux court included no laws that directly addressed the validity or

enforceability of a waiver of the statute of limitations. Given its omission of relevant Guam law

and lack of on-point legal authority, there is sufficient reason to deviate from Mailloux.

[40] Public policy further supports deviation from Mailloux. While “[a]nyone may waive the

advantage of a law intended solely for his benefit[,] . . . a law established for a public reason cannot

be contravened by a private agreement.” 20 GCA § 15105 (2005). This court has the power to

“refuse[] to enforce contracts that are entered into in violation of public policy.” See Sorensen

Television Sys., Inc. v. Superior Court (Lina’la Sin Casino), 2006 Guam 21 ¶ 8. Statutes of

limitations serve a strong public interest by preventing stale claims and ensuring fairness. See

Custodio v. Boonprakong, 1999 Guam 5 ¶ 24; Guam Hous. & Urban Renewal Auth. v. Dongbu

Ins. Co., 2001 Guam 24 ¶ 13. The majority rule is that an unlimited waiver of the statute of

limitations violates public policy. See, e.g., Umpqua Bank v. Gunzel, 483 P.3d 796, 807-10 (Wash.

Ct. App. 2021) (collecting cases from fifteen states).

[41] While Goodwind concedes that “there is a strong public policy in Guam to uphold statutes

of limitations,” it also argues this policy must be balanced against the “equally strong public policy

in upholding parties’ freedom to contract and upholding the intention of the parties in a contract.”

Appellant’s Reply Br. at 20 (citing 18 GCA § 70101 (2005)); accord Appellant’s Br. at 17 (arguing

6 Guam’s 1970 Code of Civil Procedure section 312 provided: “Civil actions, without exception, can only be commenced within the periods prescribed in this Title, after the cause of action shall have accrued, unless where, in special cases, a different limitation is prescribed by law.” Guam Code Civ. Proc. § 312 (1970). The Mailloux court did not consider whether a contractual waiver of the statute of limitations could qualify as such a “special case” under the statute or any of the public policy concerns inherent in such waivers. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 16 of 44

that public policy supports enforcing the statute of limitations waiver (citing Duenas, 2012 Guam

4 ¶ 37)). Goodwind asserts that, under 18 GCA § 70101,7 “the intention of the parties in a contract

is paramount, and rights and obligations can be waived unless such waivers are against public

policy.” Appellant’s Reply Br. at 20 (emphasis added).

[42] However, 18 GCA § 70101 applies only to contracts governed by Title 18 and explicitly

excludes waivers contrary to public policy. See 18 GCA § 70101. It does not override the clear

public policy underlying 7 GCA §§ 11101 and 11303(a), which impose a four-year limitations

period on written instruments. Thus, it does not validate the Notes’ statute of limitations waivers.

[43] Goodwind also cites Duenas v. George & Matilda Kallingal, P.C., 2012 Guam 4, to

support that “clear language of a contract must be interpreted as written even though it contains

terms which may be considered ‘harsh and unjust’ by a court.” Appellant’s Br. at 17 (quoting

2012 Guam 4 ¶ 37). However, Duenas did not involve a conflict between contractual freedom and

public policy. In that case, this court ruled that defendant KPC, as the mortgagee, had the right to

demand a new lease after the termination of their original lease. Duenas, 2012 Guam 4 ¶ 38.

Despite the general rule that a leasehold mortgage ends upon lease termination, this court found

that the lease terms unambiguously allowed KPC’s right to a new lease to survive. Id. This court’s

analysis in Duenas focused only on the interpretation of the contract based on its plain and

unambiguous language, rather than engaging in a balancing of public policy concerns.8 The

7 Title 18 GCA § 70101 states: Except where it is otherwise declared, the provisions of the foregoing chapters of this Title, commencing with Division 1, Part 3 hereof, in respect to the rights and obligations of parties to contracts, are subordinate to the intention of the parties, when ascertained in the manner prescribed by Chapter 87 of this Title, on the interpretation of contracts, and the benefit thereof may be waived by any party entitled thereto, unless such waiver would be against public policy. 18 GCA § 70101 (2005) (emphases added). 8 Similarly, other opinions from this court that highlight the importance of enforcing contractual terms as written did not address conflicts with established public policies. See, e.g., Wasson v. Berg, 2007 Guam 16; Camacho v. Camacho, 1997 Guam 5; Ramiro v. White, 2016 Guam 6; Basil Food Indus. Servs. Corp. v. Guam, 2019 Guam 29. Thus, they do not support overriding the public policy behind statutes of limitations. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 17 of 44

present case implicates strong public policy underlying the statute of limitations—protecting

parties from stale claims and promoting fairness—which directly conflicts with enforcing the

waivers in the Notes. Duenas does not provide adequate grounds to use the freedom to contract

to override the public policy goals of upholding the statute of limitations.

[44] Given (1) the significance of the statute of limitations as a public policy matter and (2) the

statutory requirement for a legal exception to extend the statute of limitations, see 7 GCA § 11101,

we hold that the standard four-year limitations period applies to Goodwind’s claims. The Mailloux

decision does not satisfy the requirement for a “special case where a different limitation is

prescribed by law” because (1) Appellate Division decisions are not binding on this court, (2) the

Mailloux court neglected the applicable Guam law (i.e., GCCP § 312), and (3) the opinion lacks

citations to authority on point. The trial court correctly found that the statute of limitations waivers

in the Notes were unenforceable under Guam law.

3. We deny Goodwind’s request to amend its complaint for futility

[45] Because we have found the statute of limitations waivers unenforceable, Goodwind asks

that it be granted leave to amend its complaint. Appellant’s Br. at 19. Under GRCP 15(a), after a

responsive pleading is served, amendments require either the court’s leave or the opposing party’s

written consent, and “leave shall be freely given when justice so requires.” Guam R. Civ. P. 15(a).

However, the court may deny a requested amendment for futility if the revised complaint would

still be subject to dismissal. Lujan, 2018 Guam 27 ¶ 13.

[46] Goodwind’s claims are time-barred on the face of its complaint. No amendment can

change the West Bay and Century Notes having been issued around May 2011, and Goodwind not

suing until January 2023—more than seven years past the deadline.

[47] Goodwind contends that the statute of limitations was “equitably tolled” because the

Defendants asserted “for the first time” in their counterclaims that the Century Note had been paid Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 18 of 44

off, “through some form of payroll deduction of Joseph’s salary.” Appellant’s Reply Br. at 26

(citing RA, tab 8 ¶ 45 (Defs.’ Answer & Countercl.)). However, equitable tolling does not apply.

Even if Goodwind’s current management was unaware of this claim until the counterclaims were

filed, it should have pursued payment by May 2015 if it believed the Century Note remained

unpaid. Because the statute of limitations was not equitably tolled and any amendment would be

futile, we deny Goodwind’s request to amend its complaint.

B. We Reject the Defendants’ Arguments Raised on Cross-Appeal

[48] On cross-appeal, the Defendants contend that the trial court erred by: (1) dismissing their

fraud and fraud-related counterclaims for lack of sufficient particularity; (2) finding that the parol

evidence rule barred evidence of negligent misrepresentation, breach of contract, and breach of the

covenant of good faith and fair dealing; (3) dismissing the unjust enrichment counterclaim as time-

barred by the statute of limitations; and (4) denying the Defendants’ request for leave to amend

their counterclaims for futility.

