Herring v. Herring

Opinion

D

%FER%DE souF=T

Ci-r' GuA°.»i

21l24 JUN 2@2g JU%- 73 -7PMPH3:3: 39

39

CLErrn Jr- C'cou.n mama L85J?.T

OF GUAM

IN THE SUPERIOR COURT OF GUAM ~

DANIEL L. DANIEL L. HERRING, HERRING, MARIA

MARIA LOURDES CIVIL CASE CIVIL CASENO.

Y:

no. C~i'fii,-f/,

c/11%-16 _ _ __

gm

HERRING, HERRING, and LIANG HERRING,

Plaintiffs, DECISION AND ORDER GRANTING RULE RULE 12(8)(2)

12(8)(2) MOTION

MOTION To

TOD1s1v11ss

DISMISS

vs. GRANTING IN PART RULE 15(A)

AND GRANTING IN PART RULE MOTION FOR LEAVE VE TO AMEND THE DAVID L. HERRING, FRANCES M.

HERRING, FRANCES COMPLAINT HERR1NG, and JEREMY HERRING, and JEREMY T. HERRING,

Defendants.

INTRODUCTION

This matter came camebefore

before the

the Honorable

Honorable John

JohnC.

C.Terlaje I 1\ 2024, Terlaje on March 15"', 2024, for a Motion Motion

Hearing Hearing on David L. Herring, Frances FrancesM.

M. Herring,

Herring, and

andJeremy

JeremyT.T.Herring

Herring("Defendants"')

("Defendants"')Motion

Motion

to Dismiss the Fraud Claims of of the

the Plaintiffs.

Plaintiffs.David

DavidL_

L.Henning,

Herring, Frances M.

M. Herring,

Herring, and

and Jeremy

T. Herring Herring represented themselves.Curtis represented themselves. CurtisVan Van de

Develd

veldappeared

appearedfor

forDaniel

Daniel L.

L. Herring,

Herring, Maria

Lourdes Herring, Herring,and andLiang

LiangHerring

Herring(the

(the"Plaintiffs").

"Plaintiffs").

Basedon the relevant law and authorities the Court now issues issuesthe

thefollowing

following decision and

order GRANTING Defendant's Motion to Dismiss the Plaintiffs Claims and GRANTING IN

PART Plaintiff's Plaintiffs Motion Motion for Leave

Leave to

to Amend the Complaint.

I. FACTUAL AND AND PROCEDURAL BACKGROUND

Plaintiffs initially filed filed their

their Verified

VerifiedComplaint

Complaint on

onDecember

December 20,

20, 2016,

20 I 6, alleging

alleging three

three

causes of actions: causes of actions: (!)

(1) Fraud against Defendants David and Frances against Defendants Frances Herring, (2) Fraud Fraud against

against

Defendant David Herring, Defendant David Herring, (3) Fraud Fraud and Abuse of

ofTrust

Trust Obligations

Obligations against

against all three

three Herring

Herring

CV1126-16 CV! 126-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(8)(2)

12(B)(2) MOTION

MOTION TO DISMISS Page2 Page

AND GRANTING

GRANTING IN

IN PART

PART RULE 15(A) MOTION FOR LEA LEAVE TO

TO AMEND

AMEND

THE THE COMPLAINT

Defendants. Verified Defendants. Comp!., (December Verified Comal., (December 20, 20, 2016). Then, on August 27, 2019, Plaintiffs filed a

Second Sec ond Amended Amended Complaint alleging the following owi ng cclaims against

l ai ms agai ns the Herring Defendants 1)

Defendants:: (1)

Fraudulent Breach of of Fiduciary Duty,

Duty, Count I;

I, (2) Fraudulent Breach

Breach of

of Fiduciary

Fiduciary Duty,

Duty, Count

Count II;

II,

and (3) Fraudulent Breach of raudulent Breach of Fiduciary F iduciary Duty

Duty and Conspiracy

Conspiracy to

to Breach

Breach Fiduciary

F iduciary Duty.

Duty. Mot.

Mot. to

Dismiss Second Dismiss Second Am.

Am. Verified

Verified Comp!.; of P.&&A.A.(October Mem. off.

Comal., Mem. (October7,7,2019).

2019).InInresponse,

response, on October

1 h, 2019, 7'*', 2019,Defendants Defendantsfiled

filedaaMotion

Motion to

to Dismiss

Dismiss all

all three

three Causes

CausesofofAction.

Action. On

On April

April 12, 2022,

Plaintiffs Opposition with Plaintiffs filed their Opposition with a Motion Motion for Leave to Amend.

Amend. Opp'n

'n to Mot.

Mot. to

to Dismiss

Dismiss wide

with

Mot. Mot. for for Leave Leave to Amend, (April (April12,

12, 2022).

2022). On

On April

April26,

26, 2022,

2022, Defendants Reply. Reply Defendants filed their Reply. Reply

to Civ. Case Case No.

No. CVl

CV1126-16, (April

(April 26, 2022).

The The relevant facts regarding regarding the Motion

Motion to Dismiss

Dismiss are as

as follows:

follows:

1. The TheSecond Second Amended

AmendedComplaint

Complaint(SAC)

(SAC)alleges

allegesthat,

that, in

in 1988,

1988, Plaintiff

PlaintiffLiang

Liang deeded

deeded her

Tamuning Tamuning Property Property to

to her

her son,

son, Defendant David, and Defendant David David allegedly

allegedly entered

entered

into an oral trust relationship relationship with

with Plaintiff

Plaintiff Liang

Liang "for

"forthe

the beneficial

beneficialuse

use of

ofthe

the premises

to create aa stream stream of

of income

income to

to be

be transmitted

transmitted to

to Liang

Liang to

to use

use the

the funds

funds for

for Liang's

Liang's

subsistence." Mot. to subsistence." Mot. to Dismiss Dismiss Second

SecondAm.

Am. Verified

Verified Campi.;

Con pl., Mem. of P. && A. 1,r] 2 Mem. of

(October 7, 2019).

2. The TheSAC SACfurther

furtheralleges

allegesthat,

that, inin1994,

1994, Defendant

Defendant David

David then

then leased the Tamuning leased the Tamuning

Property to John John and

and Elizabeth

Elizabeth Kim

Kim ("the

("the Kims")

Kiss") and

andtransmitted

transmitted fiends to Plaintiff funds to Plaintiff

Liang. Liang. According Accordingtotothe

theSAC,

SAC,on

onJuly

July1,1,2004,

2004,Defendants

DefendantsDavid

Davidand

andFrances

Frances then

then leased

leased

a portion of the property property to

to "David

"David Properties", an entity entity owned

owned by Defendants David David

and Frances, Frances, but

but failed

failed to

to provide

provide a copy

copy of the lease

lease agreement

agreement totoPlaintiff

Plaintiff Daniel

Daniel or

Plaintiff PlaintiffLiang.

Liang. Count

CountIIalso

also alleges

alleges that, in August 2004, Defendant David David transferred

CV1126-16 DECISION AND ORDER GRANTING GRANTING RULE I2(B)(2)

12(B)(2) MOTION

MOTION TO

TO DISMISS Page3 Page

AND GRANTING

GRANTING IN

IN PART

PART RULE 15(A) MOTION FOR LEAVE LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

the Tamuning Tamuning Property to his brother, brother, Plaintiff

Plaintiff Daniel,

Daniel, at

at which

which point

point the Kims'

Kims' Lease

was assigned assigned to Daniel. Id.

to Daniel. ,i

Id at112-3.

TheSAC 3. The SACfilrther furtheralleges

allegesthat

thaton

onFebruary

February23,

23, 2010,

2010, Defendants

Defendants David

David and

and Frances

Frances

entered into into an

an agreement

agreement for reduction of for aa reduction of rent rent toto the

theKims

Kiss in exchange for a lump lump sum,

the agreement agreement for

for which

which was allegedly

allegedly not

not provided

provided to

to Plaintiffs Daniel or

Plaintiffs Daniel or Liang.

Liang.

Defendants David Defendants David and and Frances

Frances received a $25,000.00 $25,000.00 lump

lump sum security deposit on

November19. November 19. 2010, 2010, after

after they

they purportedly

purportedlyexecuted

executed aa Consent to Assignment of Lease Assignment of

Agreement, assigning the Kim assigning the Kim Lease

Lease toto JJ&& Lee

Lee Corporation.

Corporation.Id.

Id at ,i

at1]3.

4. Co u n t HII oof Count f PPlaintiffs'

l a i n t i f s ' First

rs Cause of

of Action

Action alleges Defendant David alleges that Defendant David agreed agreed with

with

Plaintiff PlaintiffDaniel Daniel to

to enter

enter into

into aa loan agreement with with BankPacific

BankPacific in

in the amount

amount of

of three-

hundred-thousand-and-seventy-five-thousand-dollars ($375,000.00) for the purpose of of

finding aajoint funding jointbusiness business venture. The Complaint Complaint then

then alleges that

that Defendant

Defendant David

David

removed over two-hundred-thousand-dollars two-hundred-thousand-dollars ($200,000.00) Bom from the

the account

account between

July 16 16 and July 30 in 2010 for his own own use. David agreed use. Defendant David agreed to repay the loan loan in

its entirety, and supposedly supposedly did make payments on the loan loan until

until 2014, when the loan was

placed into into default for non-payment. Id. at for non-payment. ,i at 1]3.

