5 IN THE SUPERIOR COURT OF GUAM 6
7 BARRY HONDA, ) CIVIL CASE NO. CV1895-09 ) 8 Plaintiff, ) ) DECISION AND ORDER 9 v. ) 10 ) LAWRENCE S. YOSHIDA, ) 11 ) 12 Defendant. )
l3
15 INTRODUCTION
16 This matter came before the Honorable Arthur R. Barcinas on the 14th day of 17 September, 2012, for hearing on the Defendant's Motion for Summary Judgment. Attorney 18 Thomas M. Tarpley represented the Plaintiff, and Attorney Jacqueline Taitano Terlaje 19
20 represented the Defendant. The Court now issues the following Decision and Order on the
21 matter presented. 22 DISCUSSION 23 Summary judgment should be granted when no material facts are in dispute and the 24 moving party is entitled to judgment as a matter of law. Iizuka Corporation v. Kawasho 25
26 International (Guam), Inc., 1997 Guam 10 ~ 8. The burden is always on the moving party and
27 the court must review the facts in the light most favorable to the non-moving party. Id. If the 28 movant can demonstrate that there exists no genuine issue of material fact, the non-movant Decision and Order Civil Case No.
cannot rely upon assertions contained in the complaint, but must produce ;:'l~l1Hl\';ill1L
2 II probative evidence tending to support the complaint. "[T]he mere CA1;)lCll\,;C
3 factual dispute between the parties will not 4 summary judgment; the requirement is that there be no genuine issue of material fact." LJUlll'- v " ,
5 '-'\.KUU y ... LV'''':>, 2004 Guam 25,30 (quoting L U ..... "'.. ..,vu v. '-..duvUT L.J\.."-'Vl', .LUV.,
6 247-248 (1986)). Whether a fact is material is determined by the governing substantive law; if 7
8 the fact may affect the outcome, it is material. However, "[fJactual disputes that are irrelevant
9 or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 10 (1986). II The first issue in this case is whether there was a breach of a valid written contract 12
13 between the parties, consisting of a 1995 Promissory Note executed by the Defendant in favor
14 of the Plaintiff. The second issue in this case is whether there was a breach of a valid written 15 contract between the parties, consisting of a 2009 Agreement executed by the Plaintiff in favor 16 of the Defendant. The Defendant has moved for summary judgment as to both issues, 17 requesting summary judgment against the Plaintiff on the Plaintiff's claim of breach of contract, 18
19 and requesting summary judgment in his own favor on his counterclaim of breach of contract.
20 Therefore, the law of contracts directs the facts that are material to this case. 21 The moving party carries the burden of showing the court the relevant information 22 which it believes demonstrate the absence of an issue of material fact. The moving party is not 23 required to negate each element of the non-moving party's case. Rather, the moving party 24
25 satisfies and discharges its burden by establishing the absence of evidence to support the non-
26 moving party's case. 2000 Guam 27,7; and 1997 27 Guam 11 ~ 6 (citing 477 U.S. 317, 325 (1986)). 28
20f23 Decision and Order Civil Case No. CV 1895-09
If a lack of evidence is established by the moving party, the non-moving party mus
2 present specific facts showing there is a genuine issue for trial. The non-moving party may no
3 rely on conclusory allegations contained in the pleadings, but must present some significan1 4 probative evidence tending to support the assertions. Id. 5 "[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after 6 adequate time for discovery and upon motion, against a party who fails to make a showing 7
8 sufficient to establish the existence of an element essential to that party's case, and on which tha1
9 party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 10 There can be no "genuine issue of material fact" ifthere is a complete failure of proof concerning 11 an essential element of the nonmoving party's case, since such failure renders all other facts 12
13 immaterial. Id., at 323.
14 In Guam, "[ a] breach of contract claim consists in allegation of the following elements:
15 (1) the contract; (2) plaintiff's perfonnance of the contract, or excuse for nonperfonnance; (3) 16 defendants' breach; and (4) the resulting damage to plaintiff." Marianas Hospitality Corp. v. 17 Premier Business Solutions, Inc., Civil Action No. 07 00002, Order Re: Defendant's Motions to 18
19 Dismiss, *9 (D. Ct. Guam January 14, 2009) (citing to Reichert v. General Ins. Co., 68 Cal.2d
20 822,830,69 Cal.Rptr. 321,442 P.2d 377 (1968). 21 A) Plaintiff's Claim of Breach of Contract 22 "A contract is an agreement to do or not to do a certain thing." 18 GCA § 85101 (2012). 23 The elements of a contract on Guam are: 1) parties capable of contracting; 2) consent of the 24
25 parties; 3) a lawful object; and 4) sufficient consideration. 18 GCA § 85102 (2012); see also
26 BIas v. Cruz, 2009 Guam 12 ,-r 18. In order to fonn a valid contract, it is also essential that the 27 parties be identifiable. 18 GCA § 85203 (2012). 28
Page 3 01'23 Decision and Order Civil Case No. CV1895-09
In this case, the parties are identified and have executed consent to the 1995 Promissory
2 Note in their own names. Thus, the instrument itself purports to bind both the Plaintiff and the
3 Defendant. PlaintitT and Defendant are named as parties to the agreement, and the express 4 terms of the agreement indicate that both executed the agreement on their own behalf. Under 18 5 GCA § 20308, an intent to bind the Plaintiff and the Defendant can be found within the 6 document. On the face of the document, the parties were capable of contracting, the agreement 7
8 II contained a lawful object, and also sufficient consideration. Most importantly, it is duly
9 executed and acknowledged, and the Defendant does not argue or contest that he entered into a 10 valid contract when he and the Plaintiff signed the1995 Promissory Note. Cf. BIas v. Cruz, 11 2009 Guam 12 'J'J18-20. Accordingly, at first glance, the 1995 Promissory Note constitutes a 12
13 valid contract under Guam law.