1. The trial court did not err in dismissing the Defendants’ fraud and fraud-related counterclaims

[49] The Defendants’ first argument on cross-appeal is that the trial court erred in dismissing

their fraud and fraud-related counterclaims (i.e., (1) intentional misrepresentation, (2) fraud in the

inducement, (3) rescission based upon fraudulent inducement, (4) negligent misrepresentation, and

(5) constructive fraud). Appellees’ Br. at 10 (Aug. 16, 2024); Appellees’ Reply Br. at 5 (Sep. 30,

2024). The trial court did not err in dismissing these counterclaims because they did not meet the

heightened pleading standard for fraud-based claims.

a. Heightened pleading standard for fraud-related claims

[50] “With regard to dismissal for failure to plead fraud with particularity pursuant to Rule 9(b),

a de novo review must ‘determine whether the complaint pleaded facts with the requisite Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 19 of 44

particularity.’” Taitano I, 2008 Guam 12 ¶ 9 (quoting Yourish v. Cal. Amplifier, 191 F.3d 983,

992 (9th Cir. 1999)).9 GRCP 9(b) requires that “[i]n all averments of fraud or mistake, the

circumstances constituting fraud or mistake shall be stated with particularity,” while “[m]alice,

intent, knowledge, and other conditions of mind of a person may be averred generally.” Guam R.

Civ. P. 9(b). When interpreting this rule, this court clarified that “two separate elements of the tort

of fraud have very different pleading requirements: the fact that a misrepresentation occurred must

be plead with particularity [while] the fact that a defendant knew that the misrepresentation was

false may be averred generally.” Taitano I, 2008 Guam 12 ¶ 19. “As a justification for [the]

minimum level of specificity” required for pleading fraud-related claims, “courts reason that the

‘allegations of fraud must be “specific enough to give defendants notice of the particular

[fraudulent] misconduct . . . so that they can defend against the charge and not just deny that they

have done anything wrong.”’” Id. ¶ 14 (second and third alteration in original) (quoting Bly-Magee

v. California, 236 F.3d 1014, 1019 (9th Cir. 2001)).

[51] To plead fraud and fraud-related claims with sufficient particularity, the pleading must

clearly state the “who, what, when, where, and how” of the alleged fraudulent misconduct. See id.

¶ 14 (citations omitted). When analyzing the specificity requirement for fraud-related pleadings,

this court has also explained that “[w]hile statements of the time, place and nature of the alleged

fraudulent activities are sufficient, mere conclusory allegations of fraud are insufficient.” Id. ¶ 15

(quoting Moore v. Kayport Package Express, Inc., 885 F.2d 531, 540 (9th Cir. 1989)). “For

example, accusing a defendant of running a ‘sophisticated pyramid scheme’ without explaining

what makes it a pyramid scheme or why it is fraudulent is a conclusory allegation and therefore

insufficient.” Id. (quoting Miron v. Herbalife Int’l, Inc., 11 F. App’x 927, 930 (9th Cir. 2001)

9 Because GRCP 9 is modeled on Federal Rule of Civil Procedure (“FRCP”) 9, see Guam R. Civ. P. 9, SOURCE, we look to federal case law interpreting FRCP 9 for guidance. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 20 of 44

(unreported)). “[E]ven where allegations concern facts peculiarly within defendant’s knowledge,

the plaintiffs must still state a factual basis for their belief.” Id. This court has stated: “Although

under our notice-pleading standard, we must take all factual allegations in the complaint as true,

‘we are not bound to accept as true a legal conclusion couched as a factual allegation.’” Story-

Bernardo v. Gov’t of Guam, 2023 Guam 27 ¶ 20 (per curiam) (quoting Papasan v. Allain, 478 U.S.

265, 286 (1986)) (citing Taitano I, 2008 Guam 12 ¶ 2).

b. The Defendants’ fraud-related counterclaims fail to meet the requisite specificity

[52] The Defendants fail to clearly state the “who, what, when, where, and how” of the alleged

fraudulent misconduct. See Taitano I, 2008 Guam 12 ¶ 14 (citations omitted). When an allegation

of a fraudulent scheme involves multiple actors, the claimant must, at a minimum, identify the role

of each actor in this scheme. See id. ¶ 26. The Defendants argue that “[t]he ‘who’ requirement

really arises only in a case involving multiple defendants, which requires the plaintiff to identify

the role of each defendant in the fraud. [But] [h]ere, there is only one alleged fraudfeasor:

Goodwind.” Appellees’ Reply Br. at 11 n.2 (citing Taitano I, 2008 Guam 12 ¶ 26). This is not a

convincing application of Taitano I.

[53] In Taitano I, the plaintiff’s complaint pleading fraud did not identify the specific officers

and representatives of the corporation accused of fraud. 2008 Guam 12 ¶ 27. However, in

determining this was “not a fatal defect,” this court relied on the fact that “that information may

be entirely within the control of the defendant.” Id. This court distinguished the facts of Taitano

I from other cases where the plaintiffs had been longtime employees of the defendant corporation.

Id. (citing SmithKline Beecham, 245 F.3d at 1052). As we observed, in SmithKline Beecham, the

Ninth Circuit rejected a pleading for failing to identify the defendant’s employees who took part Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 21 of 44

in the alleged fraud “only because plaintiff was also an employee of defendant for almost 20

years.” Id. (citing SmithKline Beecham, 245 F.3d at 1052).

[54] Here, like in SmithKline Beecham, Rowena (the representative and sole shareholder of

West Bay and representative and shareholder of Century) and Joseph (the representative of West

Bay and representative and shareholder of Century) were employees of Goodwind and held officer

positions for decades. In their counterclaims, the Defendants even state that “[a]t all times relevant

herein, that throughout the time Rowena and Joseph were on Guam, they were the Treasurer and

managing director, respectively, [and] were the agents of Tan and Counter-Defendant GDC . . . .”

RA, tab 8 ¶ 11 (Defs.’ Answer & Countercl.) (emphases omitted). When the Notes were issued in

2011, Rowena and Joseph were officers and “agents” of Goodwind themselves.

[55] The Defendants’ counterclaims center on allegations of a fraudulent scheme that involves

multiple actors from a corporation where they were officers and agents at the time of the alleged

fraudulent misconduct. To plead their fraud and fraud-related claims with sufficient particularity,

the Defendants needed to identify in their counterclaims the roles of specific employees of

Goodwind who were responsible for the alleged fraudulent scheme. Instead, the Defendants made

broad claims about Goodwind without clearly identifying the specific employees responsible for

the misrepresentations or other fraudulent conduct. See id. ¶¶ 35, 37, 48, 66-68, 72, 74, 77, 84-86,

92-93, 96, 104, 106, 114, 121-23, 129, 131, 137-38. In their counterclaims, the Defendants did

not identify the specific employee(s) of Goodwind responsible for making them believe that (1)

they would never have to repay the West Bay Note, see id. ¶¶ 35, 66-67, 72, 75, 93, 114; (2)

Goodwind would pay for any portion of the SFOB loan, see id. ¶¶ 48, 67, 72, 84, 93, 129, 131; or

(3) Goodwind would pay for their operating expenses and other loans, see id. ¶¶ 37, 48, 67, 93,

129, 131. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 22 of 44

[56] The few times the Defendants identified specific Goodwind employees’ actions in their

counterclaims were insufficient to make the “who, what, when, where, and how” of the alleged

fraudulent scheme sufficiently clear. For example, the Defendants reference “Tan and Counter-

Defendant GDC’s misrepresentations” but articulate no particular misrepresentations Tan

specifically made to them. See id. ¶ 78 (emphases omitted). Instead, the Defendants attempt to

connect Tan to the alleged fraud by asserting that Goodwind is Tan’s “alter ego” and by referring

to Tan’s “tacit approval.” See id. ¶¶ 6, 34, 53. The Defendants also allege that Tan confirmed his

approval of the Garage acquisition to Joseph. Id. ¶ 26. However, approval of the acquisition alone

is not evidence of fraudulent misconduct. See In re ZAGG Inc. S’holder Derivative Action, 826

F.3d 1222, 1234 (10th Cir. 2016). Because fraudulent misrepresentations must be pleaded with

particularity, these references to Tan are insufficient to tie him to the alleged fraudulent scheme.

[57] The Defendants also allege that President Chiang and CFO Onglao discussed the Garage

acquisition with Tan, who subsequently approved. RA, tab 8 ¶ 25 (Defs.’ Answer & Countercl.).

However, as discussed above, approval of the acquisition alone is not evidence of fraudulent

misconduct.