5. Count CountIIIIalso alsoalleges

alleges that

that Plaintiffs

Plaintiffs Daniel

Daniel and

and Maria

Mariahave

have made

made payments

payments on

on the loan,

and have therefore therefore suffered

suffered actual

actual damages,

damages,and

andthat

thatPlaintiffs

PlaintiffsDaniel,

Daniel, Maria

Maria and

and Liang

Liang

experienced emotional and physical distress to Defendant distress due to Defendant David's ,i David's actions. Id. at113.

6. Plaintiffs'

Plaintiffs'Second SecondCause

Cause of

ofAction

Actionalleges

alleges that Defendant David convinced Plaintiffs

Daniel Daniel and and Maria

Maria to give

give Defendant David

David Power

Power of

of Attorney.

Attorney. Defendant

Defendant then

then allegedly

used the the Power

Power of

ofAttomey

Attorneytotoprocure

procure aa mortgage loan in May 2013 from FFinance inance Pro,

by Defendant

Inc. on the home occupied by Defendant Jeremy Jeremy without

without Plaintiffs

Plaintiffs Daniel and Maria's

CV1126-16 DECISION AND AND ORDER

ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(8)(2) MOTION

MOTION TO

TO DISMISS Page4 Page

AND GRANTING

GRANTING IN

IN PART

PART RULE

RULE 15(A) LEAVE TO S(A) MOTION FOR LEA TO AMEND AMEND

THE COMPLAINT

consent. Count consent. Count III furtheralleges M further alleges that

that the

the mortgage

mortgage has damaged

damaged Daniel

Daniel and Maria's

credit, preventing them credit, preventing them from firm borrowing

borrowingmoney. Id.atat, money. Id 1] 3-4.

7. FFinally, i nal y, PlPlaintiffs' Second Cause of ai nti ffs' Second of Action Action alleges

alleges a conspiracy

conspiracy between

between the

the Herring

Herring

Defendants and new Defendants Finance Factors, Inc. ("FFI"), Core Tech Capital, Inc.

Inc,

("CTCI"),and ("CTCI"), and Ho HoEur

Eun("Defendant

("DefendantHo")

Ho")"to"tohide

hideand

anddisguise

disguisethe

the true

true nature

nature of

of the

financial transaction entered entered into

into between

between the

the Defendants

Defendants and

and by

by their

their action

action obliging

obliging

Plaintiff Maria." Id. at and Maria."

Plaintiff(sic) Daniel and at,1]4.

In response, 8. In response, Defendants Defendants filed

tiled a Motion to Dismiss Motion to Dismiss based

based on four general arguments: (1)

the plaintiffs plaintiffs allegedly do not not have

have standing regarding both counts of the First Cause Cause of

of

Action; (2) the Action, (2) the plaintiffs plaintiffs allegedly

allegedly fail

fail toto state

state a claim upon which reliefcan which relief can be

be granted

regarding the first count of the First Cause Cause of

of Action;

Action, (3) the Statute

Statute of

of Limitations

Limitations

allegedly bars bars both

both counts

countsof

ofthe

theFirst

FirstCause

CauseoffAction,

Action; and

and (4)

(4) Plaintiffs

Plaintiffs allegedly

allegedly fail to

plead fraud with sufficient sufficient particularity regarding the Second Second Cause

Cause of

of Action.

Action. Mot.

Mot. to

Di s mi s Second Dismiss ec ond Arn.

A m. Verified

V eri fi ed Comp!.;

Con pl .,Mem.

Men. off.P.&&A.A.,

1]22(O c tober 7,

(October 7, 2019).

II. LAW AND DISCUSSION

"A A Rul

Rulee 12(b)(6)

12(b)(6) motion

motiontests

tests the sufficiency ofa claim."

claim." Navarro

arro vv. Block, 250 F.3d 729,

732 (9th Cir. 22001).

0 When

h e n re v i e wi n g aa Ru reviewing l e 1 12(b)(6)

Rule 2 (b )(6 ) mmotion, o t i o n , t hthe

e Co u rt mmust

Court u s t " c"construe o n s t ru e dthe

u

pleading in the light most favorable to the non-moving non-moving party,

party, and

and resolve

resolve all doubts in the non-

moving party's favor."" First s Hawaiian Bank vv. Manley, a y , 20077 Guam 2,

1] 99 (citation omi tted).

omitted).

Dismissal is appropriate appropriate only

only when the non-moving

non-moving party

party "can

"can prove

prove no set of facts

facts in

in support

support of

of

his c l aim i m wh i c h wo u l d e n title i t l e him

h i m too relief."

re l i e f " TTaitano

a i t a n o v. Cal v e F in.

n. Corp. , 2008 Guam

Guam 12 11 9

12,

(quoting Vasquez v.

v. Los

Los Angeles

Angeles City., 487 F.3d

F.3d 1246,

1246, 1249 (9th

(9th Cir. 2007)).

CV1126-16 DECISION AND ORDER GRANTING RULE 12(B)(2) MOTION TO DISMISS Page5 Page

AND GRANTING IN PART RULE 15(A)

l S(A) MOTION

MOTION FOR LEAVE TO AMEND THE COMPLAINT

Further, under Rule Further, Rule 9(b),"

9(b " the

the circumstances

circumstances constituting fraud or or mistake

mistake shall

shall be

be stated

stated

particularity"and with particularity" and that that "malice, intent, knowledge, and other conditions of mind of of mind ofaa person

may be averred generally."

be averred added). When generally." GRCP 9(b) (emphasis added). hen reviewing reviewing aa Rule 12(b)(6)

Rule l2(b)(6)

dismissal for failure dismissal failure to to plead

plead aa fraud

fraud claim

claim pursuant

pursuant to

to Rule

Rule 9(b),

9(b), we

we must

must determine nova

determine de novo

whether whether the the complaint complaint pleaded

pleaded facts

factswith

with sufficient Taitano I,I, 2008 sufficient particularity. Taitano 2008 Guam Guam 12

12 1]

, 9

th

v. Cal.

(citing Yourish v. Cal.Amplifier, Amplifier,191 F.3d 983;

F.3d983;992 (9"' Cir. 1999)). This is because because"[t]raud

"[f]raud claims

are special specialmatters that are subject et to

to aa heightened pleading pleading standard."

standard." Ukase

Ukau v, Wang,2016 Guam

v. Wang,

261135. Although a plaintiff 26, 35. Although plaintiff is is not

not required

required "to

"to prove

prove aa claim

claim of

offraud

fraud at

at the

the pleading

pleading stage,"

stage," they

must set set forth forth the

the "claim

"claim with

wide sufficient

sufficient detail to provide provide notice

notice to

to defendants

defendants as to

to what

what particular

particular

fraudulent action is being alleged." Id 1147.

Id., 47. On

On the

the issue

issue of

ofHaud,

fraud, there are five

five elements: (1) a

elements:(!)

misrepresentation; (2) knowledge misrepresentation; (2) knowledge of of falsity (or

(or scienter),

scienter); (3) intent

intent to induce

induce defraud

defraud or

or induce

induce

reliance, reliance; (4) justifiable justifiable reliance,

reliance; and (5) resulting damages.

damages. Trans

Trans Pay.

Pac. Exp.

Exp. Co. v. Oka

Oka Towers

Corp., Corp., 2000 2000 Guam Guam 3,

1]23.

Finally, Finally, Defendant's Defendant's Motion

MotiontotoDismiss

Dismissraises

raises the

the issue

issue of

of standing,

standing, which is not a Rule

12(b)(6) motion, motion, but but aa Rule

Rule 12(b)(1)

12(b)(l) motion.

motion. Guam

Guam courts

courts have

have noted in

in that

that past that:

The United

United States

States Supreme

Supreme Court has has recently recently chastised

chastised itself

itself and other

courts for failing failing to

todistinguish

distinguishbetween

between dismissals

dismissals pursuant

pursuant to to Rule 12(b)(1)

12(b)(l) and

Rule Rule l2(b)(6), 2(b)( 6), stating,

stating; "[o]nthethe subject matter matterjurisdictionlingredient-of-claim-forjurisdiction /ingredient-of-claim-forrelief

reliefdichotomy, dichotomy, thisthis court courtand

and others

others have

have been

been less than meticulous."

meticulous." Arbaugh,

546 U.S. 51 I. The court further characterized U.S. at 511. characterized suchsuch dispositions dispositionswhich which fail fail to

consider the difference consider the difference as as "unrefined"

"unrefined" and and "drive-by "drive-by jurisdictional

jurisdictional rulings."

rulings." Id.,

(quoting (quoting Steel Steel Co. v. Citizens for for aa Better Better Environment,

Environment, 523 523 U.S. 83, 83, 91 (1998).

Thus, this this Court

Court will

willdistinguish

distinguishbetween

betweensuch suchdismissals, dismissals,and and as

as in

in this

this case,

case, where

a party raises the issues of ofstanding standing and the the plaintiffs'

plaintiffs' ability

ability to

to maintain

maintainthe the suit

suit as

as

a party party to the action, action, Rule

Rule 12(b)(6)

l2(b)(6) is is not applicable. Rather, Rule applicable. Rather, Rule 12(b)(l)

l2(b)(l) is

is the

the

proper authority under which which toto request requestdismissal

dismissalforfor"lack

"lackofofjurisdiction

jurisdiction over the

subject matter." GRCP subject matter." GRCPRule Rule 12(b)(l);

l2(b)(l), Quitugua

Quitugua v. v. Flores,

Flores, 2004

2004 Guam

Guam 19 19 - 31,

3·1,

n.l2, n.12; see see also

also McLain

McLainv.v. Real

Real Estate

Estate Bd.