14 The Defendant has moved for summary judgment in his favor on the Plaintiff s claim for
15 breach of contract on the grounds that although the 1995 Promissory Note was previously valid, 16 it was rescinded by written agreement in 2009, and was thereafter invalid, and he did not breach 17 the 1995 Promissory Note prior to 2009, during the time that it was valid. 18
19 "A contract is extinguished by its rescission." 18 GCA § 89201 (2012). Because the
20 parties entered into a valid contract, the Defendant must show that she is entitled to rescind the 21 contract on the basis of a justifying reason. Under Guam law, a written contract may only be 22 rescinded "on the application of a party aggrieved: (1) In any of the cases mentioned in 18 GCA 23 § 89203; or, (2) Where the contract is unlawful, for causes not apparent upon its face, and the 24
25 parties were not equally in fault; or (3) When the public interest will be prejudiced by
26 permitting it to stand." 20 GCA § 3240 (2012). 27
Page 4 01'23 Decision and Order Civil Case No. CV1895-09
Under Chapter 89 of Title 18, as referenced by 20 GCA § 3240, a court may grant
2 rescission of a written agreement upon a showing of anyone of the following reasons:
3 1. If the consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, or obtained through duress, menace, fraud or undue 4 influence, exercised by or with the connivance of the party as to whom he 5 rescinds, or of any other party to the contract jointly interested with such party; 2. If, through the fault of the party as to whom he rescinds, the consideration of his 6 obligation fails, in whole or in part; 3. If such consideration becomes entirely void from any cause; 4. If such consideration, before it is rendered to him, fails in a 7 material respect, from any cause; or 5. By consent of all other parties. 8 18 GCA § 89202 (2012). 9 Although the term "novation" was not used by the parties in arguing whether the 2009 10
11 agreement rescinded the 1995 Promissory Note, this legal concept is operative in this case. A
12 novation "is the substitution of a new obligation for an existing one." 18 GCA § 82501 (2012). l3 This statute and its related statutes were adopted from, and are identical to California Civil Code 14 § 1530 et seq. ("Novation is the substitution of a new obligation for an existing one."). When a 15
16 Guam statute is based on an identical California statute, California cases interpreting that statute
17 are highly persuasive, and the Court must follow California precedent unless there is a 18 compelling reason to deviate from the California law. Cruz v. Cruz, 2005 Guam 3 ~ 9; and 19 Fajardo v. Liberty House Guam, 2000 Guam 4 ~ 17. 20 Novation of a contract occurs in one of two ways under Guam law. "The first is by 21
22 'replacement of an unexpired contract by another contract reached through renegotiation .... '"
23 Pangelinan v. Gutierrez, 2004 Guam 16 ~ 24 (quoting Williams Petroleum Co. v. Midland 24 Coops., 679 F.2d 815, 819 (lOth Cir.1982)); see also 18 GCA § 82502 (2012) ("Novation is 25 made ... [b]y the substitution of a new obligation between the same parties, with intent to 26 extinguish the old obligation"). The substitution is by agreement and with the intent to 27
Page 5 of23 Decision and Order Civil Case No. CV 1895-09
extinguish the prior obligation. Cal.Civ.Code, §§ 1530, 1531; see also 1 Witkin, Summary of
2 Cal. Law (9th ed. 1987) Contracts, § 906, p. 811.)
3 Only this first type of novation is implicated in this case. Defendant contends that the 4 1995 Promissory Note was renegotiated and replaced by the parties' subsequent written 5 agreement made in Febmary of2009, thus invalidating it. 6 "Novation is made by contract, and is subject to all the mles concerning contracts in 7
8 general." Cal. Civ.Code, § 1532. A novation thus amounts to a new contract which supplants
9 the original agreement and "completely extinguishes the original obligation.... " 1 Witkin, supra, 10 § 906, p. 811, emphasis in original; see Beckwith v. Sheldon, 165 Cal. 319,323,131 P. 1049 11 (1913). 12 "[R]egardless of the extent to which a contract is modified, a novation cannot be found 13
14 unless it be shown that the parties intended and agreed to extinguish the original contract."