[58] In paragraph 30 of their counterclaims, the Defendants allege that Onglao “endorsed the

recommendation [to] . . . pay Rowena’s taxes and expenses” in his March 3, 2011, email to Joseph

and Chiang and attached as Exhibit C to the counterclaims. Id. ¶ 30; id., Ex. C at 1 (Email, Mar.

3, 2011) (emphasis added). However, the email merely conveys E&Y’s recommendation that

“GDC will pay for Rowena’s taxes in California and Guam in so far as California LLC is

concerned.” See id., Ex. C at 1 (Email, Mar. 3, 2011) (emphasis added). The Defendants also

assert that in this email, Onglao endorsed consultants’ advice to use Rowena as Goodwind’s

representative for the California company. RA, tab 8 ¶ 30 (Defs.’ Answer & Countercl.).

However, an email proposing to pay for Rowena’s taxes and to use Rowena to “represent GDC Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 23 of 44

Guam in [the] California LLC” is not a promise that Goodwind would refrain from collecting on

the Notes, pay for the SFOB loan, or cover non-Goodwind operating expenses. See id., Ex. C at

1 (Email, Mar. 3, 2011).

[59] The Defendants assert that Rowena agreed to be the “nominee shareholder” of the

California LLC “in the place of Counter-Defendant GDC” “[b]ased on Counter-Defendant GDC’s

CFO/VP Willy Onglao’s and its President’s [Chiang’s] representations, and advice from Deloitte

and E&Y, and Tan’s tacit approval.” RA, tab 8 ¶ 34 (Defs.’ Answer & Countercl.) (emphases

omitted). This does not sufficiently connect Onglao, Chiang, or Tan to the alleged “promises and

assurances” that Goodwind would refrain from demanding repayment under the Notes, pay for the

SFOB loan, or cover operating expenses. The Defendants then allege that “Onglao advised

Rowena for West Bay to execute a $750,000.00 Promissory Note (‘West Bay Note’) in favor of

[Goodwind] on or about May 2011.” Id. ¶ 34 (emphases omitted). However, encouraging the

execution of a promissory note is not promising that the note “was never intended to be repaid

back.” See id. ¶ 35.

[60] The Defendants allege that Onglao “managed and conducted the business operations of the

Garage” following its purchase and was “instrumental in conducting the litigation the Garage was

involved with in California.” Id. ¶ 46. But the acts of managing and conducting business

operations and involvement in litigation do not constitute evidence of any promises or assurances

that Goodwind would refrain from collecting on the Notes, pay for the SFOB loan, or cover other

expenses.

[61] For the first time in their reply brief, the Defendants claim they “identified CFO/VP Onglao

as one of Goodwind’s executives who made the misrepresentations” in their counterclaims.

Appellees’ Reply Br. at 11 n.2. However, the Defendants did not explicitly connect Onglao with

the alleged misrepresentations in their counterclaims. The Defendants’ most plausible argument Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 24 of 44

is that Onglao stated in an email that “GDC will pay for Rowena’s taxes in California and Guam

in so far as California LLC is concerned.” See RA, tab 8, Ex. C at 1 (Email, Mar. 3, 2011).

However, when looking at this statement within the full context of the email in Exhibit C and the

information in paragraph 30, it is apparent that this statement was part of Onglao’s conveyance of

E&Y’s recommendations. In the same email, Onglao also presented Deloitte’s alternative

recommendation that Goodwind form a California corporation that “will represent GDC Guam in

[the] California LLC” instead of Rowena. See id.

[62] Ultimately, the Defendants’ allegations fall short of the heightened pleading standard under

GRCP 9(b); their counterclaims fail to identify the specific actors, statements, or circumstances

necessary to support fraud-based causes of action. Each counterclaim was pleaded without the

requisite specificity, as discussed below.

i. Intentional misrepresentation, fraud in the inducement, and rescission

[63] The Defendants failed to plead with the requisite specificity their counterclaims for

intentional misrepresentation and fraud in the inducement. Guam’s legal definition of actual fraud

within the context of a contractual relationship requires one of the following acts:

1. The suggestion, as a fact, of that which is not true, by one who does not believe it to be true[;]

2. A positive assertion in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;

3. The suppression of that which is true, by one having knowledge or belief of the fact;

4. A promise made without any intention of performing it; or,

5. Any other act fitted to deceive.

18 GCA § 85308 (2005). The elements of a cause of action for both fraud and intentional

misrepresentation are: “(1) a misrepresentation; (2) knowledge of falsity (or scienter); (3) intent to Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 25 of 44

defraud to induce reliance; (4) justifiable reliance; and (5) resulting damages.” Taitano I, 2008

Guam 12 ¶ 12 (citation omitted); Hemlani v. Flaherty, 2003 Guam 17 ¶ 9 (“The tort of intentional

misrepresentation has the same elements as fraud.”).

[64] “Fraud in the inducement is a subset of the tort of fraud” that occurs when a party’s assent

to a contract is induced by “misrepresentations or concealment.” See Hinesley v. Oakshade Town

Ctr., 37 Cal. Rptr. 3d 364, 367, 372 (Ct. App. 2005). When a party’s consent to a contract results

from fraudulent inducement, that party has the right to rescind the contract. See 18 GCA § 89202

(2005).

[65] Even if Onglao in his email was endorsing E&Y’s recommendation to use Rowena to

represent Goodwind in investing in the California LLC, the Defendants did not connect the dots

by sufficiently pleading in their counterclaims that: (1) Onglao misrepresented that Goodwind

would pay for the Defendants’ taxes (or other expenses); (2) Onglao knew this was a

misrepresentation; (3) Onglao intended to defraud the Defendants to induce reliance upon this

conscious misrepresentation when signing the Notes; (4) the Defendants justifiably relied upon

Onglao’s misrepresentation; and (5) the Defendants suffered ascertainable damages as the direct

result of relying upon Onglao’s misrepresentation. Instead, the Defendants pleaded the elements

of intentional misrepresentation and fraud in the inducement by making general references to

Goodwind as the responsible party, see RA, tab 8 ¶¶ 37, 48, 66-68, 72, 74-75, 77, 84-86 (Defs.’

Answer & Countercl.), or by failing to identify any responsible party at all, see, e.g., id. ¶ 35 (“The

West Bay Note was never intended to be repaid back to GDC . . . .” (emphasis omitted)). Their

intentional misrepresentation and fraud in the inducement counterclaims were pleaded without the

requisite specificity. Because the Defendants did not sufficiently plead that their consent to the

Notes resulted from fraudulent inducement, the Defendants’ counterclaim for rescission based

upon fraudulent inducement fails as well. See id. ¶¶ 120-27. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 26 of 44

ii. Negligent misrepresentation

[66] Defendants also failed to plead their negligent misrepresentation counterclaim with

requisite specificity. “[N]egligent misrepresentation does not require knowledge of falsity,”

Thrifty Payless, Inc. v. The Americana at Brand, LLC, 160 Cal. Rptr. 3d 718, 725 (Ct. App. 2013),

but instead requires: (1) “misrepresentation of a past or existing material fact,” (2) lack of

“reasonable grounds” to believe it was true, (3) “intent to induce another’s reliance” on the

misrepresentation, (4) “ignorance of the truth and justifiable reliance . . . by the party to whom the

misrepresentation was directed, and (5) damages.” Flaherty, 2003 Guam 17 ¶ 9 (quoting Fox v.

Pollack, 226 Cal. Rptr. 532, 537 (Ct. App. 1986)); Thrifty Payless, 160 Cal. Rptr. 3d at 725.