Bd. OfOfNew

New Orleans,

Orleans, kic.,

Inc., 444

444 U.S.

U.S. 232,241

232,241

CV1126-16 CV! 126-16 DECISION DECISION AND

ANDORDER

ORDERGRANTING

GRANTINGRULE

RULE12<B><2) MOTION TO DISMISS 12(B)(2) MOTION Page Page6

AND GRANTING

GRANTING IN

IN PART

PART RULE 15(A) MOTION FOR FOR LEA

LEAVE TO AMEND

VE TO AMEND

THE COMPLAINT

(1980); and Colorado Environmental Coalition v. Weak (1980), Wenker, 353 F.3d 1221, 1221, 1227

1227

(10th Cir. 2004). Guam Housing and Urban Urban Renewal

Renewal Auth. v.

v. Guam Capital CV0150-08.

Capital Investment Corp., CV 0150-08.

This Court Court agrees.

agrees.

"Standing isis a threshold jurisdictional "Standing jurisdictional matter." Benavente v. Taitano, 2006 v. Taitano, 2006 Guam 15, 15, 1114

114

(Sup. Ct. Guam 2006) (quoting Guam Guam Imaging

Imaging Consultants,

Consultants, Inc. v.

v. Guam

Guam Mem'l

Mem'l Hosp.

Hosp. Auth.,

Auth., 2004

,r 17 (Sup. cCt.

Guam 115, 11 t. Guam Guam 2004).

2004). "T"Thus,

hus , we

wehav e hel

have d that

held that aa ccourt

ourt has

has no

no ssubject

ubj ec matter

jurisdiction jurisdictiontotohear hear aa claim

claim when

whenaa party

party lacks

lacks standing." Id.,

Id.; see also Taitano

see also Taitano v. Lujan, Lucan, 2005

2005 Guam

Guam

26, ,r1]15 15(Sup.

(Sup.Ct.

Ct.Guam

Guam2005).

2005). However,

However, so long as there there are

aresufficient

sufficient facts

facts plead

plead in

in the

thecomplaint

complaint

from whi which to i infer c h to nfer jjurisdiction, uri s di c aa Rule 12(b)(1)

12(b)(l) moti

motion mustt be

on mus be deni

denied. Tarleton

eron v.. Meharry

Medical College, ege, 717 F.2d 1523,1529

1523,1529 (6th Cir.1983); Davi Daviss v. Ohio Barge

Barge Li ne, Inc.,

Line, Inc., 697 F.2d

549,552 (3rd Cir.1983), Cir.1983); Wright

Wright v. Gregg, 685 F.2d 340,342 340, 342 (9th Cir.

Cir. 1982), Mountain Fuel Supply 1982); Mountain

Johnson, 586 F,2d Co. v. Johnson, F.2d 1375, 1382 (10th Cir.1978), cert. denied, denied, 441

441 U.S.

U.s. 952 (1978).

Do ththe A. Do e PPlaintiffs

l a i n ti ffs Ha v e SStanding Have ta n d i n g fo

for th e FFirst

the i r s t Ca u s e oof Cause f Ac ti o (F

Action raudule

(Fraudulent

Breach of Fiduciary Duty)?

A l ilitigant t i g a n t mmay.

a y . cclaim

l a i m sstanding

t a n d i n i fifh he

e o rors hshe

e p opossesses

s s e s e s ""the

t h e i rre d u c i b l e cconstitutional irreducible onstitut

minimum minimumofofstanding"

standing" under

under Article

Article III

III of

ofthe

the U.S. Constitution. Benavente Benavente v. Taitano, 2006 GGuam

u

15 ,r1] 15.

15.InIn other other words,

words, "[a]

"[a] party

party acquires

acquires standing

standing... by suffering

... by suffering an

an injury fact." Id. 1],r 18.

injury in fact."

Absent a statute statute conveying conveying standing,

standing, aa plaintiff

plaintiff must satisfy

satisfy the

the following

following elements

elements for each

each and

every claim pursued:

pursued: (1) suffer a concrete, particularized, and concrete, particularized, and actual actual or

or imminent

imminent injury-in-fact,

(2) demonstrate causal connection demonstrate a causal connection between between the

the injury

injury and

and the

the complained-of

complained-of conduct, and (3)

show that a favorable favorable decision

decision by

by the

the court

court will

will likely redress the

the iajury.

injury. Id.

CV1126-16 DECISION AND ORDER GRANTING RULE 12(B)(2) MOTION TO DISMISS DECISION Page?7 Page

AND GRANTn~1G

GRANTING ININPART

PARTRULE

RULE15(A)

l5(A) MOTION FOR LEAVE TO AMEND THE COMPLAINT

Defendants argue argue in

in their Motion to Dismiss Motion to Dismiss that

that Liang

Liang Herring

Herring does

does not

not have

have standing

standing

regarding counts of the regarding both counts the First First Cause

Cause of Action,

Action, because

because Plaintiff Liang

Liang deeded

deeded away her

interest in the property in interest in 1988, I 988; further,

further, Defendants

Defendants allege that

that Daniel does not have Daniel Herring does have

standing either, either, because becausehe

hedoes

doesnot

nothave

havea afiduciary

fiduciaryrelationship

relationshipregarding

regardingthe

theproperty.

property. Finally,

Finally,

Defendants argue that Maria Defendants Herringdoes Maria Herring does not

not have

have standing

standing for

forthe

the second

second count ofthe

count of the First

First Cause

ofAction, of Action, because because she

she was not a party to the loan loan agreement.

agreement.

PlaintiffLiang

1. Plaintiff LiangHerring HerringHas

HasStanding

Standingto

toAllege

Allege the

the First

First Cause

Cause of Action

Breach of Fiduciary

(Fraudulent Breach Fiduciary Duty)

Duty) Regarding

Regarding Both

Both Counts,

Couuts, Despite

Despite

Conveying HerHer Property in 1988

Defendants argue that Defendants argue that "taking "taldng the

the allegations

allegations in

in the

the Complaint

Complaint as

as true,

true, at

at the

the time

time of

Defendant Defendant David's alleged alleged fraudulent acts, Plaintiff Liang had fraudulent acts, the Ta1'

had no interest in the I11Jl'1i1'1g Tamuning

Property, having having transferred

transferred the Property to Defendant David on March 15, 15, 1988." Mot.

Mot, to Dismiss

Second Am. Verified Mem. ofP.

Comp!.; Mem.

Verified Compo., A."i[ (October 7, 2019).

& A.1]8

off. & 2019). The The Tamuning

Tamuning Property was

Quitclaim deed

"transferred by Quitclaim deed ("the ("the Deed"),

Deed"), and

and on

on the

the face ofthe

face of the Deed,

Deed, was

was not

not subject

subject to the

restrictions or conditions Plaintiff Plaintiff Liang described in Count described in Count II of of the

theComplaint."

Complaint." Id.

Id

Finally, in ally, Defendants ef en d an ts point

p o in t out

o u t that

th at Plaintiff

lain tif f Liang

Lian g "has

"h as not ddescribed any wr escr ed an writing

itin

memorializing the supposed memorializing supposed conditions conditions attached conveyanceofofthe attachedtotoconveyance theproperty"

property" and

and "in the

"in the

absence of absence of such suchwritings,

writings, Plaintiff Liang is Plaintiff Liang is barred barred by

by the

the Statute

Statute of Frauds from

from establishing any

such conditions conditions by by para!

carol evidence." Id. Thus, Defendants argue that Plaintiff Liang's "failure to Id Thus,

plead or attach any memorandum conditioning the transfer of the Tamuning memorandum conditioning on payments Tamuning Property on

renders any any such such agreement

agreementdeficient

deficient pursuant

pursuant to

tothe Statuteof

theStatute ofFrauds,

Frauds,and

andPlaintiff

Plaintiff Liang

Liang has no

standing to assert assert any

any interest in the property or rental payments interest in payments made on the property after she she

conveyed her conveyed her interest interest to

to Defendant

Defendant David 1988, even ifif Defendant David in 1988, Defendant David David gratuitously

gratuitously

rental income to her for a period of transferred rental of time time following

followingthe

theconveyance."

conveyance."Id.

Id.atat1["if 9.

CV1 l26-l6 CV! 126-16 DECISION AND AND ORDER

ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(B)(2) MOTION

MOTION TO DISMISS Page 8 Page

AND GRANTING

GRANTING IN

IN PART

PART RULE

RULE 15(A) MOTION FOR

FOR LEAVE

LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

Plaintiffs Plaintiffs respond

respond in

in their

their Opposition,

Opposition, however,

however,that

thatthe

the alleged

alleged oral

oral agreement

agreement constitutes

constitutes

a constructive constructive trust, and that that the

the Statute

Statuteof

of Frauds,

Frauds,which

which requires

requires certain

certain contracts

contracts to

to be

beininwriting,

writing,

does not apply does not appl y to to constructive

c ons truc ti v etrusts.

tnl s ts .Opp'n

O pp'ntotoMot.