15 Pangelinan v. Gutierrez, 2004 Guam 16 'Il 24 (quoting Howard v. County of Amador, 220 16 Cal.App.3d 962, 269 Cal.Rptr. 807, 817 (Ct.App.l990)). "A change in contractual terms alone, 17 no matter how substantial, is not sufficient to support a finding of novation." Id. It must 18
19 "'clearly appear' that the parties intended to extinguish rather than merely modify the original
20 agreement." Howard, 220 Cal.App.3d at 977. 21 1) Acquiescence and Waiver Through Acceptance and Subsequent Conduct 22 18 GCA § 87105, concerning the interpretation of written contracts states, "[w]hen a 23 contract is reduced to writing, the intention of the parties is to be ascertained from the "'Titing 24
25 alone, if possible .... " 18 GCA § 87105 (2012). Further, pursuant to 18 GCA § 86107, "[t]he
26 execution of a contract in writing ... supersedes all the negotiations or stipulations concerning 27 its matter which preceded or accompanied the execution of the instmment." 18 GCA § 86107 28
Page 6 of23 Decision and Order Civil Case No. CV 1895-09
(2012). Thus, where the parties express their agreement in writing, any oral agreements or
2 discussions made contemporaneously or prior to the writing may only be collaterally considered
3 in determining the intent of the parties, and then only if the agreement itself is silent. See also 6 4 GCA § 2511 (2012). 5 The express provisions of the 2009 Agreement are silent as to its effect on the 1995 6 Promissory Note. Thus, the Court appears to be without evidence as to the intent of the parties 7
8 with regards to these contracts. However, the Defendant has produced undisputed evidence that
9 the Plaintiff acted in conformity with the rescission of the original 1995 Agreement, by 10 accepting a return of consideration, making payments due under the 2009 Agreement, and 11 failing to make any further demands under the 1995 Agreement, which would show an intent to 12
enforce the 1995 Agreement. "[A]n intention to substitute a new obligation for an existing one 13
14 may be gathered from the statements and conduct of the parties under all the circumstances of a
15 particular case .... " Pangelinan v. Gutierrez, 2004 Guam 16 ~ 28 (quoting Swift v. Allan, 211 16 Md. 588, 128 A.2d 260, 263 (Md.1957))(distinguished on other grounds by 17 San Miguel v. Department of Public Works, 2008 Guam 3 ~ 11). 18
19 In California, a novation under CCP § 1530 may be determined solely by a party's
20 objective manifestations, and it may be inferred from one party's silence, acquiescence, or 21 inaction in the face of a subsequent agreement. Fanucchi & Limi Farms v. United Agri 22 Products, 414 F.3d 1075, 1082 (9th Cir. 2005) ("Indeed, "it is not necessary to meet and state 23 either in writing or orally that the original contract was rescinded. 'If the intent to abandon can 24
25 be ascertained from the acts and conduct of the parties the same result will be attained.
26 Abandonment may be implied from surrounding facts and circumstances.' " (quoting Hunt v. 27 Smyth, 25 Cal.App.3d 807, 818 (Cal. Ct. App. 1972) (quoting Tucker v. Schumacher, 90 28
Page 70f23 Decision and Order Civil Case No. CV1895-09
CaLApp.2d 71, P.2d 327 (1949)); see F.3d 493,
2 11 497 (8th Cir. 2003)(intent to alter a contract by party's actual conduct, not
3 subjective understanding); !d!yru~~~Q.:illltYJ;g~QLill~ID~~.l11[Q!!ru1~~;!L~~.-.L. 4 ~~~~~!:l!!....~~~~24.~~~~!L.!:~~~±!:.!" 24 F.2d 671, 687 (5th Cir. 5 1994)(the subsequent actions of parties to a contract can modify the contract to the extent 6 consistent with the subsequent course of conduct); 1-~~ ~ ~_~~I'" ~~. .. ~ ~_UU 4 . _•• ~_~. _ 7
8 Trust Co., Wichita, 333 F.2d 822, 825 (10th Cir. 1964)(abrogation of contract may be implied 9 by parties' subsequent conduct). to Novation may be shown through acquiescence of the objecting party, because parties 11 may waive a contract's stated method of modification, rescission, or any other rights guaranteed 12
13 to them under a contract. Cousineau v. Norstan, Inc., 322 F.3d 493, 497, n.3 (8th Cir. 2003);
14 Universal CoLT. Credit Corp. v. Stewart, 262 F.2d 745, 749, n.6 (5th Cir. 1959). 15 Consequently, the court need not rely ~pon the subjective statements of intent of the 16 parties, as it may determine whether it clearly appears that the parties intended to extinguish and 17 replace the 1995 Agreement with the 2009 Agreement based upon the subsequent conduct of 18
19 the parties in conformity with either the original agreement or the subsequent agreement.
20 Pangelinan v. Gutierrez, 2004 Guam 16 , 28; see also 1 Witkin, Summary of CaL Law (9th ed. 21 1987) Contracts, § 689, p. 622 [contract's meaning may be established by parties' subsequent 22 conduct alone]. The Court may conclude that the Defendant was relieved of any obligations 23
24 under the 1995 Promissory Note from the parties' subsequent conduct, particularly by entering
25 into the 2009 and the subsequent acts of the parties in conformity therewith. 26 Defendant has produced undisputed evidence showing that the Plaintiff acted in 27 conformity with the provisions of the new contract and a waiver of the original 1995 28
PageS of23 Decision and Order Civil Case No. CY 1895-09
Promissory Note by issuing checks to the Defendant pursuant to the new contract in exchange
2 for the accepted return of the consideration underlying the 1995 Agreement, and by the
3 cessation of demand for any payment allegedly still owed under the original 1995 obligation. 4 Plaintiff's conduct in negotiating a new contract for the return of the original consideration 5 underlying the 1995 Promissory Note, accepting the return of the consideration, making 6 payments to the Defendant in consideration for the return, and ceasing to make any demands for 7
8 the original amount due after the signing of the new 2009 Agreement are all inconsistent with
9 an action or intent to enforce any obligations purportedly still owed by the Defendant under the 10 original 1995 Promissory Note. II Defendant has provided evidence of the new written 2009 Agreement with the Plaintiff 12 and evidence showing that the Plaintiff accepted the return of consideration and issued checks 13
14 to the Defendant for eleven months, without demanding a single payment from the Defendant
15 under the 1995 Promissory Note. Defendant's Exhibits 1 and 2. This evidence and the 16 admissions of the Plaintiff reflect a new, changed agreement and acquiescence on the part of the 17 Plaintiff with the terms of the 2009 Agreement as a novation. Defendant's Exhibit 2. Plaintiff 18
19 does not dispute any of these facts. Consequently, the Defendant has met his initial burden of
20 proof showing that the 1995 Promissory Note was invalid after the execution of the 2009 21 Agreement. 22 Next, thc Defendant has introduced the evidence of the 1995 Promissory Note, which 23 states in relevant part: 24
25 Payment of Note. This note shall be paid in installments until the principal on this note is fully paid as follows: Each dividend or bonus payment due Promisor from 26 Gum(sic) Transport and Warehouse, Inc. (corporation)(hereinafter "GWT") shall be paid directly to the Promisee as an installment payment toward the outstanding 27 balance of this note. 28
Page 9 of23 Decision and Order Civil Case No. CV 1895-09
Dep. of Barry Honda, Exhibit 4, 1995 Promissory Note (filed December 30,2011).
