Herring v. Herring

• Court: Superior Court of Guam
• Decided: June 7, 2024
• Docket: CV1126-16
• Status: Unknown

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-for- jurisdiction/ingredient-of-claim-for- relief 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<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.

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