[67] The Defendants also did not adequately link their allegations to the requisite elements of

negligent misrepresentation in their counterclaims that: (1) Onglao misrepresented that Goodwind

would pay for the Defendants’ taxes (or other expenses); (2) there was no reasonable grounds for

Onglao to believe that Goodwind would pay for Rowena’s taxes (or other expenses); (3) Onglao

intended to induce the Defendants’ reliance on the notion that Goodwind would pay for Rowena’s

taxes (or other expenses) when signing the Notes; (4) the Defendants were ignorant of the truth

that Goodwind would not pay for Rowena’s taxes (or other expenses) and justifiably relied thereon

when signing the Notes; and (5) the Defendants suffered ascertainable damages as the direct result

of relying upon Onglao’s misrepresentation. Instead, the Defendants pleaded the elements of

negligent misrepresentation by making general references to Goodwind as the responsible party,

see RA, tab 8 ¶¶ 37, 48, 92-93, 96 (Defs.’ Answer & Countercl.), or by failing to identify any

responsible party at all, see, e.g., id. ¶ 35. Their negligent misrepresentation counterclaim lacks

the requisite specificity.

// Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 27 of 44

iii. Constructive fraud

[68] “The elements of a cause of action for constructive fraud are (1) a fiduciary relationship;

(2) non-disclosure; (3) intent to deceive; and (4) reliance and resulting injury (causation).” Gayle,

2000 Guam 25 ¶ 41 (quoting Gen. Am. Life Ins. Co. v. Rana, 769 F. Supp. 1121, 1126 (N.D. Cal.

1991)). However, the law does not require that “the fiduciary relationship element of constructive

fraud constitute the legal requirements of establishing a fiduciary duty.” See id. “In cases of

constructive fraud, the term ‘fiduciary relationship’ has been used synonymously with the term

confidential relationship.” See id. (quoting Gen. Am. Life Ins., 769 F. Supp. at 1127). “Further,

the breach of duty referred to in [18 GCA § 85309 (2005)] must be one created by the confidential

relationship.” See id.

[69] The Defendants likewise failed to draw a sufficient connection between the alleged facts

and the elements of constructive fraud in their counterclaims that: (1) a fiduciary relationship

existed between the Defendants and Onglao; (2) Onglao did not disclose to the Defendants that

Goodwind would not pay for the Defendants’ taxes (or other expenses); (3) Onglao intended to

deceive the Defendants; (4) the Defendants relied upon Onglao’s misrepresentations; and (5) the

Defendants suffered ascertainable damages as the direct result of this reliance. Instead, the

Defendants pleaded the elements of constructive fraud by making general references to Goodwind,

see RA, tab 8 ¶¶ 37, 48, 104, 106 (Defs.’ Answer & Countercl.), or by failing to identify any

responsible party at all, see, e.g., id. ¶ 35. They fail to allege constructive fraud with the requisite

specificity.

[70] Despite pleading that Onglao indicated to Joseph that Goodwind would pay for Rowena’s

taxes, the Defendants do not specifically connect Onglao with each element of their fraud-related

counterclaims. Moreover, the Defendants allege that Onglao was just “one of Goodwind’s

executives who made the misrepresentations,” Appellees’ Reply Br. at 11 n.2 (emphasis added). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 28 of 44

If multiple Goodwind executives allegedly made fraudulent misrepresentations to the Defendants,

particularly while the Defendants were officers and agents of Goodwind themselves, the

Defendants should have made the identity and role of each such executive more explicit in their

counterclaims. The Defendants also should have articulated how particular actors’ specific

conduct satisfied each element of their counterclaims. Instead, the Defendants’ counterclaims do

not sufficiently state the “who, what, when, where, and how” of the alleged fraudulent misconduct.

Ultimately, none of the Defendants’ counterclaims satisfy the specificity requirement under the

heightened pleading standard for fraud-related claims. The trial court did not err in dismissing

them.

2. The trial court erred in holding that the parol evidence rule barred evidence of negligent misrepresentation but correctly held that it barred evidence of breach of contract and breach of the covenant of good faith and fair dealing

[71] The Defendants’ second argument on cross-appeal is that the trial court improperly applied

the parol evidence rule to exclude evidence of negligent misrepresentation, breach of contract, and

breach of the implied covenant of good faith and fair dealing. Appellees’ Br. at 12.

[72] Under Guam’s parol evidence rule, generally:

When the terms of an agreement have been reduced to writing by the parties, it is to be considered as containing all those terms, and therefore there can be between the parties and their representatives, or successors in interest, no evidence of the terms of the agreement other than the contents of the writing . . . .

6 GCA § 2511 (2005) (emphasis added). Written contract terms supersede all prior negotiations

and stipulations. 18 GCA § 86107 (2005); Leong v. Deng, 2002 Guam 2 ¶ 17.

[73] The parol evidence rule applies only to integrated agreements. Craftworld Interiors, Inc.

v. King Enters., Inc., 2000 Guam 17 at unnumbered ¶ 11. To determine integration, courts assess

whether the writing appears on its face to be a complete agreement. See, e.g., Founding Members

of Newport Beach Country Club v. Newport Beach Country Club, Inc., 135 Cal. Rptr. 2d 505, 512 Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 29 of 44

(Ct. App. 2003) (“In considering whether a writing is integrated, the court must consider the

writing itself, including whether the written agreement appears to be complete on its face; whether

the agreement contains an integration clause; whether the alleged parol understanding on the

subject matter at issue might naturally be made as a separate agreement; and the circumstances at

the time of the writing.”). If an agreement appears to be complete and specific, it is presumed to

be an integrated agreement unless proven otherwise. See Restatement (Second) of Contracts §

209(3) (A.L.I. 1981).

[74] The Century Note10 and the West Bay Note11 each have terms governing the loans,

including borrower and lender identities, principal amounts, repayment conditions, governing law,

and modification restrictions. Given their apparent completeness, both Notes are integrated

agreements, and the parol evidence rule applies.

10 The Century Note identifies the following information on its face: (1) Century and Goodwind are parties to the Century Note, as the borrower and lender, respectively; (2) $120,000 is the amount Century is to pay to Goodwind; (3) there shall be no interest on the loan; (4) the full principal amount is due within 30 days of demand; (5) the Century Note is governed by Guam law; (6) the terms of the Century Note may not be “waived, altered, modified or amended except as [Goodwind] may consent thereto in writing”; (7) Century may not assign the Century Note to another party without Goodwind’s prior written consent; and (8) Goodwind may assign the Century Note without Century’s consent. RA, tab 1 (Compl., Jan. 20, 2023), Ex. C at 1-3 (Century Note, 2011). The Century Note also includes signatures for both Century and Goodwind. Id., Ex. C at 3 (Century Note). By including these terms, the Century Note appears to be a complete agreement, and the parol evidence rule applies. 11 The West Bay Note identifies the following information on its face: (1) West Bay and Goodwind are parties to the West Bay Note, as the borrower and lender, respectively; (2) $750,000 is the amount West Bay is to pay to Goodwind; (3) there shall be no interest on the loan; (4) the full principal amount is due within 30 days of demand; (5) the West Bay Note is governed by Guam law; and (6) the terms of the West Bay Note may not be “waived, altered, modified or amended except as [Goodwind] may consent thereto in writing.” RA, tab 1 (Compl.), Ex. A at 1-2 (West Bay Note, 2011). The copy of the West Bay Note attached to Goodwind’s complaint as Exhibit A is missing at least one page, leaving the provision regarding assignment rights incomplete. See id., Ex. A at 1-2 (West Bay Note). Exhibit A is also lacking signatures by West Bay and Goodwind. See id., Ex. A at 1-2 (West Bay Note). However, the Defendants confirmed that the West Bay Note was signed. See RA, tab 23 at 2 (Defs.’ Mot. Dismiss, July 27, 2023) (“The following facts remain undisputed: The two promissory notes were prepared and signed ‘[i]n or around May 2011.’” (emphasis added) (quoting RA, tab 1 at 2 ¶¶ 5, 10 (Compl.)). To support their argument that the Notes are not integrated agreements, the Defendants merely argue that the no-oral-modification clause in each Note “was insufficient, in and of itself, to conclusively prove that the parties intended the promissory notes to be fully integrated documents.” Appellees’ Br. at 14. However, when looking at the no-oral-modification clause in conjunction with (1) the other terms included in the West Bay Note and (2) the fact that the Defendants acknowledged that the West Bay Note was signed, the West Bay Note appears to be a complete agreement. Accordingly, the parol evidence rule likewise applies to the West Bay Note. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 30 of 44

[75] We find that the parol evidence rule applies to the Notes. Thus, the next inquiry is whether

an exception permits extrinsic evidence of negligent misrepresentation, breach of contract, or

breach of the implied covenant of good faith and fair dealing.

a. Exceptions to the parol evidence rule

[76] Guam law recognizes exceptions to the parol evidence rule, including (1) the “validity

exception,” which allows evidence challenging a contract’s validity, and (2) the “fraud exception,”

which permits evidence of fraud, even if it contradicts the written terms. See 6 GCA § 2511;

Torres v. Torres, 2005 Guam 22 ¶ 28. These exceptions exist because the parol evidence rule

protects valid written contracts, not those procured through fraud or other invalidating causes. See

Riverisland Cold Storage, Inc. v. Fresno-Madera Prod. Credit Ass’n, 291 P.3d 316, 319 (Cal.