Mot. toto Dismiss

Di s mi s s with

wi th Mot.

Mot. for

for Leave to

to Amend,

Amend,

(April pri 12, Adams v. YYoung, 12, 2022) (citing Adams oung, 255 Cal.App.2d 145, 145, 63 CaLRptr.877,

Cal.Rptr.877, ""when

w h e n a party

accepts title to accepts title to land landunder

under an

anoral

oralagreement

agreementof

ofholding property for the benefit of the transferor holding the property

a cconstructive t r u c t i v e trust t r u s t isi s applied

a p p l i e d though

t h o u g h no

n o written

w t e n memoranda

m o r a n d a exist.")

e x i s t . " ) Under

U n d e r Guam

G u a m law,

w, a

constructive trust is is imposed

imposed against

against one

onewho,

who, in

in any

any way,

way, holds

holds the

the legal

legal right

right to

to property

property which

which

he ought not, in equity and and good

good conscience,

conscience, hold and enjoy. In rre e Moylan,

o 2011 WL

L 44915003

915

(October 18, 2011).

Although the Although the Court

Courtcannot

cannotdetermine

determine atat this

this time

time ififsuch

such aa constructive

constructive tnlst

trust exists

exists in this

case, case, itit is is theoretically

theoretically plausible.

plausible. ItIt is

is also

also plausible

plausible that

that such

such aatrust

trustwould

would not

not be bound

bound by the

requirements of requirements of the statute of of frauds.

frauds. Therefore,

Therefore, construing

conshuing the pleading

pleading in the light

light most

most favorable

favorable

to the non-moving non-moving party, party, Plaintiff

PlaintiffLiang

Liang has

has standing

standing to

to allege

allege both counts in the first cause of cause of

action (Fraudulent Breach Breach of

of Fiduciary

Fiduciary Duty).

Duty).

2. Daniel Herring

r i n g Do

Does Not Have

Have SStanding

tan Regarding Count I oof f th

thee FFirst

i r st

Cause of Action (Fraudulent Breach Breach of Fiduciary Duty), of Fiduciary Duty), Because He Does Not Because He

Have Have aa Fiduciary

Fiduciary Relationship Tamuning Property Relationship Regarding the Tamuning

Defendants Defendants argue that "Plaintiffs "Plaintiffs have not alleged the basis basis for

for Plaintiff

Plaintiff Daniel's

Daniel's standing

to bring a claim claim for

for breach

breachof

offiduciary

fiduciaryduty."

duty."Mot.

Mot. totoDismiss

DismissSecond

SecondAm.

Am.Verified

VerifiedComp!.;

Con pl.,Mem.

Men.

of of P. & A.1]

A.,r 10-11 10-11 (October

(October 7,

7, 2019). According

According toto Defendants, Defendants, even

even ififthis

this Court

Courtassumes

assumes that

Defendant David has Defendant David has a fiduciary duty via fiduciary duty via constructive trusttotoPlaintiff constructive trust Plaintiff Liang, Liang, "there

"there is no

allegation egati on that that Plaintiff

Pl ai nti ff Daniel was involved iin n the

the purported

purported establ

establishment of the trust or that

Defendant e a n t David D v i d stood

t o o d in any otherr fiduciary i a r y capacity

a p a c i t y tot o Plaintiff P l a i n t i f Daniel." l d aat 1,r] 1I 1I.. In D a n i e l . " Id

opposition, Plaintiffs Plaintiffs mention

mention that

that "Plaintiff

"Plaintiff Daniel

Daniel is

is the son to

to whom

whom the remainder interest interest [[of

of

CVl 126-16 CV1126-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(B)(2) MOTION TO DISMISS Page9 Page

AND GRANTING

GRANTING IN PART RULE I5(A)

15(A) MOTION

MOTION FOR LEA

LEAVE TO AMEND

AMEND

THE COMPLAINT

the property] was intended ntended to be given," but iitt iis s Unclear

unclear how this

this could

could plausibly

plausibly establish

establish a

fiduciary obligation on the part part of

of Defendant

Defendant David

David to

to Plaintiff

Plaintiff Daniel.

Daniel. Opp'n

Opp'n to Mot. to Dismiss

with Mot. with Mot. for for Leave

Leave to Amend ,I 7, (April Amend1]7, (April12,

12,2022).

2022). Under

UnderGuam

Guamlaw,

law, Plaintiff

PlaintiffDanie1

Daniel must claim

that he suffered an an injury

injury in fact and "demonstrate "demonstrate a causal

causal connection between the injury and the

complained-of ai conduct." Benavente v.

conduct." v. Taitano, Taitano, 2006 Guam

Guam 15 ,I 15.

15 'll 15. Given

Given that

that Plaintiff

Plaintiff Daniel

does not have have aa fiduciary fiduciary relationship

relationship with

with Defendant David

David regarding

regarding the

the constructive

constructive trust for

Tamuning Property, no causal the Tamuning causal connection connection exists

existsfor

forhim

him to

to claim

claim an

aninjury.

injury. Therefore,

Therefore, Plaintiff

Plaintiff

Daniel Herring Herring does not not have

have standing

standingregarding

regardingCount

CountI of the

I of theFirst

F irstCause

CauseoffAction

Action (F raudulent

(Fraudulent

Breach of Fiduciary Duty).

Duty).

Ma r i a He 3. Maria r r i n g Do Herring e s No

Does Nott Ha v e SStanding Have ta n d i n g Re g Regarding Co f th Count II oof irs

e FFirst the

Cause of Action

Action (Fraudulent

(Fraudulent Breach of Fiduciary Fiduciary Duty),

Duty), Because

Because She WasWas Not

a Party to the Loan Loan Agreement

Count II II in

in the

the First Cause of

of Action

Action (Fraudulent Breach of of Fiduciary Duty) involves involves the

three-hundred-and-seventy-five-thousand dollar three-hundred-and-seventy-five-thousand dollar ($375,000.00) loan agreement with with BankPacific,

BankPaciHc,

entered e re d into i n t o by

b y Defendant

n t David and,' PPlaintiff la f Da n i e tto

Daniel o f fund

u n d aaj ojoint

i n t b business

u s i n e s s vventure.

en The

Complaint Complaint alleges that Defendant alleges that Defendant David David took two-hundred-thousand dollars ($200,000.00) for his

own own use. Verified Con use. Verified pl., (December Comp!., (December 20, 2016). Defendants argue that that Count

Count IIII of

of the

the Complaint

Complaint

"appears to allege that that Defendant

Defendant David

David owed

owed a fiduciary

fiduciary duty to Plaintiff Plaintiff Daniel"

Daniel" because

because of the

loan agreement. Id.

Id at ,I 13.

at 1] 13. Defendant,

Defendant, points

points out,

out, however,

however, that

that Plaintiff

Plaintiff Maria

Maria was

was not a party to

the loan agreement "or the alleged partnership" and and was

was not

not aa party

party "to

"to the

the supposed

supposed subsequent

subsequent

agreement between between Plaintiff

Plaintiff Daniel

Daniel and Defendant

Defendant David regarding repayment of the loan." Id. In Ki

their Opposition, Plaintiffs ai nti ffs have no response regardi ng the response regarding the status status of

of Plaintiff

Pl ai nti ff Maria's

Mari a's standi

standing

regardi ng the regarding the loan.

l oan. Opp'n

O pp' n to

to Mot.

Mot. to

to Dismiss

Di mi s with

wi th Mot.

Mot. for Leave to

to Amend, (April

pri l 12,

12, 2022).

Under n d e Guam law, law, Plaintiff

PlaintiffMaria

Mariamust

mustclaim

claimthat

thatshe

she suffered

suffered an injury

injury in

in fact

fact regarding the loan

CV! 126-16 CV1126-16 DECISION AND ORDER GRANTING RULE 12(B)(2) MOTION TO DISMISS DECISION Page 10 Page 10

AND GRANTING IN PART RULE 15(A)

IS(A) MOTION

MOTION FOR LEAVE TO AMEND THE COMPLAINT

as

and "demonstrate and "demonstrate a causal causal connection

connection between

between the

the injury and

and the

the complained-of

complained-of conduct.

conduct."

Benavenre v. Taitano, 2006 Guam 15 ~1]15. Benavente v. 15.Given Giventhat

thatPlaintiff

Plaintiff Maria

Maria was not

not a party

party to

to the loan

agreement, no agreement, no causal causalconnection

connectionexists

existsfor

forher

hertotoclaim

claim an

an injury.

injury. Therefore,

Therefore, Plaintiff

Plaintiff Maria

Herring does Herring does not have have standing

standingregarding

regardingCount

CountIIIIof

ofthe

theFirst

FirstCause

CauseoffAction

Action (Fraudulent

(Fraudulent Breach

of Fiduciary Duty). of

Have Plaintiffs B. Have Plaintiffs Plead Plead Fraud

Fraud wwith Sufficient Particularity ith Sufficient Particularity Regarding Regarding

Defendants Frances and Jeremy? Defendants

As mentioned above, above, although

although aaplaintiff

plaintiff is not required "to prove a claim of fraud fraud at

at the

pleading stage," pleading stage," they they must

must set

set forth the "claim with sufficient "claim with sufficient detail to provide notice to defendants

as to to what what particular particular fraudulent

fraudulent action is being alleged." Id.~ alleged." Id 47. On

1147. On the

the issue of fraud, there there are

five elements: five elements: (1) a misrepresentation;

misrepresentation, (2)

(2) knowledge

knowledge of

of falsity (or scienter), falsity (or scienter); (3) intent to induce

defraud or induce reliance;

reliance, ((4)

4) justifiable reliance; and (5)

justifiable reliance, (5) resulting damages. Trans resultingdamages. Trans Pay.