2 This language establishes that the payments on the balance of the 1995 Promissory Note
3 were to be paid exclusively from any dividends or bonuses received by the Defendant. The 4 default provision of the 1995 Promissory Note then specifically provided that the Plaintiff, as 5 the Promisee of the Note, could require and demand a lO-day accelerated payment in full on the 6 note, but only "[i]f promisor shall default in the payment of principal, when due under this 7
8 note." Id.
9 The clear and unambiguous language of the note requires that payments on the note 10 were only due if, and when a bonus or dividend payment was due to the Defendant from GWT. 11 Default could only occur if the Defendant received a bonus or dividend payment from GWT 12
13 and did not pay those proceeds directly to the Plaintiff.
14 The Defendant has introduced evidence and the admission of the Plaintiff in his sworn
15 deposition testimony that no bonus or dividend payments were ever made to the Defendant. 16 Thus, the Defendant has further established that he did not breach the 1995 Promissory Note. 17 Once a lack of evidence to support the plaintiff s case is established by the moving 18
19 party, the plaintiff must affirmatively present specific facts showing that there is a genuine issue
20 for trial. The plaintiff may not rely on conclusory allegations, but must present some significant 21 probative evidence tending to support the assertion of fact. Id. 22 This burden shift is iterated within the particular language of Rule 56. Rule 56(e) 23 requires that: 24
25 When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the 26 adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a 27 genuine issue for trial. If the adverse party does not so respond, summary 28 judgment, if appropriate, shall be entered against the adverse party.
Page to of23 Decision and Order Civil Case No. CV1895-09
GRCP Rule 56(e)(2012)(emphasis added). 2 Affirming the burden shift of Rule 56, the United States Supreme Court has established 3 that in cases where the non-movant will bear the ultimate burden of proof on a certain issue at 4
5 trial, in the face of evidence showing an absence of evidence to support an essential element of
6 the claim, the non-movant must provide the court with sufficient evidence to show that the non- 7 movant can prevail at trial. As observed by the highest court: 8 In our view, the plain language of Rule 56( c) mandates the entry of summary 9 judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element 10 essential to that party's case, and on which that party will bear the burden of proof 11 at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the 12 nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to a judgment as a matter of law" because the 13 nonmoving party has failed to make a sufficient showing on an essential element 14 of her case with respect to which she has the burden of proof.
15 Celotex Corp. v. Catrett, 477 U.S. 317,322-23 (1986). 16 In bringing this motion for summary judgment, the Defendant has produced evidence 17 indicating the absence of proof on one or more essential elements of Plaintiff s case of breach of 18
19 contract, namely, he has provided evidence that the 1995 Promissory Note was no longer valid
20 after the execution of the 2009 Agreement. In addition, the Defendant has provided evidence 21 that he never defaulted on the 1995 Promissory Note. Thus, the burden has shifted to the 22 Plaintiff to produce admissible evidence showing that there is a material issue of fact for trial
regarding the validity of the contract and the Defendant's breach of that contract. 24
25 2) Excluded Inadmissible and Discredited Evidence of Plaintiff Barry Honda
26 The Plaintiff presents two arguments in opposition to show that there are material issues 27 of fact for trial on his breach of contract claim: (1) that the Defendant breached the 1995 28
Page 11 of23 Decision and Order Civil Case No. CVI895-09
contract by to pay over lU\;iUUi:> from GTW, resulting in the Defendant's
2 II default on 1995 Promissory and pennitting Plaintiffs demand for the remaining
3 II sum in full on 2009; and (2) 4 The Plaintiff has provided sworn deposition testimony that no dividends or bonuses 5 were ever paid to the Defendant from GWT, but he argues that this is immaterial, because he 6 has shown that there is a material issue of fact regarding his breach of contract claim by 7
8 declaring "on infonnation and belief' the Defendant may have received payments from GWT.
9 He further argues that there is a material issue of fact because he has provided his own 10 testimony that he demanded payment in full on the note from the Defendant in February of 11 2009, but the Defendant did not pay him in full, and that the subsequent February 2009 12 Agreement was not intended to abrogate or rescind the Defendant's obligation to him under the 13
14 1995 Promissory Note. 15 Rule 56, as supplemented by CVR Rule 7.1(d)(I)( C) of the Local Rules of the Superior 16 Court of Guam, requires that motions for summary judgment and oppositions to summary 17 judgment be accompanied and authenticated "by affidavits or declaration of persons with
:: II personal knowledge through whom they could be introduced at triaL" LAJi:>!Q,VV v. H l '..-£1
20 II Distributing Corp., 693 F.2d 870, 883 (9th Cir.1982), cert. denied, 460 U.S. 1085 (1983); see
21 also 398 U.S. 144, 159 (1970); Piper v. United States, 392 F.2d 22 462,464 (5th Cir. 1968); 559 F.2d 1282, 1285 n. 5 (5th Cir. 1977); 6 Moore's 23 Federal Practice P 56.11(L 8), at 207 (2d ed. 1948); id. P 56.22(1), at l304; 10 C. Wright & A. 24
25 Miller, Federal Practice and Procedure: Civil § 2738.
26 GRCP Rule 56(e) specifically and unequivocally restates this proposition; "[s]upporting 27 and opposing affidavits shall be made on personal knowledge, shall set forth such facts as 28
12 of23 Decision and Order Civil Case No. CV1895-09
would be admissible in evidence, and shall show affirmatively that the affiant is competent to
2 testify on the matters stated therein." GRCP Rule 56( e).