2013) (analyzing same exceptions under California law). “Evidence to prove that the instrument

is void or voidable” is admissible “because it shows that the purported instrument has no legal

effect” rather than “contradict[ing] the terms of an effective integration.” Id. at 319 (quoting 2

Witkin, Cal. Evid. 5th Docu Evid § 97 (5th ed. 2012)). Guam’s parol evidence rule also “does not

exclude other evidence of the circumstances under which the agreement was made or to which it

relates, as defined in § 2515 [Circumstances to be Considered].”12 6 GCA § 2511; Torres, 2005

Guam 22 ¶¶ 28, 30.

[77] This court looks to California law to aid in the interpretation of the exceptions to the parol

evidence rule. See Torres, 2005 Guam 22 ¶¶ 33-35 (“[B]ecause California is the source of Title 6

GCA §§ 2511 and 2515, then ‘we look to the substantial precedent developed within that state to

12 Title 6 GCA § 2515 states: For the proper construction of an instrument, the circumstances under which it is made, including the situation of the subject of the instrument and of the parties to it, may also be shown so that the judge or jury be placed in the position of those whose language he is or they are to interpret. 6 GCA § 2515 (2005). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 31 of 44

assist in interpreting parallel Guam provisions.’” (citations omitted)).13 Adopting California’s

approach, extrinsic evidence offered under 6 GCA § 2515 “cannot contradict the written

document” unless it falls under one of the exceptions to 6 GCA § 2511, which includes the validity

and fraud exceptions. See Torres, 2005 Guam 22 ¶ 35. This restriction applies “regardless [of]

whether the writing is intended by the parties as a final, complete, and exclusive statement of those

terms.” See id. (quoting Cal. Civ. Proc. Code § 1856 (Law Revision Cmts. to 1978 Amendment)).

[78] In their counterclaims, the Defendants alleged that they made agreements with Goodwind

outside of their written contracts (i.e., the West Bay and Century Notes) by which West Bay would

never have to repay Goodwind under the West Bay Note and Goodwind would pay for a share of

their operating expenses, taxes, and loans. See, e.g., RA, tab 8 ¶¶ 35, 37, 48 (Defs.’ Answer &

Countercl.). These alleged agreements are not included in the written terms of the Notes and

constitute parol evidence.

[79] In its October 11, 2023 Decision and Order, the trial court held that the parol evidence rule

barred evidence of the Defendants’ counterclaims for (1) negligent misrepresentation, (2) breach

of contract, and (3) breach of the implied covenant of good faith and fair dealing. RA, tab 29 at

6-9 (Dec. & Order, Oct. 11, 2023).

b. Parol evidence rule and negligent misrepresentation

[80] The trial court cited the elements for negligent misrepresentation from Hemlani v. Flaherty,

2003 Guam 17, and noted that “[t]o be liable for negligent misrepresentation, the defendant need

act only negligently and not dishonestly or in bad faith.” RA, tab 29 at 6-7 (Dec. & Order) (citing

13 “The source of 6 GCA § 2511 is California Civil Procedure Code § 1856, and the source of 6 GCA § 2515 is California Civil Procedure Code § 1860. Sections 1856 and 1860 were enacted in 1953, and the California codes were acknowledged as the source of Guam’s statutes.” Torres v. Torres, 2005 Guam 22 ¶ 33 n.6 (citing Foreword (1953) to Guam Code of Civil Procedure (1970)). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 32 of 44

Florenzano v. Olson, 387 N.W.2d 168, 173 (Minn. 1986)). The court concluded that the fraud

exception to the parol evidence rule did not apply. Id. at 7.

[81] The majority view in U.S. jurisdictions is that the parol evidence rule does not apply to

negligent misrepresentation claims. See Rempel v. Nationwide Life Ins. Co., 370 A.2d 366, 370

(Pa. 1977). However, courts reach this conclusion through differing rationales: (1) some assert

that the rule applies strictly to contract claims and not to tort claims like negligent

misrepresentation;14 (2) others find that negligent misrepresentation claims fall within the fraud or

validity exceptions.15 A third group of courts has held that the parol evidence rule applies to

negligent misrepresentation claims when the claim improperly infuses a tort cause of action into a

contractual relationship to circumvent the parol evidence rule and enforce extra-contractual

promises.16

14 Many jurisdictions hold that the parol evidence rule is a substantive principle of contract law that does not extend to tort actions. See, e.g., Formento v. Encanto Bus. Park, 744 P.2d 22, 26 (Ariz. Ct. App. 1987) (holding that parol evidence rule cannot shield defendants from their own misrepresentations); Keller v. A.O. Smith Harvestore Prods., Inc., 819 P.2d 69, 73 (Colo. 1991) (en banc) (holding that parol evidence rule is rule of substantive contract law and does not apply to tort actions in Colorado); Wilburn v. Stewart, 794 P.2d 1197, 1199 (N.M. 1990) (“[P]arol evidence is admissible to show any misrepresentations that induced the parties to contract . . . .”); Gilliland v. Elmwood Props., 391 S.E.2d 577, 580-81 (S.C. 1990) (adopting Formento’s reasoning); Ramsay Health Care, Inc. v. Follmer, 560 So. 2d 746, 748 (Ala. 1990) (“[T]he parol evidence rule applies to contract actions, not actions in tort.”); Vigortone AG Prods., Inc. v. PM AG Prods., Inc., 316 F.3d 641, 644 (7th Cir. 2002) (determining that parol evidence rule does not apply to tort claims, regardless of presence of integration clause). This view prevents parties from using the parol evidence rule to shield themselves from liability for fraudulent or negligent misrepresentations. Cabinet Distribs., Inc. v. Redmond, 965 S.W.2d 309, 314 (Mo. Ct. App. 1998). 15 A second group of courts allows evidence of negligent misrepresentation under the fraud or validity exceptions. See, e.g., TTCP Energy Fin. Fund II, LLC v. Ralls Corp., 255 F. Supp. 3d 1285, 1290 (N.D. Ga. 2017) (“Under Georgia law, the parol evidence rule and the presence of a merger clause do not generally bar a claim for fraud or negligent misrepresentation when ‘one of the parties interfered with the ability of the other to ascertain the real nature of the bargain into which he was entering.’” (quoting Schlange-Schoeningen v. Parrish, 767 F.2d 788, 793 (11th Cir. 1985))); Rubberlite, Inc. v. Baychar Holdings, LLC, 737 F. Supp. 2d 575, 582-83 (S.D. W. Va. 2010) (finding that neither parol evidence rule nor integration clause in license agreement barred claim alleging negligent misrepresentations and omissions). 16 A third group of courts has held that the parol evidence rule does apply to negligent misrepresentation claims when “a tort cause of action is being infused into a contractual relationship.” See Snyder v. Lovercheck, 992 P.2d 1079, 1088 (Wyo. 1999); see also Rio Grande Jewelers Supply, Inc. v. Data Gen. Corp., 689 P.2d 1269, 1270- 71 (N.M. 1984) (characterizing negligent misrepresentation claim as “nothing more than an attempt to circumvent the operation of the Commercial Code and to allow the contract to be rewritten under the guise of an alleged action in tort”); Sound Techs., Inc. v. Hoffman, 737 N.E.2d 920, 926-27 (Mass. App. Ct. 2000) (“[W]e think mistaken the notion that the parol evidence rule has no application in this tort action.” (citations omitted)). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 33 of 44

