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6 7 8 IN THE SUPERIOR COURT OF GUAM
9 10 IMO GENERAL CONSTRUCTION, CIVIL CASE NO.: CV1168-15
11 . PLAINTIFF, 12 vs.
DECISION AND ORDER
DCK PACIFIC GUAM LLC, PERNIX (Re: Plaintiff's Motion to Lift Stay and 13 GUAM LLC, and GUAM HEALTHCARE For Leave to Amend Complaint)
14 DEVELOPMENT, INC., db GUAM REGIONAL MEDICAL CITY,
15
16 i DEFENDANTS.
17
18 INTRODUCTION 19 This matter came before the honorable Anita A. Sukola on November 9, 2017 on I M O
20 g General Construction's ("PlaintifF') Motion to Lift Stay and For Leave to Amend Complaint.
21 i Attorney Anita P. Arriola appeared on behalf of the Plaintiff. Attorney Joyce C.H. Tang 22 appeared on behalf of Defendant Guam Healthcare Development Inc., db Guam Regional 23 Medical City ("GRMC"). Attorney Gerry E. Diaz appeared on behalf of Per fix Guam LLC 24 ("Per fix"). Upon review of the written and oral arguments, legal authorities presented by the 25 Parties; and for the reasons set out herein, the Court hereby GRANTS Plaintiffs Motion to Lift 26 Stay and For Leave to Amend Complaint.
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28 OQIQIAIAI CVl168-15 IMO General Construction v. DCK Pacific Guam LLC, et al, Page 1 of13 DECISION AND ORDER (re: PTs Mot, Lift Stay and For Leave Amend Con pl.)
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1 I BACKGROUND 2 The factual background of this matter was previously laid out by the Court in its July 1, 3 2016 Decision and Order on Defendant DCK Pacific Guam LLC's Motions to Stay Pending 4 Arbitration and to Stay Cross-Complaint Pending Arbitration. However, the facts necessary to 5 the dispose of the instant Motion are as follows. Plaintiff is a Washington corporation registered 6 in Guam as a foreign corporation. Comal. 'll'I[ 1-2. Per fix is the successor in interest to Defendant 7 DCK Pacific Guam LLC ("DCK"). Q at q[<I[ 3-4. GRMC is a Guam Corporation. Con pl. qt 5, 8 Def. GRMC's Answer & Crossclaims '][5. 9 GRMC is the owner of several lots of land in Dededo, Guam,1 hereinafter collectively the 10 "property". Con pl. 'll 6. On or about July 28, 2011, GRMC entered into a contract ("CM 11 Agreement") with DCK which provided that DCK would serve as construction manager for the 12 construction of the Guam Regional Medical City on the property. Pl's Mot. Lift Stay and For 13 Leave Amend Con pl. 2. On or about February 17, 2012, DCK entered into a subcontract 14 agreement with the Plaintiff, wherein the Plaintiff agreed to "furnish labor, services, equipment 15 and materials for a work of improvement on the Property, namely, certain construction and civil 16 works necessary to improve GRMC." Comal. q[q[ 8-9. Plaintiff began work in March of 2012. Q 17 at '][ 10. Plaintiff alleges that while DCK paid certain amounts to Plaintiff for work under the 18 subcontract, DCK failed and refused to pay the remainder amount due to IMO, and at the time 19 of the Complaint the amount due and owing was $2,l35,927.20. Q at '][ 11. 20 | Plaintiff subsequently brought suit alleging four causes of action. The First Cause of 21 Action is for breach of contract against DCK and Per fix. Con pl. ']['][ 15-19. The Second Cause of 22 Action is ro recover in Quantum Meruit and Quantum Valiant against DCK and Pen ix. Q at 23 q[q[ 20-23. The Third Cause of Action is for account stated against DCK and Per fix. Q at <1[q[ 24- 24 26. The Fourth Cause of Action is for foreclosure of a Mechanic Lien recorded on the property. 25 Id. at *H 27-31.
26 i i
27 ' The Complain! alleges at Paragraph 6, and Defendant GRMC's answer confirms that Defendant GRMC owns the following lots (identified by number): 5009-2-9R/W, 5009-2- 10, 5009-2-15, and 5009-2-16, all of which are located 28 in the municipality of Dededo.
CV] 168-15 IMO General Construction v. DCK Pacific Guam LLC, et al. Page 2 of 13 DECISION AND ORDER (re: PTs Mot. Lift Slay and For Leave Amend Comal.)