Pac. Exp.

Exp. Co.

Towers Corp., v. Oka Towers 2000Guam Corp.,2000 ~ 23.

Guam331123

Defendants argue that Plaintiffs Defendants have failed Plaintiffs have to allege failed to allege aa basis for their fraud fraud claim

claim against

against

Defendant Frances Defendant Frances regarding the First Cause of Action, Action, because

because Defendant Frances was was not

not in a

part of of the the constructive constructive Mst

trustused

used in

in the

the alleged

alleged fraud.

fraud. Further,

Further, Defendants

Defendants argue that

that Plaintiffs

have not plead fraud with with sufficient

sufficientparticularity

particularityagainst

againstDefendants

Defendants Frances

Frances and

and Jeremy

Jeremy in the

Second Cause Second Causeof Action,because fAction, because Defendants Defendants did

did not

not hold

hold the

the Power of

of Attorney

Attorney that

that was used to

allegedly defraud allegedly defraud Plaintiffs Plaintiffs.

CVI 126-I6 CV! 126-16 DECISION AND AND ORDER

ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(B)(2) MOTION

MOTION TO

TO DISMISS Page 11 Page 11

AND GRANTING

GRANTING IN

IN PART

PART RULE 15(A) MOTION FOR LEA LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

1. Plaintiffs Have

Have Failed to Plead Fraud with Sufficient Sufficient Particularity Particularity Against

Frances Herring

Herring Regarding

Regarding CountCount II of ofthe

the First

First Cause

Cause of Action (Fraudulent Br e a c h o f F i d u c i ary Breach r y Du ty ), Be c ause u s e They

T h e y Do

Do Not

No t Al l ege

g e That

T h a t She

h e Made

Made a

Representation with the Intent to Induce Fraud or Reliance

Defendants argue argue that

that Plaintiffs

Pl ai nti ffs fail

fai l to

to allege

ege "the

"the basis

bas i s for

for their

thei r claim

ai m for FFraudulent

raudul

Breach reac of Fiduciary Dut Dutyy agai

against Defendant

endant Frances."

ranc es . " Mot.

Mot . too Dismiss Second

ec ond Am.

A m. Verified

eri

Comal., Comp!.; Mem.

Mem. ofofP.P. &&A.'l1 A.,i 11

11 (October

(October 7,

7, 2019). In

In particular,

particular, "Count

"Count II alleges

alleges that

that Defendant

David David owed owed Plaintiff PlaintiffLiang

Liangfiduciary

fiduciaryduties

dutiesbased

based on

on an

an oral

oral trust

trust established between Plaintiff established between Plaintiff

Liang and Defendant David in 1988," but Defendants contend contend that

that "Plaintiffs

"Plaintiffs have

have failed

failed to allege

how Defendant Defendant Francis Francis stood in a`fiduciary capacity to a •fiduciary capacity to Plaintiffs PlaintiffsLiang

Liang and

and Daniel."

Daniel."Id.

Id It is

unclear how Defendant Frances rances could

could be

be guilty

guilty of

of a Fraudulent

F raudulent Breach

Breach of

of Fiduciary

F iduciary Duty,

Duty, if no

Fiduciary Fiduciary Duty Dutyexisted

existed in

in the

the first place. In Opposition, Plaintiffs first place. Plaintiffs argue that:

Defendant Defendant David David laterlater transferred transferred thethe property property intointo the

the name

name of ofhis

his spouse

spouse

Defendant Defendant Frances who who knew of of the continuing continuing obligation

obligation to hold hold the property in a i a ry capacity

fiduciary p a c i t y for f o r Plaintiff

l a i n t i f f Liang ... [[And]

A n d ] De f e n d a n t Da Defendants v i d aand David n d FFrances'

ra n c e s

continuing continuing the holding of oftitle title to to the real property under the promise promise by Defendant Davids Davids to to use the property property for the benefit benefit of of Plaintiff

Plaintiff Liang, was was intended to induce reliance of

the reliance of Plaintiff Plaintiff Liang Liang in Defendant Defendant David

David and continue

continue Defendant

Defendant David's

David's

holding holding of ofthe the title

title inin the

the trust,

trust, despite that Defendants David David andand Frances intended to combine combine and conspire to use use the theproperty property forfor their

their own

own financial benefit and gain and not for the benefit benefit of of Plaintiff Plaintiff Liang.

Liang.

Id. at1]4 and7.

at ,i and

It is unclear what what exactly Plaintiffs

Plaintiffs are

are alleging

alleging here,

here; itit appears that they are claiming claiming that

Defendant endant Frances es knew

k new about the al eged constructive alleged t ruc t i v e trust t rus t between

bet ween Defendant

Def endant David

Dav and

Plaintiff Liang, Liang, and

and therefore

therefore was

was a part of

of inducing

inducing Plaintiff

Plaintiff Liang into reliance on Defendant

David's David's promise promise to to create

create a constructive trust.

trust. Ironically,

Ironically, however, all of of this

this makes

makes itit clear

clear that

Defendant Defendant Frances Frances was not a part

part of

of the constructive trust trust alleged

alleged by

by Plaintiffs.

Plaintiffs.

CV1126-16 CVll26-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(B)(2) MOTION

MOTION TO DISMISS Page 12 Page 12

AND GRANTING

GRANTING IN

IN PART

PART RULE

RULE 15(A) LEAVE TO 15(A) MOTION FOR LEAVE TO AMEND AMEND

THE COMPLAINT

COMPLAINT

Therefore, it is

is not possible that Defendant Frances made aa "misrepresentation"

Frances made "misrepresentation" with with the

"intent "intent to to induce induce defraud

defraud or

or induce

induce reliance"

reliance" regarding

regarding aa fiduciary

fiduciaryduty

dutythat

thatshe

she did

didnot

notpossess.

possess.

See Trans Pac. See Trans Pay. Exp.

Exp. Co.

Co. v.v. Oka

Oka Towers

Towers Corp.,

Corp., 2000 Guam

Guam 33,

1] 23.

23. Given

Given that Defendant

Defendant Frances

Frances

does does not have a fifiduciary duc rel hi p with PPlaintiffs relationship l ai regardi regarding the cconstructive ti v e trustt for the

Tamuning PProperty, Plaintiffs nt i f f have failed

ed to pl ead Hand

plead fraud wi t h s sufficient with uf i c i ent part i c ul ari t y agai particularity ns against

Defendant Frances rances Herring

Herri herself,

hersel f, regarding

regardi ng Count

Count II of the First Cause Cause of

of Action (F raudul

(Fraudulent

Breach of Fiduciary Duty).

.

2. Plaintiffs Have

Have Failed to Plead Fraud with Sufficient Particularity Against Frances Herring Frances Herring and and Jeremy Jeremy Herring

HerringRegarding

Regardingthethe Second

Second Cause

Cause of Action

(Fraudulent

rau d Breach of Fiduciary Du ty an Duty andd Co n sp

Conspiracy to

to Breach Fiduciary

id

Duty), Duty), Because

Because Plaintiffs Fail to Allege that Frances or Jeremy Conspired to Co m it aa TTortious Commit o rtio u s Act

Ac According to the Complaint, ai Defendant "convinced Plaintiffs ai nti ffs Daniel

Dani el and

and Maria

Mari to give

Defendant Defendant David David aa General Power of Attorney General Power Attorney to act act for

for benefit

benefit of

of these

thesePlaintiffs

Plaintiffs minor

minor children

should Plaintiffs ai nti ffs Dnaiel and and Maria

Mari travel outsi de of

outside of Guam." Second Am.

Am. Veri fi ed Comal

Verified Comp!.. 'II, 10

10

(August u g u 27, 2019). The Co m p l a i n tthen Complaint h e aallegess that h a t "sometime

" o m e t i m e in

i n May

a oof

f 22013,

0 1 3 , De fendant

Defendants

Frances rances and and Jeremy Jeremy were

were aware

aware of

of the

the Power

Power of

of Attorney

Attorney and... conspired to use use the

the Power

Power of

of

Attorney to secure secure aamortgage

mortgagefrom

fromFinance

FinancePro

ProInc

Inc...." Id Defendants

.... "Id. Defendants argue argue that this Complaint Complaint

"does not attach the Power attach the Power of

of Attorney or

or allege

allege how Defendants

Defendants FFrances

rances and

and Jeremy

Jeremy knew

knew or

were supposed ed to

to know

k now what the limitations of of the Power

Power of Attorney were, or what what Pl ai

Plaintiffs

Dani el and Mari Daniel Mariaa iintended ntended Defendant David

Davi to use

use the

the Power

Power of

of Attorney

Attorney for."

for." Mot. to Di smi ss

Dismiss

Second Am.

m. Verified e ri f i e Comp!.;

ma l , Mem.

e m of

of P. & A.