[82] We adopt the view that the parol evidence rule is a substantive rule of contract law and

does not apply to the tort of negligent misrepresentation. This approach aligns with the majority

view as well as this court’s earlier rulings. See, e.g., Maeda Pac. Corp. v. GMP Haw., Inc., 2011

Guam 20 ¶ 30 (emphasizing the importance of “[e]nforcing the boundary between tort and contract

law” within context of economic loss doctrine (quoting Vincent R. Johnson, The Boundary-Line

Function of the Economic Loss Rule, 66 Wash. & Lee L. Rev. 523, 570 (2009))); Gov’t of Guam

v. Kim, 2015 Guam 15 ¶ 25 (reiterating need for “[d]rawing a legal line between contract and tort

liability” (quoting Maeda, 2011 Guam 20 ¶ 25)); Antonio B. Won Pat Int’l Airport Auth. v. DFS

Guam L.P., 2023 Guam 7 ¶ 42 (per curiam) (noting that certain laws govern only tort cases, but

not contract cases).

[83] Under this framework, the trial court erred in holding that the parol evidence rule bars

evidence of negligent misrepresentation. However, this court may affirm the trial court’s judgment

“on any ground supported by the record.” See People v. San Nicolas, 2001 Guam 4 ¶ 29. The

fraud and validity exceptions to the parol evidence rule do not save claimants who have failed to

plead fraud or fraud-related claims with sufficient particularity. See Reeder v. Specialized Loan

Servicing LLC, 266 Cal. Rptr. 3d 578, 586 (Ct. App. 2020). The Defendants did not plead their

negligent misrepresentation counterclaim with sufficient particularity. Therefore, we affirm

dismissal of this claim.

c. Application of the parol evidence rule to breach of contract and breach of implied covenant of good faith and fair dealing

[84] Before applying the parol evidence rule to the Defendants’ breach counterclaims, the trial

court identified the elements of a breach of contract claim: “(1) the existence of the contract, (2)

the plaintiff’s performance or excuse for nonperformance, (3) the defendant’s breach, and (4)

resulting damages to the plaintiff.” RA, tab 29 at 7 (Dec. & Order) (citing Hemlani v. Hemlani, Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 34 of 44

2015 Guam 16). Because “none of the elements contain anything about fraud,” the trial court

concluded that “the fraud exception does not apply, and the parol evidence rule forbids the court

from referencing extrinsic evidence to interpret, vary, or add to the terms of an unambiguous

written agreement.” Id. (citing Wasson, 2007 Guam 16 ¶ 11).

[85] We affirm the trial court’s conclusion that the exceptions to the parol evidence rule do not

apply to the Defendants’ breach of contract claims on other grounds: the validity and fraud

exceptions apply only to claims seeking to invalidate a contract, while a breach of contract claim

presumes the contract’s validity. To allow parol evidence of a breach of contract under the validity

or fraud exceptions would contravene the very purpose of the exceptions. Without parol evidence,

the Defendants cannot substantiate their breach of contract counterclaim. We affirm the trial

court’s dismissal of this counterclaim.

[86] The trial court also explained that the “covenant of good faith and fair dealing, implied by

law in every contract, exists merely to prevent one contracting party from unfairly frustrating the

other party’s right to receive the benefits of the agreement actually made.” Id. at 7-8 (quoting

Waller v. Truck Ins. Exch., Inc., 900 P.2d 619, 639 (Cal. 1995)). The court emphasized that the

covenant “cannot impose substantive duties or limits on the contracting parties beyond those

incorporated in the specific terms of their agreement.” Id. at 8 (quoting Quijano v. Atkins-Kroll,

Inc., 2008 Guam 14 ¶ 2 n.2).

[87] As with breach of contract claims, the validity and fraud exceptions to the parol evidence

rule do not apply to claims of breach of the implied covenant of good faith and fair dealing because

such claims also rest on the premise that a valid contract exists. Allowing parol evidence under

these exceptions would contradict their intended function. Without parol evidence, the Defendants

lack a viable claim for breach of the implied covenant of good faith and fair dealing. The trial Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 35 of 44

court did not err when it held the parol evidence rule barred evidence of breach of the implied

covenant of good faith and fair dealing. We affirm the dismissal.

3. The trial court erred in dismissing the Defendants’ unjust enrichment counterclaim as time-barred by the statute of limitations; however, we affirm the dismissal on alternative grounds

[88] The Defendants’ third argument on cross-appeal is that the trial court erred in dismissing

their unjust enrichment counterclaim as time-barred by the statute of limitations. Appellees’ Br.

at 17-18 (citing RA, tab 29 at 10 (Dec. & Order)).

[89] A claim for unjust enrichment requires: (1) a benefit conferred by one party to another; (2)

the recipient’s knowledge or appreciation of the benefit; and (3) circumstances making it

inequitable for the recipient to retain the benefit without payment. In re Guardianships of Moylan,

2011 Guam 16 ¶ 69 (quoting Rawlings v. Rawlings, 2010 UT 52, ¶ 29, 240 P.3d 754). Generally,

the statute of limitations is three years for an unjust enrichment claim that arises from fraud, as

well as from contracts and obligations not founded upon an instrument of writing. See 7 GCA §§

11305(d), (h) (2005). Under 7 GCA § 11305(d), a fraud-based claim accrues upon discovery of

the facts constituting the fraud. This court has interpreted the discovery rule to mean the statute

of limitations begins to run when the claimant suspects, or should suspect, wrongdoing. See Gayle,

2000 Guam 25 ¶ 24.

[90] The Defendants’ unjust enrichment counterclaim is based on their allegation that

Goodwind “fail[ed] to pay its share of the SFOB loan and other expenses.” Appellees’ Br. at 17

(citing RA, tab 8 ¶¶ 137-43 (Defs.’ Answer & Countercl.)). They contend that there was an

agreement between Goodwind and the Defendants outside of their written contracts (i.e., the West

Bay and Century Notes), providing that West Bay would never have to repay Goodwind under the

West Bay Note, while Goodwind would cover a share of their operating expenses, taxes, and loans.

See, e.g., RA, tab 8 ¶¶ 35, 37, 48, 141 (Defs.’ Answer & Countercl.). In their counterclaims, the Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 36 of 44

Defendants argued that “[b]oth West Bay and Century have been paying more than their

proportionate share of the SFOB loan and other expenses have in fact been paying for

[Goodwind’s] share of the SFOB loan and other expenses.” Id. ¶ 140 (emphases omitted). The

Defendants further allege that Goodwind “has received the benefits and has been unjustly enriched

by having ownership of West Bay and SFOB without paying for its share of the SFOB loan and

other expenses, at the expense of West Bay and Century.” Id. ¶ 141 (emphases omitted). The trial

court dismissed this counterclaim as time-barred by the three-year statute of limitations under 7

GCA § 11305(h). RA, tab 29 at 10 (Dec. & Order). The trial court reasoned that the Defendants

“had over ten years to notice that [Goodwind] was not paying their debts,” which should have

caused the Defendants to suspect that Goodwind had done something wrong to them. Id.

[91] However, the Defendants point out that “[i]n so concluding, the Court assumed a fact that

was not alleged by the Defendants, namely, that Goodwind had not paid its debts for more than

ten years.” Appellees’ Br. at 18. The Defendants argue that they “specifically alleged [in their

counterclaims] that Goodwind paid expenses related to the garage and that they had no suspicion

that Goodwind would not continue to pay expenses until after May 2022.” Id. (citing RA, tab 8

¶¶ 48, 60 (Defs.’ Answer & Countercl.). There is therefore a dispute as to the facts that would

determine when the Defendants should have suspected the alleged wrongdoing, thereby triggering

the statute of limitations. We agree with the Defendants that:

[When] properly construed in the light most favorable to the Defendants, their allegations are sufficient to, at the very least, raise a question of fact not properly decided on a motion to dismiss as to whether they should have suspected more than three years before this action was filed that Goodwind would no longer pay its share of the SFOB loan and other expenses.