3 Although the rule specifically references "affidavits," for the purposes of GRCP Rule 4 56(e), "since 1982 on Guam, and 1976 under Federal law, unsworn declarations under penalty 5 of perjury are statutorily equivalent, with limited exceptions, to affidavits." Duenas v. Yama's 6 Co., Inc., Civ. No. 90 00062A, 1991 WL 255834, *5 (D.Guam App.Div. 1991)(citing 6 GCA § 7
8 4308; 28 U.S.C. § 1746; Carter v. Clark, 616 F.2d. 228 (5th Cir.1980); and Dickinson v.
9 Wainwright, 626 F.2d. 1184 (5th Cir.1980). 10 It is clear that under Rule 56, a party must "go beyond the pleadings and by her own 11 affidavits, or by the 'depositions, answers to interrogatories, and admissions on file,'" 12 demonstrate proper evidentiary support for its factual allegations. Celotex COl:p. v. Catrett, 477 13
14 U.S. 317, 324 (1986). Rule 56(e) specifically requires any allegations or exhibits to be
15 submitted in a form which would be admissible at triaL 16 The testimony of Plaintiff Barry Honda may be disregarded for two reasons: (1) certain 17 material statements made by Plaintiff Barry Honda in his declaration are sworn "on information 18
19 and belief," rather than personal knowledge, and are therefore, inadmissible under Rule 56; and
20 (2) these material statements made on information and belief were submitted in order to directly 21 contradict Plaintiff Barry Honda's previous sworn deposition testimony in order to create a 22 material issue of fact for trial, thus permitting the Court to disbelieve and reject Plaintiffs 23 subjective and discredited testimony in determining this motion for summary judgment. 24
25 a) Information and Belief is Not Personal Knowledge
26 In the declaration submitted by Plaintiff Barry Honda in opposition to the Defendant's 27 motion for summary judgment, he states; "[u]pon information and belief, Defendant Yoshida 28
Page 13 of23 Decision and Order Civil Case No. CV1895-09
has received payments from GTW and failed to apply the payments against the balance of the
2 Note." Honda v. Yoshida, Civil Case No. CV1895-09, Decl. of Barry Honda in Support of
3 Opposition to Defendant's Motion for Summary Judgment, p. 2, ~ 6 (filed June 24.2011). This 4 statement is not based on personal knowledge in order to properly dispute the fact for the 5 purposes of summary judgment. 6 It is well-settled that any evidence submitted in opposition to a motion for summary 7
8 judgment must be contained in the declaration or affidavit of a person which is "made on
9 personal knowledge, shall set forth facts which are admissible in evidence, and shall show 10 affirmatively that the affiant is competent to testifY to the matters stated therein," or that 11 evidence cannot be considered by the Court. GRCP Rule 56(e)(emphases added); Adickes v. 12 S.H. Kress & Co., 398 U.S. 144, 158 n. 17 (1970); Woloszyn v. County of Lawrence, 396 F.3d I3
14 314,323 (3rd Cir. 2005); and Evans v. Technologies Applications & Service Co., 80 F.3d 954,
15 962 (4th Cir. 1996). 16 At best, the statement of Barry Honda sets forth a subjective and speculative belief to 17 create an issue of fact as to whether the Defendant was in default of the original 1995 18
19 II Promissory Note. This submission, as stated, is not based on facts within his personal 20 II knowledge. It is based on some unknown "information" or "belief." No other evidence or 21 testimony has been provided to show that Barry Honda has any personal knowledge which 22 would support this statement, and therefore, it cannot be used as competent evidence in 23 opposition to the Defendant's properly supported motion for summary judgment. Hotel & 24
25 Restaurant Employees' Alliance, Local No. 237, of the Hotel & Restaurant Employees' Int'l
26 Union & Bartenders' Int'l League of America, AFL-CIO v. Allegheny Hotel Co., 374 F.Supp. 27 1259, 1263 (Dist. Ct. Pa. 1974) (Affidavits that stated the belief of the affiant, contained 28
Page 14 of23 Decision and Order Civil Case No. CV1895-09
opinions, were based on hearsay and expressed only conclusions, were insufficient and could
2 not be considered on a summary-judgment motion); see also Applegate v. Top Assocs., Inc.,
3 425 F.2d 92, 96-97 (2d Cir. 1970)(Plaintiffs statements that he personally believed that the 4 signature on his wife's affidavit was a forgery and that the plaintiff in the Nevada divorce 5 proceeding was an impersonator could not rebut contrary factual evidence that wife had signed 6 affidavit and therefore, judge was required to grant summary judgment against plaintiff); 7
8 Newhouse v. Probert, 608 F.Supp. 978, 983, Dist. Ct. Mich. 1985) (A declaration offered by
9 plaintiff admitting that the information was "not first hand" but was merely "believed to be true 10 given the sources and the duplication of sources" was a declaration based entirely upon hearsay 11 evidence, rather than personal knowledge and was insufficient under Rule 56 to create a genuine 12
issue of material fact); Great W. Sugar Co. v. Mrs. Allison's Cookie Co., 563 F.Supp. 430, 432 13
14 (Dist. Ct. Mo. 1983)(Affidavits submitted with respect to a summary-judgment motion that were
15 based only on information and belief and not on personal knowledge would be stricken for 16 failure to comply with Rule 56); and Lark v. West, 182 F.Supp. 794, 798 (Dist. Ct. D.C.), ajJ., 17 289 F.2d 898 (D.C. Cir.) cert. denied, 368 U.S. 865 (1961) (A statement in an affidavit that a 18
19 report "contains matters which must be of prejudicial nature" was at best a belief, which was not
20 equivalent to personal knowledge, and could not defeat properly supported summary judgment 21 motion)(emphasis in original). 22 b) Directly Contradicting Statements With No Explanation 23 Perhaps more importantly, it is apparent that this statement has been fabricated to create 24
25 a material issue of fact, but is not sworn or declared as true to avoid the penalty of perjury. This
26 is because the Plaintiff previously testified at deposition, under oath, that GWT "never issued 27
Page 15 of23 Decision and Order Civil Case No. CV 1895-09
any lUI;,;;UU':' or LJLJllU':'I;,;;,:, to the Defendant. Dep. of Barry Honda, p. 31, lines (filed