A.,1] 15 (October 7, 2019). Defendants Defendants then go on to

a r gue u e t h att rregarding e g a r d i n g D e f endants n d a n t s Frances

F r a n c e s and

a n d Jeremy,

J e r e m y , "Plaintiffs " P l a i n t i f f s have h a v e failed

f a i l e d to

t o aallege

llege a

misrepresentation, knowledge of misrepresentation, knowledge of falsity, falsity, or the requisite requisite intent

intent to

to defraud."

defraud." Id.

Id

CV! 126-16 CV1126-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(8)(2)

12(B)(2) MOTION

MOTION TO

TO DISMISS 13 Page 13 Page

AND GRANTING

GRANTING IN

IN PART

PART RULE

RULE 15(A) MOTION FOR LEAVE LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

In In their their Opposition,

Opposition, Plaintiffs

Plaintiffsdo

do not

notaddress

address any of

of the Defendants'

Defendants' arguments

arguments against

against the

Cause of Second Cause of Action Action nor

nor do

do they

they even mention the

even mention the Power

Power of

of Attorney

Attorney issue.

issue. Opp'n

Opp'n to

to Mot.

Mot. to

Di smi ss with Dismiss th Mot.

Mot. for

for Leave

Leave to Amend,

Amend, (Apri

(Aprill 12, 2022). "In

12, 2022). both cicivil "Inboth vi l and

and cri mi nal cases...

criminal cases we

rely on the the parties to frame the issues of of decision and

and assign

assign to

to courts

courts the

therole

role of

of neutral

neutral arbiter

arbiter of

of

matters the parties present."

present."See US. v. Sineneng-Smith, 590 U.S. 371 v. Sineneng-Smith, 371 (2020). Typically, Typically, the Court

Court

needs the Plaintiffs Plaintiffs to at least

least respond

respond to

to the

the Defendants'

Defendants' arguments.

arguments. It

It is again

again very

very unclear

unclear what

what

Plaintiffs Plaintiffs are are claiming

claiming here.

here. Are

Are they

they alleging

alleging that

that Defendants

Defendants Frances

Frances and Jeremy each had their

own own fiduciary fiduciary duty duty toto the

the Plaintiffs?

Plaintiffs? How

Howisisthis

thispossible

possible ififneither

neither Frances

Frances nor

nor Jeremy held the

Power off AAttorney?

t orn O

Orr i is

s t this

h i s aa ccivil

i v i l cconspiracy

onspira cclaim wwhere

h e aa ffiduciary

iduc dduty

u i is

s ssomehow

o e

unnecessary amongst all of the parties, even if if it is a conspiracy

conspiracy to

to breach

breach aa fiduciary

fiduciary duty?

Assuming Assuming that that this

this is

is even possible under

under Guam law (and

and the Court

Court isis not

not saying

saying that

that itit is

possible), the allegation possible), the allegation does does not

not amount

amount to

to aa cause

cause of

of action

action for

for conspiracy.

conspiracy. For

For instance,

instance, the

elements of of aa civil civil conspiracy

conspiracy are

are "(l)

"(1) the

the formation

formation of a group

group of two or more

more persons who agreed

to a common plan or design to commit commit aa tortuous act, (2)

tortious act; (2) aa wrongful wrongful act committed

committed pursuant to the

agreement, agreement; and (3) resulting See Uni resulting damages." See ted TTalent United Agency, LLC v. Markel American al ent Agenc American

Insurance Company, 2023 WL 6449399 (citing City of oflIndustry

ndushy v. Fi

v. City ofFillmore, 198 App.

198 Cal. App.

th 191, 4th 191, 212 212 (2011)).

(2011)). Plaintiffs

Plaintiffs allege

allege that

that "sometime

"sometime in

in May

May of

of2013,

2013, Defendants

Defendants FFrances

rances and

eremy were Jeremy were aware aware of

of the

the Power

Power of Attorney and...

and cconspired

ons to use the

the Power

Power of

of Attorney to

.... "Second

secure a mortgage from Finance Pro Inc...." SecondAm.

Am.Verified

VerifiedComal.

Comp!.~ 10 (August

1110 (August 27,

27, 2019).

Here, Plaintiffs Plaintiffs seemingly seemingly allege

allege that Defendants

Defendants Frances and

and Jeremy

Jeremy "agreed

"agreed to

to aacommon

common plan"

plan"

so

to get a bank bank loan, loan, not

not "commit

"commit aa tortuous

tortious act."

In tthis h i case, the ttortious

u o u s act

c t would bbe

e f ra u d , wwhich

fraud, h i c h rerequires q u i re s a a" m"misrepresentation, i s re p re s e n t a

knowledge nowl edge of of falsity,

ty , and a requisite intent to defraud." See Pay. Exp.

See Trans Pac. Exp. Co.

Co. v.

v. Oka Towers

CV1126-16 DECISION AND ORDER GRANTING RULE 12(B)(2) MOTION TO DISMISS 14 Page 14

AND GRANTING IN PART RULE 15(A)

15(A) MOTION

MOTION FOR

FOR LEAVE TO AMEND

THE COMPLAINT

Corp., Corp., 2000 ,r The Complaint 2000 Guam 31]23. Complaintdoes does not

not describe

describe Defendants

Defendants Frances Jeremy taking Frances and Jeremy taking

part in a misrepresentation with the intent intent to defraud. In fact, fact, the

the Complaint makes it sound like

the alleged the alleged "formation "formation of group" took of the group" took place

place after Defendant David made after Defendant made the the alleged

misrepresentation (promisingtoto use misrepresentation (promising use the the power

power of attorney for aa specific of attorney specific purpose).

purpose). Therefore,

Plaintiffs have Plaintiffs have hailed hailed to

to plead

plead fraud

fraud with

with sufficient

sufficientparticularity

particularity against

against Frances

Frances Herring and

and

Jeremy Second Cause Jeremy Herring regarding the Second Causeof ofAction

Action (Fraudulent

(Fraudulent Breach

Breachof

of Fiduciary

Fiduciary Duty

Duty and

Conspiracy to Breach Conspiracy to Breach Fiduciary Fiduciary Duty).

Duty).

C. Do

Dothe

theStatute

Statute of

ofLimitations

LimitationsBar

BarBoth

BothCounts

Countsof

ofthe

the First

First Cause

Cause of

of Action?

The three-year three~yearstatute statuteoflimitations

of limitations for

for fraud claims is set

set forth

forth in Title

Title 7 GCA section 11305, l 1305,

which states in relevant states in relevant part:

part:

(d) An action action for

for relief

reliefon

on the

the ground

ground of

offraud

fraud or

ormistake.

mistake. The

The cause of action in

cause of

such a case caseisis not

not to

to bedeemed to have accrued accrued until

until the discovery by the the aggrieved

aggrieved

party of thefacts party of facts constituting defraud or mistake.

the fraud or mistake.

Supreme Court The Supreme Court has hasheld

heldthat

thatthe

thequestion

questionofof"when

"when[Plaintiff]

[Plaintiff] 'discovered' the [alleged

wrongdoing] is is important in

in determining

determining the

the commencement

commencement of

of the

the statute

statuteof

of limitations

limitations period

on any claim that that the

the deed constituted

constituted an

an agreement

agreement to

to convey

convey the

the property."

property." See

See Burkhart v.

v.

Miranda, ,r (emphasis added), Miranda, 2013 Guam 2 1]27 added); see Taitano I,I, 2008 Guam 12 ,r1]28 ("In see also Tairano cases ("In cases

where where the the exact exact timing

timing of

of specific

specific events

events isis critical

critical for

for determining

determining fraud,

fraud, lack

lack of precision in

of precision

alleging dates can can be

befatal

fatal to

to aapleading.").

pleading.").

In In Gayle Gayle v.

v. Hemlani, 2000

2000 Guam 25 (Guam 2000), 2000), aa constructive

constructive Hand

fraud case

case involving the

three year statutes of limitations in 7 G.C.A. §§ 11305(4), Guam Courts stated that:

We have have held

held that

that the

thestatute

statuteof oflimitations

limitationswill

will begin

begin toto run

run when

when the

the plaintiff

plaintiff

suspects oror should suspects should suspect suspectthat thathis

his injury

injury was

was caused

caused by by wrongdoing

wrongdoing or that that

someone has done something has done somethingwrong wrong to him. Custody v. Boonprakong et.

Custodio v. Boonprakong et. al., 1999 1999

Guam Guam 5,5, ,r1[27 27(interpreting

(interpretingthe thediscovery discoveryrules

rulesininthe

thecontext

contextof ofTitle

Title 77 GCA

GCA §§

11308 (1994) 11308 (1994) with with respect

respect to

to aamedical

medical malpractice

malpracticeclaim)

claim) (citation

(citation omitted).

CV1126-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(8)(2)

12(B)(2) MOTION

MOTION TO DISMISS Page 15 Page 15

AND GRANTING IN PART RULE 15(A)

GRANTING IN PART RULE 15(A) MOTION FOR LEAVE TO LEAVE TO AMEND

AMEND

THE COMPLAINT

Further, we we observe that:

that:

A plaintiff plaintiffneed

neednotnotbe

be aware

aware ofofthe

the specific

specific acts

acts necessary to establish necessary to establish the the claim

claim...

...