Id. Thus, the trial court erred in holding that the Defendants’ unjust enrichment claim was barred

by the statute of limitations. However, as discussed below, we affirm the trial court’s dismissal of Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 37 of 44

the unjust enrichment counterclaim on separate grounds supported by the record. See San Nicolas,

2001 Guam 4 ¶ 29.

a. The Defendants’ unjust enrichment counterclaim fails as derivative of their dismissed fraud-based counterclaims

[92] A dispositive issue is whether an unjust enrichment claim premised on the same factual

allegations as fraud-related claims can survive independently when the underlying fraud claims

have been dismissed. Other courts addressing similar issues—including the First, Third, Fifth,

Sixth, Seventh, and Eighth Circuits17—have held that unjust enrichment claims based on the same

facts as fraud-related claims will not survive if the related claims fail.

[93] For example, the Seventh Circuit has clarified that although “fraud is not an indispensable

element of an unjust enrichment claim,” an unjust enrichment claim grounded in the same

fraudulent conduct cannot survive if the related fraud claim fails. Ass’n Benefit Servs., Inc. v.

Caremark RX, Inc., 493 F.3d 841, 855 (7th Cir. 2007) (“[W]hen the plaintiff’s particular theory of

unjust enrichment is based on alleged fraudulent dealings and we reject the plaintiff’s claims that

those dealings, indeed, were fraudulent, the theory of unjust enrichment that the plaintiff has

17 The Second Circuit has not directly ruled on this issue but has recognized that “New York law does not permit recovery on an unjust enrichment claim that is duplicative of a conventional tort claim.” Gov’t Emps. Ins. Co. v. Mayzenberg, 121 F.4th 404, 413 (2d Cir. 2024). Similarly, while the Ninth Circuit has not squarely addressed this issue, it has “construed the common law” to permit unjust enrichment claims in California either as “an independent cause of action or as a quasi-contract claim for restitution.” ESG Cap. Partners, LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016). In ESG Capital, the Ninth Circuit explained that “[t]o allege unjust enrichment as an independent cause of action, a plaintiff must show that the defendant received and unjustly retained a benefit at the plaintiff’s expense.” Id. at 1038-39 (citing Lectrodryer v. SeoulBank, 91 Cal. Rptr. 2d 881 (Ct. App. 2000)). The court determined the plaintiff satisfied this standard by relying on the same factual allegations of material representations that supported its federal securities fraud and state fraud claims. See id. at 1032-36, 1038-39. The Ninth Circuit concluded that the plaintiff adequately pleaded its federal and state law fraud claims as well as its unjust enrichment claim as an independent cause of action. See id. The court also determined that “[a]lternatively, ESG Capital’s allegation of fraud resulting in the defendants’ unjust enrichment sufficiently state[d] a claim under quasi-contract.” Id. at 1039. The Ninth Circuit, however, did not address how an unjust enrichment claim should be treated when it is based on the same conduct alleged in a related claim that has been properly dismissed. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 38 of 44

pursued is no longer viable.” (citing Athey Prods. Corp. v. Harris Bank Roselle, 89 F.3d 430, 436

(7th Cir. 1996))). The Seventh Circuit has further explained:

Unjust enrichment is a common-law theory of recovery or restitution that arises when the defendant is retaining a benefit to the plaintiff’s detriment, and this retention is unjust. What makes the retention of the benefit unjust is often due to some improper conduct by the defendant. And usually this improper conduct will form the basis of another claim against the defendant in tort, contract, or statute. So, if an unjust enrichment claim rests on the same improper conduct alleged in another claim, then the unjust enrichment claim will be tied to this related claim— and, of course, unjust enrichment will stand or fall with the related claim.

Cleary v. Philip Morris, Inc., 656 F.3d 511, 517 (7th Cir. 2011) (footnote omitted). We find this

reasoning persuasive.

[94] The First, Third, Fifth, Sixth, and Eighth Circuits have similarly held that an unjust

enrichment claim that rests on the same improper conduct alleged in another claim will rise or fall

with that claim. See Kaufman v. CVS Caremark Corp., 836 F.3d 88, 96-97 (1st Cir. 2016);

DiCroce v. McNeil Nutritionals, LLC, 82 F.4th 35, 41 (1st Cir. 2023); Burrell v. Staff, 60 F.4th 25,

50 (3d Cir. 2023) (“[W]here [an] unjust enrichment claim rests on the same improper conduct as

the underlying tort claim, the unjust enrichment claim will rise or fall with the underlying claim.”);

Digit. Drilling Data Sys., L.L.C. v. Petrolink Servs., Inc., 965 F.3d 365, 383 (5th Cir. 2020)

(concluding that when an unjust enrichment claim is premised on allegations of illegal, wrongful,

unethical, or otherwise unjust conduct, a finding that no such conduct occurred “necessarily dooms

the unjust enrichment claim”); Ruffin-Steinback v. dePasse, 267 F.3d 457, 462-63 (6th Cir. 2001)

(determining that where allegations supporting an unjust enrichment claim are duplicative or

derivative of allegations under another claim that has been properly dismissed, the unjust

enrichment claim may also be dismissed); Noble Sys. Corp. v. Alorica Cent., LLC, 543 F.3d 978,

987 (8th Cir. 2008) (“[Plaintiff] bases its unjust enrichment claim on its allegations of fraud and

other tortious conduct, including tortious interference. Because there is no underlying fraud, Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 39 of 44

conversion, or other tort to support either the conspiracy or unjust enrichment claims, these claims

must also fail.”); Schaaf v. Residential Funding Corp., 517 F.3d 544, 553-554 (8th Cir. 2008)

(affirming dismissal of unjust enrichment claim by district court, which held that “without valid

fraud claims, the investors could not recover for unjust enrichment”).

[95] Taken together, the prevailing approach indicates that when an unjust enrichment claim

rests on the same alleged improper conduct underlying another cause of action, resolution of the

related claim will be dispositive of the unjust enrichment claim. Under this prevailing view, if an

unjust enrichment claim is derivative of claims of fraudulent dealings and the court properly rejects

those claims, then the claimant’s theory of unjust enrichment is no longer viable. To assess

whether an unjust enrichment claim is derivative of a fraud-related claim, the court may compare

the factual allegations underlying both claims. See Ruffin-Steinback, 267 F.3d at 463; Cleary, 656

F.3d at 517-18.

[96] Here, the Defendants’ theory of unjust enrichment is based on alleged fraudulent dealings.

See Appellees’ Br. at 17-19 (citing RA, tab 8 ¶¶ 137-43 (Defs.’ Answer & Countercl.)). They

allege that there was an agreement between Goodwind and the Defendants outside of their written

contracts (i.e., the West Bay and Century Notes) by which (1) West Bay would never have to repay

Goodwind under the West Bay Note, and (2) Goodwind would pay for a share of their operating

expenses, taxes, and loans. See, e.g., RA, tab 8 ¶¶ 35, 37, 48, 66, 72, 84, 93, 137-38 (Defs.’ Answer

& Countercl.). The Defendants’ unjust enrichment counterclaim is based on their allegation that

Goodwind “fail[ed] to pay its share of the SFOB loan and other expenses.” Appellees’ Br. at 17

(citing RA, tab 8 ¶¶ 137-43 (Defs.’ Answer & Countercl.)). The Defendants argue that “[b]oth

West Bay and Century have been paying more than their proportionate share of the SFOB loan

and other expenses [and] have in fact been paying for [Goodwind’s] share of the SFOB loan and

other expenses.” RA, tab 8 ¶ 140 (Defs.’ Answer & Countercl.) (emphases omitted). The Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 40 of 44

Defendants further contend that Goodwind “has received the benefits and has been unjustly

enriched by having ownership of West Bay and SFOB without paying for its share of the SFOB

loan and other expenses, at the expense of West Bay and Century.” Id. ¶ 141 (emphases omitted).