2 II December 2011).
3 federal circuit court appeals has addressed the issue of whether a party may 4 create its own of fact and credibility by contradicting his or her own earlier testimony, in 5 order to survive a motion for summary judgment; and every circuit, without exception, has 6 found that a court should disregard a party's affidavit, declaration, or testimony in light of 7
8 previous contradictory sworn testimony, where no reasonable explanation is offered for the
9 contradiction between the two. Orta-Castro v. Merck, Sharpe & Dobme Quimica P.R., Inc., 10 447 F.3d 105, 110 (1st Cir. 2006); S.W.S. Erectors, Inc. v. Infax, Inc., 72 F.3d 489,495-96 (5th 11 Cir. 1996); Pyramid Securities Ltd. v. IB Resolution, Inc., 924 F.2d 1114, 1123-24 (D.C.Cir. 12 1991); Rohrbough v. Wyeth Laboratories, Inc., 916 F.2d 970, 975-76 (4th Cir. 1990); Farrell v. 13
14 Automobile Club of Michigan, 870 F.2d 1129, 1131-32 (6th Cir. 1989); Martin v. Merrell Dow 15 Pharmaceuticals, Inc., 851 F.2d 703, 705-06 (3d Cir. 1988); Franks v. Nimmo, 796 F.2d 1230, 16 1237 (lOth Cir. 1986); Babrocky v. Jewel Food Co. & Retail Meatcutters Union, 773 F.2d 857, 17 861 (7th Cir. 1985); Van T. Junkins and Associates, Inc. v. U.S. Industries, Inc., 736 F.2d 656, 18
19 11656,658-59 (lith Cir. 1984); 719 F.2d 1361, 1366
20 (8th Cir. 1983); Radobenko v. Automated Equipment Corp., 520 F.2d 540, 543--44 (9th Cir. 21 1975); and Perma Research & Development Co. v. Singer Co., 410 F.2d 572, 577-78 (2d Cir. 22 1969). 23 As reasoned in the landmark case of and adopted 24
25 by nearly every following circuit to address the issue:
26 If a party who has been examined at length on deposition could raise an issue of fact simply by submitting an affidavit contradicting his own prior testimony, this 27 would greatly diminish the utility of summary judgment as a procedure for 28 screening out sham issues offact. . . . The object of summary judgment is "to
Page 16 of23 Decision and Order Civil Case No. CVJ895-09
discover whether one side has no real support for its version of the facts," and thereby to avoid unnecessary trials. 2 Id. at 578 (quoting Community of Roquefort v. William Faehndrich, Inc., 303 F.2d 494, 498 (2d 3 Cir. 1962))(emphasis added). 4
5 Plaintiff has offered no explanation for the discrepancy between his previous sworn
6 testimony asserting that no dividends were ever paid out to the Defendant from GTW and thus, 7 the Defendant was not in default of his obligations under the 1995 Promissory Note, and his 8 later declaration "on belief' that dividends were paid out to the Defendant from GTW but were 9 never applied to the balance of the 1995 Promissory Note as required, which would thus support 10
11 his claim for breach of contract under the original note. The later declaration neither attempts to
12 explain nor clarify the direct and material contradiction between his earlier sworn testimony that 13 the Defendant was paid no dividends, and his later statement that the Defendant was paid 14 dividends. 15
16 This fact is crucial and material to the Plaintiffs claim for breach of contract. No
17 explanation at all is proffered for the Plaintiff s sudden change in statements. 18 Plaintiff has offered no admissible testimony or evidence to rebut the Defendant's 19 evidence that the Defendant did not breach the 1995 Promissory Note before it was rescinded 20 by novation in 2009, and explain to the Court why his later repudiation of his ovvn sworn 21
22 testimony, which supports the Defendant's evidence that there was no breach, was reasonable or
23 correct. Plaintiff has failed to create a genuine issue of material fact, because the information 24 contained in his declaration directly contradicts his previous sworn testimony stating that 25 Defendant never received any dividends from GTW, with no proffered explanation for the 26 contradiction. Given the conflicts between the Plaintiffs earlier testimony and later statements, 27
28 this Court is "left not with a genuine issue of material fact, but with trying to determine which
Page 17 of23 Decision and Order Civil Case No. CV 1895-09