[o]nce ]nee the plaintiff

plaintiff has

has .a suspicion of

a suspicion of wrongdoing, wrongdoing, and therefore an incentive to sue, he must sue, he must decide decide whether

whether to to file suit or sit on his rights... Consequently, if a suspicion exists, exists, the

the plaintiff

plaintiff cannot

cannot sitsit back

back and

and wait

wait for

for the facts

facts to

to find

find him asas

the burden of finding finding the

the facts

facts falls upon

upon his

his shoulders.

Gayle v.

v. Hemlani, ,r (citations omitted).

Hemlani, 2000 Guam 25, 1]24

1. L TThe

h e FFirst

irst Cau se oof

Cause f Action CountlI (F rau d u len t Breach (Fraudulent Breach of Fiduciary Duty)

Du

Is Is Barred

Barred by

by the

the Statute

Statute of Limitations

The DDefendants'

efe ' Motion

o t i o n cclaims

l a i m s t hthat

a t PPlaintiff

l a i n t i f f LLiang

i a n g a allegedly

l e g e d l y hhad

a d rereason

a s o n t to

o ssuspect

uspe

wrongdoing ov er aa dec over before Plaintiffs decade before Pl ai nti ffs filed fi l ed suit.

ui t. Specifically,

Spec i fi c al l y ,"in

"i n Count

Count II of the original

Complaint,t , Plaintiff i n t i f f Liang aadmittedd under oath tthat sshe noticedd thatt Defendant a n t David hhad

transmitted significantly transmitted significantly reduced reduced moneys

moneys from

from the rental

rental payments

payments on

on the

the Tamuning

Tamuning property

property in

Augus August 2004." Mot. to to Di s mi s Second Am.

Dismiss Am. Veri fi ed Compo., Verified Mem. of P. & Comp!.; Mem. & A11

A.,r 12

12 (October 7,

(October 7,

2019). Therefore, according to to Defendants,

Defendants, "[although]

"[although] Plaintiff

Plaintiff Liang claims 'discovered'

claims to have 'discovered'

that Defendant David had accepted accepted aa lump

lump sum

sum in

in consideration

consideration of

of reduced rent in May

May 2015,

2015, the

statute of limitations statute of limitations begins begins to

to run

run when

when Plaintiff

Plaintiff Liang has suspicion suspicion of

of wrongdoing,

wrongdoing, which she

she

clearly earl y did in 2004, 2004, and

and iin

n response

response to whi ch she

which she requested

requested that Defendant David d transfer

transfer the

property to Plaintiff Daniel."

Daniel." Id

Id

In Opposition, Plaintiffs argue thatt "the statute Opposition, Plaintiffs t u t e of o limitations

i o n s does

d o e s not

n o t run

ru n while tthe

Defendant secrets ec rets the

the events

ev ents of

of his wrongful actions"" and insinuate hi s wrongful nuate that that Defendant

Defendant David

Dav i d hid

information from Plaintiff Liang. Opp'n to Mot. to Dismiss with wi th Mot.

Mot. for Leave

Leav e to

to Amend ,r

Amend1]5-7,

(April 12, (April 12, 2022).

2022). However,

However, the

the Plaintiffs

Plaintiffs never

never argue

argue that Defendant David's allegedly deceitful David's allegedly

behavior behav i prevented prev ented Plaintiff P l ai nti ff Liang

Li ang from di

discovering

s ng the

di reduced

ed rental

rental payments

pay ments in

i n 2004.

2004. Id.

Id

Further, Plaintiffs cite a case case in favor of their assertion, but in favor but the the case addresses

addresses very

very different

different facts

where where the Defendant Defendant in a libel case case hid

hid their

their identity

identity and

and said

saidDefendant

Defendant was

was found

found to

to be

be"equitably

"equitably

CV1126-16 DECISION AND ORDER ORDER GRANTING

GRANTING RULE

RULE 12(B)(2)

12(B)(2) MOTION TO DISMISS 16 Page 16 Page

AND GRANTING IN PART RULE GRANTING IN PART RULE 15(A) MOTION FOR LEA LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

estopped from 'from asserting asserting statute

statuteoflimitations

of limitations when,

when, as

asresult

resultof

ofintentional

intentional concealment,

concealment, plaintiff

plaintiff

is unable to discover defendant's actual actual identity."

identity." See on v.v . Browning-Ferris See Bernson Browni Industries of

th

Ca., Ca., Inc., 7 Cal. 4th 926 926 (1994).

(1994). Further, holds that "Defendant's fraud Further, that same case holds in concealing Baud in

a cause cause of of action action against

against him

him tolls

tolls applicable

applicable statute

statute oflimitations,

of limitations, but only for for that period

period during

during

which a claim is undiscovered undiscovered by

by plaintiff

plaintwororuntil

untilsuch

such time

time as plainfyf by

as plaintiff, byexercise

exercise of

ofreasonable

diligence, diligence, should have discovered it." Id (emphasis Id. (emphasi added).

s added).

Plaintiffs do Plaintiffs do not argue that Defendant Defendant prevented

prevented Plaintiff

Plaintiff Liang

Liang from discovering

discovering the

the rental

income disparity pari ty in

i n 2004,

2004, nor

nor do

do they

they even

ev en dispute

di s puteit.i t.Opp'n

O pp' n toto Mot.

Mot. to

to Dismiss

Di mi s s with

wi th Mot.

Mot. for

Leave to Amend, Amend, (Apri l 12, (April 12,2022).

2022).F Further,

urther, bec aus e of

because ofher

herssuspicions

us pi c i ons cconcerning the income

disparity spari ty in 2004, Plaintiff ff Li ang requested

Liang requested that the property be transferred to Plaintiff transferred to Pl ai Daniel,

which occurred via Deed of Gift n iin

n Augus

Augustt 2004.

2004. Sec

Second Am.

Ani. Veri fi ed Comal

Verified Comp!.. 1]"if 6 (August (Augus 27,

2019). Defendants argue that that "Plaintiff

"Plaintiff Liang

Liang should

should have

have investigated

investigated the reduced

reduced payments in

2004, and her failure failure to

to do

do so

sorenders

rendersher

herclaim

claimtime

timebarred."

barred."Mot.

Mot. totoDismiss

Dismiss Second

SecondAm.

Am. Verified

Verified

Comp!.; Mem. Comal., A."i[ 12 Mem. ofofP.P. &&A.1] 12 (October (October7,7, 2019).

2019). Guam

GuamCourts

Courtsagree

agree that

that "if

"ifaasuspicion

suspicion exists,

exists,

si t back

the plaintiff cannot sit back and and wait

wai t for

for the

the facts

facts to i nd hi

to find himm as

as the

the burden of

of fifinding

ndi ng the

the facts

facts

shoulders." Gayle v.

falls upon his shoulders." v. Hemlani, Hemlani, 2000 Guam25,

25,1124

"if (citations omitted).

(citations omitted). Further, "the

statute of limitations statute of limitations will will begin

begin to

to run

run when

whenthe plaintiffsuspects the plaintiff suspects or or should

should suspect that his

suspect that his injury

injury

was caused u s e d by b y wrongdoing

w o n g d o i n g or

o r thatt someone

o m e o n e has

h a s done

d o n e something

s o m e t h i n gwrong

w r o n gtot o him." I d ((citing h i m . " Id. c

Custodian Custodio v.v.Boonprakong Boonprakong et.

Er. al.,

al., 1999 G u

Guam 5, 1]27).

"if 27). Therefore, the First Cause Cause of

of Action

c Count

I (Fraudulent (Fraudulent Breach of of Fiduciary

Fiduciary Duty)

Duty)isis barred

barred by

by the

the statute limitations.

statute oflimitations.

CV1126-16 DECISION AND AND ORDER

ORDER GRANTING

GRANTING RULE

RULE 12(Bx2)

12(B)(2) MOTION

MOTION TO

TO DISMISS Page 17 Page 17

AND GRANTING

GRANTING IN

IN PART

PART RULE

RULE 15(A) MOTION FOR LEAVE LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

COMPLAINT

2. TThe

h e FFirst

irst Cau se oof

Cause f Actio n Co

Action u n t IIII (F

Count rau d u len t Breach (Fraudulent Breach of Fiduciary Duty)

Du

Is Barred Is Barred by the Statute by the Statute of Limitations Limitations

Defendant David David and

and Plaintiff

PlaintiffDaniel

Daniel agreed

agreed to enter into a mortgage mortgage on

on the

the Tamuning

Tamuning Land

and placed placed the the loan proceeds

proceeds ($375,000.00)

($375,000.00) into

into aa joint

joint account;

account, in

in 2010, however, Defendant

David David allegedly firm the allegedly removed $203,578.70 from the account. Second Am.

account. Second Am. Verified Verified Comal. ,r (August Comp!. 1]8 (August

27, 2019).

2019). According to the Second Sec ond Amended

Amended Complaint, in 2010, "Plaintiff "Pl ff Daniel confronted on&onted

Defendant David David about the withdrawal withdrawal of

ofthe

the funds

funds and

and Defendant David

David promised

promised to

to repay

repay the

loan in its entirety."

entirety." Id. Defendants Defendantsargue

arguethat

that "the

"the Complaint

Complaint notes

notes that Plaintiff Daniel that Plaintiff Daniel was was

aware of the the facts factsthat

thatgive

giverise

risetotoCount

CountIIHasasofofJuly2010." Mot. to July 2010." Mot. to Dismiss Dismiss Second

SecondAm.