The Defendants argue that Goodwind “has retained the benefits of ownership of West Bay and

SFOB and should pay for its share of the SFOB loan and other expenses, and must reimburse and

pay restitution to West Bay and Century for their payments of [Goodwind’s] share of the SFOB

loan and other expenses” because it would be “inequitable and unjust” otherwise. Id. ¶¶ 142-43

(emphases omitted).

[97] These allegations closely mirror those underpinning the Defendants’ fraud-related

counterclaims. See id. ¶¶ 72, 84, 93 (claiming Goodwind agreed to pay for a share of the SFOB

loan and other expenses under fraud in the inducement, intentional misrepresentation, and

negligent misrepresentation counterclaims); id. ¶ 66 (claiming West Bay “did not need to repay”

Goodwind under the West Bay Note under fraud in the inducement counterclaim); id. ¶¶ 76, 87

(claiming Defendants have been paying for Goodwind’s share without reimbursement under fraud

in the inducement and intentional misrepresentation counterclaims); id. ¶¶ 64, 83, 92 (claiming

Goodwind is the “true owner” of West Bay under fraud in the inducement, intentional

misrepresentation, and negligent misrepresentation counterclaims); id. ¶ 73 (claiming Goodwind

“did not perform its promises” under fraud in the inducement counterclaim); id. ¶ 87 (claiming

West Bay has been harmed by paying for Goodwind’s share under negligent misrepresentation

counterclaim). The Defendants repeated the allegations of their fraud-related counterclaims to

support their unjust enrichment counterclaim, without providing additional factual assertions to

show that Goodwind conferred a benefit at their expense that would be inequitable to retain without

compensating for its value. Accordingly, we hold that the Defendants’ unjust enrichment

counterclaim is derivative of its fraud-related counterclaims. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 41 of 44

[98] Because the trial court did not err in dismissing the Defendants’ fraud-related

counterclaims, their unjust enrichment claim fails as well.

4. The trial court did not err when it denied the Defendants’ request for leave to amend their counterclaims

[99] The Defendants’ fourth argument is that the trial court erred in denying their request to

amend their counterclaims. Appellees’ Br. at 19.

[100] The court may deny a party’s request to amend their pleading under GRCP 15(a) for futility

when the complaint as amended would be dismissed. Lujan, 2018 Guam 27 ¶ 13. In opposing

Goodwind’s motion to dismiss, the Defendants attached proposed amended counterclaims. See

RA, tab 16 (Defs.’ Opp’n to Pl.’s Mot. Dismiss, May 15, 2023), Ex. A (Proposed Answer & Am.

Countercl.). As the trial court noted, the proposed amended counterclaims “appear almost

identical to the [original] counterclaims.” RA, tab 29 at 11 (Dec. & Order). On that basis, the

court denied leave to amend, citing futility. Id.

[101] The Defendants’ proposed amended counterclaims do not cure the insufficiencies of their

original counterclaims. In the proposed amended counterclaims, the Defendants still fail to plead

their fraud and fraud-related counterclaims with sufficient particularity. Compare RA, tab 16, Ex.

A ¶¶ 33, 35, 46, 64-65, 74-75, 80-135, 141, 144-54 (Proposed Answer & Am. Countercl.), with

RA, tab 8 ¶¶ 35, 37, 48, 66-67, 76-77, 87-88, 93, 97-98, 114, 117, 125, 135, 137-38, 140-41 (Defs.’

Answer & Countercl). Thus, the proposed amendments to these counterclaims would still be

subject to dismissal. The trial court did not err in finding that amending these counterclaims would

be futile.

[102] Applying the prevailing view that an unjust enrichment claim premised on the same alleged

fraudulent conduct cannot stand once the related fraud claims are properly dismissed, the

Defendants’ amended counterclaim for unjust enrichment would likewise be subject to dismissal. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 42 of 44

Moreover, because we affirm the dismissal of Goodwind’s claims, the Defendants’ counterclaim

for rescission of the Notes and “double recovery” under the Century Note are moot.18 These

circumstances support the trial court’s conclusion that amendment would be futile.

[103] As to the counterclaims for breach of contract and breach of the implied covenant of good

faith and fair dealing, the proposed amended counterclaims do not affect the following analysis:

(1) these counterclaims center on alleged agreements that are not included in the written terms of

the Notes and are parol evidence; (2) the exceptions to the parol evidence rule do not apply; (3)

the parol evidence should be excluded; and (4) we affirm the trial court’s dismissal of these

counterclaims. Thus, the trial court did not err in finding that amending these counterclaims would

V. CONCLUSION

A. Goodwind’s Direct Appeal

[104] The trial court’s reference to extraneous facts when granting the Defendants’ Rule 12(b)(6)

motion to dismiss was harmless because its dismissal can be justified without reference to any

extraneous matters. We do not treat the reference as a basis for conversion to summary judgment

under Rule 12(c).

[105] The trial court correctly held that the statute of limitations waivers in the West Bay and

Century Notes are unenforceable under Guam law. Given the strong public policy interest in time

limitations for civil actions and the statutory requirement that any exception be established by law,

the four-year limitations period applies. The trial court’s rejection of Mailloux as controlling was

erroneous but not outcome-determinative, as we find sufficient grounds to depart from its holding.

Goodwind’s claims are barred by the statute of limitations, and dismissal was proper.

18 See, e.g., RA, tab 16 (Defs.’ Opp’n to Pl.’s Mot. Dismiss, May 15, 2023), Ex. A ¶¶ 121, 126, 136-43 (Proposed Answer & Am. Countercl.). Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 43 of 44

[106] Amendment of Goodwind’s complaint would be futile, as no amendment could cure the

Notes being issued in or around May 2011 and this action being filed in January 2023. We deny

its request for leave to amend its complaint.

[107] We AFFIRM the trial court’s decision to grant the Defendants’ motion to dismiss

Goodwind’s complaint.

B. Defendants’ Cross-Appeal

[108] The trial court did not err in dismissing the Defendants’ fraud and fraud-related

counterclaims. These claims failed to meet the heightened pleading standard, lacking the requisite

specificity in identifying the actors and conduct involved. The allegations were conclusory and

deficient in detail regarding the roles of specific Goodwind employees. We affirm the dismissal.

[109] The trial court erred in applying the parol evidence rule to exclude evidence of negligent

misrepresentation because the parol evidence rule is a substantive principle of contract law that

does not apply to tort actions. Still, the negligent misrepresentation counterclaim was not pleaded

with sufficient particularity. Thus, we affirm its dismissal on that basis.

[110] We affirm the trial court’s dismissal of the Defendants’ counterclaims for breach of

contract and breach of the covenant of good faith and fair dealing. The parol evidence rule properly

barred extrinsic evidence offered to support these claims, which presume a valid contract rather

than challenge its formation or validity. The validity and fraud exceptions do not apply.

[111] Although the trial court erred in dismissing the Defendants’ unjust enrichment

counterclaim on statute of limitations grounds, we affirm the dismissal on alternative grounds

supported by the record. Under the prevailing view, we conclude that the unjust enrichment

counterclaim fails because it is grounded in fraud and the related fraud-based counterclaims have

been dismissed. Goodwind Dev. Corp. v. W. Bay Corp., 2025 Guam 14, Opinion Page 44 of 44

[112] Finally, we affirm the trial court’s denial of leave to amend the counterclaims. The

proposed amendments do not remedy the original pleading deficiencies and would be futile.

[113] We AFFIRM the trial court’s decision to grant Goodwind’s motion to dismiss the

Defendants’ counterclaims, and we AFFIRM the trial court’s decision to deny the Defendants’

request to amend their counterclaims.

/s/ /s/ F. PHILIP CARBULLIDO KATHERINE A. MARAMAN Associate Justice Associate Justice

/s/ ROBERT J. TORRES Chief Justice