of several conflicting versions of [the affiant's] testimony was correct." Rohrbough v. Wyeth
2 Laboratories, Inc., 916 F.2d 970, 976 (4th Cir. 1990). As a result of the failure to explain the
3 discrepancy between the original testimony and the later declaration, the Defendant's statements 4 may properly be disregarded by the Court. 5 The timing of the production of the Plaintiff's declaration is also highly suspect. Orta- 6 Castro v. Merck, Sharpe & Dohrne Ouimica P.R., Inc., 447 F.3d 105, 110 (1st Cir. 7
8 2006)( contradictory statements executed after previous sworn statements and submitted only to
9 defend against a motion for summary judgment may be distrusted as attempting to create sham 10 issues of fact); accord Manvil v. E.C. Gozum & Co., 1998 Guam 20 ~ 10 (contradictory 11 declaration executed two days after the filing of a motion for summary judgment did not create 12
an issue of fact). In this case, Plaintiff signed a declaration on June 24, 2011, more than a year 13
14 after he was deposed on the matter, on April 30, 2010, and the declaration was submitted only
15 as part of his Opposition to the Motion for Summary Judgment, filed on June 24, 2011. 16 Accordingly, the Court may distrust the incongruous declaration and find that it was produced 17 in an attempt to create an issue of material fact where none existed based upon his prior 18
19 testimony. Hence, the Court disregards the Plaintiff's declaration and statements as an attempt
20 to create a false issue of fact. 21 Taking the Plaintiff's previous sworn testimony on the issue as true, the evidence 22 establishes that there was no breach of the 1995 Promissory Note, because no payments from 23 the Defendant ever became due, based on the fact that no dividends or bonuses were ever issued 24
25 to the Defendant.
26 Because Plaintiff has failed to present any admissible evidence to show why the original 27 sworn deposition testimony by the Plaintiff should be superseded by his later, directly 28
Page 18 of23 Decision and Order Civil Case No. CV 1895-09
contradictory declaration, which was produced only in response to summary judgment, the
2 Court may disbelieve and disregard the Plaintiffs compromised testimony as attempting to
3 create sham issues of fact. See Perma Research & Development Co., 410 F.2d at 578 (quoting 4 Community of Roquefort, 303 F.2d at 498}("The object of summary judgment is 'to discover 5 whether one side has no real support for its version of the facts,' and thereby to avoid 6
unnecessary trials."). 7
8 In this case, the Court is left with only discredited testimony from the Plaintiff.
9 Accordingly, the Court disregards the declaration of the Plaintiff, and further disregards the 10 subjective and highly suspect testimony of the Plaintiff regarding his intent regarding both 11 contracts. 12 In further opposition to Defendant's proof that the 1995 Promissory Note was rescinded 13
14 by novation through the execution of the 2009 Agreement, based upon the Plaintiffs
15 acquiescence and waiver, the Plaintiff has produced no evidence that either the Plaintiff or 16 Defendant acted in conformity with the original Promissory Note after the execution of the 2009 17 Agreement, or that the Plaintiff insisted upon his rights under the original Promissory Note. 18
19 The undisputed evidence shows that the Plaintiff and Defendant acted under the terms of the
20 new written contract, and that the Plaintiff acquiesced in the rescission of the 1995 Promissory 21 Note by acting in accordance with the new 2009 Agreement, as would be required to show a 22 novation or waiver.
Persuasive to this Court's analysis of acquiescence is the legal maxim that a contracting 24
25 party who receives payment of money (or makes payment) in the performance of a contract,
26 with knowledge of a breach by the other party and without timely reservation of rights, such as 27 a written protest, waives the breach. Universal C.LT. Credit Corp. v. Stewart, 262 F.2d 745, 28
Page 19 of23 Decision and Order Civil Case No. CVJ895-09
749 (5th Cir. 1959); accord Westfed Holdings, Inc. v. United States, 407 F.3d 1352, 1360 (Fed.