Am. Verified

Verified

Compo., Mem. of Comp!.; Mem. P. & A.1I ofP. A.,r 14

14 (October

(October 7,

7, 2019).

2019). Further,

Further, "to

"tothe

the extent

extent he

he isis seeking

seeking redress for

for

Defendant DefendantDavid's David'ssupposed

supposed usurpation

usurpationofofthe

the fiends

funds from

from the

the Bank

Bank Pacific

Pacificloan,

loan, he

he has

has been aware

of of such such conduct since 2010, and has not alleged facts that alleged facts that would would toll the statute

statute of limitations

pursuant to to the the discovery rule." Id.

discovery rule." In their Id In theirOpposition,

Opposition, Plaintiffs

Plaintiffsdo

do not

notaddress

address this argument at

to Di

all. Opp'n to Mot. to s mi s with Dismiss th Mot.

Mot. for

for Leav

Leavee to

to Amend,

Amend, (Apri l 12,

(April 2022). Pl

12,2022). ai nti ffs argue Plaintiffs argue

that Count I tolls tolls the

the statute of

of limitations,

limitations, but

but they do not address Count HII. Id.

Without aa counterargument Without counterargument firm fromPlaintiffs,

Plaintiffs,the

theCourt

Courtdoes

doesnot

notsee

see any

any reason disagree with reason to disagree with

Defendants, who who rightly point

point out

out that Plaintiff

PIaintiffDaniel

Danielsuspected

suspected foul play on behalf of Defendant

David back David back in in 2010

2010 but

but chose

chose not

not to report it.

to report it. Guam

GuamCourts

Courts agree

agree that

that "if

"ifaasuspicion

suspicion exists,

exists, the

plaintiff plaintiffcannot cannot sit back and wait for for the

the facts to find him

him as

as the burden of finding

finding the

the facts

facts falls

upon hi hiss sshoulders."

." Gayle v. Heml ani , 2000 Hemlani, 2000 Guam 25,1],r 24 Guam25, 24 (ci tati ons omitted). Further, "the (citations

statute of of limitations limitations will

will begin

begin to

to run

run when

whenthe

the plaintiff

plaintiffsuspects

suspects or

or should

should suspect his injury suspect that his injury

was caused u s e d by b y wrongdoing

w n g d o i n g or

o r thatt someone

o m e o n e has

h a s done

d o n e something

s o m e t h i n gwrong h i m . " Id.

w r o n gtot o him." I d ((citing

c

CV! 126-16 CV1126-16 DECISION DECISION AND

AND ORDER

ORDER GRANTING

GRANTINGRULE

RULE12(B><2) MOTION TO DISMISS 12(B)(2) MOTION DISMISS 18 Page 18 Page

AND GRANTING AND GRANTING IN

IN PART

PART RULE

RULE 15(A) MOTION FOR LEA LEAVE TO AMEND

VE TO AMEND

THE COMPLAINT

COMPLAINT

Custodian Custodio v.v.Boonprakong Boonprakong et.

et. al.,

al., 1999 Guam 5, ,r 27). Therefore, the First Cause ofof Action 5, 1]27). c Count

II (Fraudulent (Fraudulent Breach of of Fiduciary

Fiduciary Duty)

Duty)isis barred

barred by

by the

the statute oflimitations.

limitations.

D. D. Can

CanPlain tiffs Amen

Plaintiffs Amendd ththe

e Co mp lain t ififth

Complaint eir Claims their Claims Are

AreDismissed

Dismissed?

Plaintiffs Moves Mov es the Court for leave to to Amend

Amend the Complaint pursuant uant to

to Guam

Guam Rule

Rul of

of

Civill Procedure Procedure 15.

15. Guam Rules of

of Ci vi l Procedure

Civil Procedure Rul

Rulee l15(a)

5(a) provi des that

provides that aa party

party must

must seek

seek

leave from the the court

court to

to amend

amend aa complaint

complaintonce

once an

an answer

answer has but that such leave "shall has been filed, but "shall

be freely given when justice so so required."

required." Guam

Guam Rule

Rule of

of Civil Procedure Ru

Rule l5(a)

15(a) isis identical

identical to

Federal Rule Rule of of Civil

Civil Procedure

Procedure 15(a).

l5(a). InArashi

In & Co., Inc. v.

v. Nakashima Enterprises, Inc., Inc., 2005

Guam 21, the Supreme Supreme Court

Court of

of Guam

Guam provided a framework framework for determining determining whether

whether to

to grant or

deny n y leave a v e to t o amend

m e n d aa pleading

p l e a d i n g under

u n d e r Rule

Ru l e 15(a)

l ) of the Guam Rules of Ci v i l PProcedure Civil ro c by

adopting the rationale in Farnan oman v. Davis, 371 U.S. 178 178 (year). The United States States Supreme

Supreme Court

Court

determined determined in Farnan o m that leave to amend should always be liberally granted.

granted. However,

However, the court

must review certain certain factors which

which may

may properly

properlylead

lead aa court

court to deny leave to amend. Arashi, a 2005

Guam 21 ,r 16.

21 11 16.Foman Foman identified

identified the

the following

following four

four factors:

factors: "undue

"undue delay,

delay, bad faith or dilatory dilatory

motive motive on on the the part of

of the

the movant,

movant, repeated failure to cure deficiencies by by amendments previously

previously

allowed, undue prejudice to the opposing i ng party

party by virtue of allowance of the the amendment,

amendment, [or]

futility of of amendment."

amendment." Farnan,

om 371 U.S. at 182.

does not

The Court does not detect detect any bad

bad faith

faith or

or dilatory

dilatory motive on the

the part of the

part of the Plaintiffs,

Plaintiffs;

however, the Plaintiffs ai nti ffs have

hav e already

al ready amended

amended the

the Complaint

Compl ai nt twice

twi c e now.

now. See

ee Verified

V eri fi ed Comp!.

Comal

(D e c e m b e r 220, ·(December 0 22016);

0 ), First Am. VVerified

e ri f i e d CComp!.

o n l (A p ri l 110,

(April 0 , 22017);

0 1 ), aand Secondd Am. Verified e ie

Con pl. (August Comp!. (August 26, 26, 2019).

2019). This

This weighs

weighs against

against Plaintiffs

Plaintiffs regarding the "repeated failure to cure

deficiencies" factor in Farnan. deficiencies" factor oman. Given that Defendants have have not

not argued

argued that

that they

they will

will be

be "unduly

"unduly

prejudiced,"

ced," however, the Court lleans eans toward al owi ng Pl

allowing ai nti ffs one Plaintiffs one l last

ast chance

chance to amend the

cv1126-16 CV! 126-16 DECISION AND AND ORDER GRANTING

GRANTING RULE

RULE 12(8)(2)

l2(B)(2) MOTION TO DISMISS Page 19 Page

AND GRANTING IN PART RULE 15(A) MOTION FOR LEA LEAVE TO

TO AMEND

AMEND

THE COMPLAINT

Complaint. Complaint. IfIfthe the Plaintiffs

Plaintiffsfail

failon

ontheir

theirthird

thirdamendment,

amendment,however,

however,the

the Court

Courtdoes

does not

not recommend

that there be a fourth.

fourth. One

One last

last chance

chance at

at amending

amending the

the Complaint

Complaint means

means one

one last

last chance

chance at

amending theComplaint. amending the Complaint.Finally, Finally, the

theCourt

Courtwill

will not

not grant leavetotoamend

grantleave amendthe

the FirstCause

First Causeof fAction

Action

(Fraudulent Breach of Fiduciary Fiduciary Duty),

Duty), because

because the Court found

found that

that both

both counts

counts were barred by

statue of the statue of limitations.

limitations. Therefore,

Therefore, amending

amending the

the First

First Cause

Causeof

of Action

Action (Fraudulent Breach of (Fraudulent Breach of

Fiduciary Duty) would be "futile"

"futile" under the

the Foman factors.

E. CONCLUSION

CONCLUSION AND

AND ORDER

Based Based on on the foregoing, the Court GRANTS Defendant's Motion to to Dismiss

Dismiss the

thePlaintiffs

Plaintiffs

Claims Regarding the First Cause of Action, both Cause of both Counts, Counts, and die

the Second Cause

Cause of

of Action, and

also GRANTS IN PART Plaintiffs Plaintiffs Motion

Motion for

for Leave

Leave to

to Amend

Amend the Complaint. Any Amended

Pleadings shall shall be

befiled

filed within

within Sheen of this order.

fifteen (15) days of order. A A Further

Further proceedings shall proceedings hearing shall

be be heard I on o01w lDo2-z\ l1AJ heard on | 1

ww L ~l at °l*00 1 :00 nm. l VIG\

61 rn_ L I M trorvi)

w e .

~

SO ORDERED, this ORDERED,this ?f To, ,wI U

day of

of f\(, 2024.

\

Holigf HO~ OHN c;aT ETQLAJE Jud§é Judg_ Sdperidr Burt of Guam :-:-:-:

_¢. -1 :__t~_-_--:-:- :·~:~ / '~ ,,.-

-_-,,

/,,,. _ .5:-

¢~ .. 06 ,,...- / -.

. '.-:-·»,,

....-. 1,,-. _

--, _ __ 1

:.