2 Cir. 2005)(a party who knows of a breach, but accepts payment under a contract without protest
3 or reservation of rights, waives the breach); Jet Asphalt & Rock Co., Inc. v. Angelo Iafrate 4 Const. LLC, 431 F.3d 613, 617-18 (8th Cir. 2005)(a party to a contract who accepts the benefits 5 provided under the terms of the contract, and permits the other party to continue in breach 6 thereof, waives the right to insist on the breach); Havoco of America, Ltd. v. Sumitomo Corp. 7
8 of America, 971 F.2d 1332, 1338 (7th Cir. 1992)(continuous acceptance of benefits, after
9 learning of the other party's breach of contract constitutes a waiver of the breach). 10 The Plaintiff has failed to create a genuine issue of material fact because the information II contained in the deposition of Plaintiff Barry Honda does not contradict the evidence presented 12
showing that the Plaintiff acquiesced in umeservedly accepting the return of the shares for 13
14 which he was allegedly owed payments, and subsequently, without protest, making payments of
15 money to the Defendant in the amount calculated under the new written 2009 agreement at a 16 time when he had full knowledge of the Defendant's alleged breach of the original Promissory 17 Note. The depositions and declarations establish not only silence or inaction on the part of the 18
19 Plaintiff when the original Promissory Note was rescinded through novation, but actual action
20 in conformity of the rescission of the 1995 Promissory Note by issuing check payments to the 21 Defendant pursuant to the terms of the new 2009 written contract, and the cessation of demands 22 for payment under the original 1995 Promissory Note. 23 The Plaintiff response fails to address the evidence presented by the Defendant showing 24
25 that the Plaintiff assented and acquiesced in the terms of the contract, and waived any breach of
26 the original 1995 contract by acceptance of the return of the original consideration for the 27 Promissory Note from the Defendant and payments made to the Defendant for its return under 28
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the new 2009 written contract, with knowledge of the alleged breach. Plaintiff presents nothing
2 to rebut the objective evidence regarding the Plaintiffs actions offered by the Defendant, and
3 has only provided his subjective testimony regarding his thoughts as evidence to show that he 4 reserved his rights to pursue a breach of contract action on the original 1995 Promissory Note. 5 Plaintiff present no evidence showing that the Plaintiff made the payments under protest, or 6 non-acceptance of the original consideration of shares, to show that the Plaintiff did not assent 7
8 to a novation under the new 2009 contract, or did not waive any potential breach associated
9 with the alleged reservation of rights under the 1995 Promissory Note. 10 In this case, the Defendant has presented the required evidence to show that no genuine 11 issue of material fact exists based upon the Court's ability to disregard the suspect declaration 12 and testimony of the Plaintiff. In contrast, the Plaintiff has failed to set forth the required l3
14 opposition showing "by affidavits or as otherwise provided in this rule," why the Court should
15 ignore the inconsistency of his statements and accept the testimony of the Plaintiff. 16 Disregarding the self-serving and incongruous subjective statements of the Plaintiff regarding 17 his intent in executing the 2009 Agreement, the Plaintiff has failed to set forth "specific facts 18
19 showing that there is a genuine issue for trial." GRCP Rule 56(e).
20 Accordingly, the Court finds on the basis of the undisputed objective evidence of the 21 Plaintiff s actions, that the 2009 written agreement was a novation of the 1995 Promissory Note. 22 The Plaintiffs re-purchase and acceptance of the shares as the consideration underlying 23 completely extinguished Defendant's obligations to the Plaintiff, leaving the Plaintiff in debt to 24
25 the Defendant, as shown by the Plaintiffs subsequent partial payment of $11,000.00 to the
26 Defendant. Specifically, Defendant conveyed to the Plaintiff in 2009 all of his right, title and 27 interest in and to the shares of stock, which constituted a return of the consideration for the 28
Page 2101'23 Decision and Order Civil Case No. CVI895-09
original Promissory Note, and under the terms of the 2009 agreement, the Plaintiff agreed to be
2 bound by the new agreement and make re-payments to the Defendant. As to the requisite intent
3 to extinguish the prior obligation of the Defendant, the Plaintiff's actions speak more loudly 4 than his discredited words. Plaintiff began making re-payments to the Defendant at a time when 5 he claims that the Defendant owed him payments, and stopped making any demands for those 6 allegedly owed payments. 7
8 B) Defendant's Claim of Breach of Contract
9 Finally, the Defendant has moved for summary judgment in his favor on his own 10 counterclaim for breach of contract on the grounds that the written agreement of 2009 is a valid II contract in its own right, and that the Plaintiff has breached the 2009 Agreement by failing to 12
13 make payments to him after December of 20 10.
14 In the 2009 Agreement, the parties are identified and have executed consent in their own
15 names. Thus, the instrument itself purports to bind both the Plaintiff and the Defendant. 16 Plaintiff and Defendant are named as parties to the agreement, and the express terms of the 17 agreement indicate that both executed the agreement on their own behalf. Under 18 GCA § 18
19 20308, an intent to bind the Plaintiff and the Defendant can be found within the document. On
20 the face of the document, the parties were capable of contracting, the agreement contained a 21 lawful object, and also sufficient consideration. It is duly executed and acknowledged, and the 22 Plaintiff does not argue or contest that he entered into a valid contract when he and the 23 Defendant signed the 2009 Agreement. Accordingly, there is no argument that the 2009 24
25 Agreement constitutes a valid contract under Guam law.
26 Most importantly, the Defendant has presented testimony, and the Plaintiff has admitted 27 under oath, that the Plaintiff has not made payments to the Defendant as required under the 28
Page 22 of23 Decision and Order Civil Case No. CV1895-09
contract. The Plaintiff has further admitted that he still owes the Defendant $39,000.00 as the
2 balance of the amount due. Accordingly, the Court finds there is no issue of material fact for
3 the Court to determine at trial, and summary judgment is granted in favor of the Defendant as to 4 his counterclaim of breach of contract under the 2009 Agreement. 5 CONCLUSION 6 After considering the motion, the Court finds that the Defendant has provided objective 7
8 and admissible evidence that he did not breach the 1995 Promissory Note, and that the 2009
9 Agreement constituted a novation of the 1995 Promissory Note, which evidence the Plaintiff 10 has failed to rebut with credible, admissible evidence. Next, the Defendant has presented 11 evidence that the Plaintiff has breached the 2009 Agreement reached by the parties. The 12
Plaintiff has admitted these facts, and fails to even argue the point. Based upon the foregoing, 13
14 Summary Judgment is GRANTED in favor of the Defendant as to the Plaintiffs claim of
15 breach of contract on the 1995 Promissory Note, and as to the Defendant's counterclaim of 16 breach of contract on the 2009 Agreement. 17
21 IT IS SO ORDERED this _==...6.-:!L......!~L1l--_ __ 22
24 ARTHUR R. BARCINAS 25 Judge, Superior Court of Guam 26
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