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u 1 After the action was initiated, GRMC cross-claimed against Pen ix and DCK asserting
2 that under the terms of the CM Agreement, DCK was required to hold GRMC harmless for any 3 loss or liability arising from a subcontractor dispute. Def. GRMC's Answer & Crossclaim 7. 4 Subsequently on February 5, 2016, DCK filed a Motion to Stay Pending Arbitration and on 5 February 29, 2016 filed a Motion to Stay the Cross-Complaint Pending Arbitration. After that 6 motion was fully briefed, this Court heard arad arguments on both motions on April 14, 2016 and 7 May 12, 2016. On July 1, 2016, this Court granted both motions in a written Decision and Order 8 staying both the cross-complaint and the matter itself, pending the outcome of DCK and 9 Plaintiff's arbitration. In the Decision and Order, the Court found that three out of the four 10 claims in the Complaint were subject to arbitration and the fourth claim, for foreclosure of the
11 mechanic's lien, would depend on the amount determined at arbitration. The Court thus found i 12 the entire matter should be stayed. See Decision and Order 8 (July 1, 2016). The Court further
13 I found that because the mechanic's lien claim depended on the outcome of arbitration, IMO's 14 Crossclaim for indemnification also depended on the arbitration outcome and thus also granted 15 the motion to stay the Crossclaim. at 8-9. 16 Subsequently, on September 12, 2016, Plaintiff and DCK, pursuant to the subcontract
17 agreement, engaged in arbitration proceedings in Hawaii. The arbitration resulted in a Stipulated i
18 Arbitration Award of $1,681,392.00, and attorney's fees and costs of $45,000.00, in favor of the 19 Plaintiff entered on June 29, 2017. T. Pike Decl. in Supp. Mot. Lift Stay and For Leave Amend 20 Comal. Ex. A. at 1-2 (July 25, 2017). On June 28, 2017 the Plaintiff and DCK also entered into a
21 I 'Severin Agreement,' in which DCK agreed to assign to HVICO and pass-through to GRMC
22 DCK's rights to pursue such claims directly against GRMC. 2 at Ex B, at 1-4. 23 24 2 The Severin Agreement provides in relevant part:
25 1 "1. To the extent and in the amount of IMO's claims and the Arbitration Award, DCK hereby assigns to IMO and agrees to pass-through to GRMC DCK's rights to pursue such claims 26 directly against GRMC . . .
I 5. Except as provided in Paragraph 6 below, IMO will be entitled to receive for its claims only 27 such amounts as are received b y IMO from GRMC on IMO's lien claim and IMO's passthroughclaims against GRMC. IMO is entitled to retain all such recovered amounts.
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CV] 168-15 IMO General Construction v. DCK Pacific Guam LLC, et al. Page 3 of 13 DECISION AND ORDER (re: Pl's Mol. Lift Stay and For Leave Amend Comal.)
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I 1 On July 25, 2017, Plaintiff filed the instant Motion to Lift Stay and For Leave to Amend
2 i Complaint. The Proposed Amended Complaint seeks to add a new cause of action and the 3 amount of the Stipulated Arbitration Award.3 On September 1, 2017, GRMC tiled an Opposition 4 to the Motion. On September 22, 2017, Plaintiff filed a Reply to the Opposition. The Court heard 5 oral arguments and took the Motion under advisement on November 9, 2017.
6 I DISCUSSION !
7 The Court notes at the outset that Plaintiffs Motion seeks three actions on the pan of the
8 Court. First, Plaintiff requests this Court lift the stay entered in the July 1, 2016 Decision and 9 Order. Mot. Lift Stay and For Leave Amend Comal. 1 (July 25, 2017). Second, Plaintiff requests
10 111 6. If and to the extent IMO does not fully recover from GRMC the full amount of its Arbitration Award, IMO shall be entitled to participate in any proceeding (including settlement discussions, negotiations, mediation and/or prosecution of claims in the Action) between DCK and GRMC, 12 and IMO shall be entitled to the following:
13 a. One Hal f (50%) of any monetary recovery DCK makes against GRMC (until IMCOls claim and the Arbitration Aw ard are fully paid) in an unsegregated 14 award/judgment/settlement scenario, or
15 b. 100% of any award/judgment/settlement where IMO's claim is segregated from other amounts not related to IMO's claims.
16 For purposes of this paragraph 6, and only to the extent, in the amount, and related t o , I M O ' s 17 claim s and the Arbitration Aw ard, DCK assigns to IMO its rights under the Contract and otherwise at law and in equity to pursue GRMC directly and to receive the amounts provided 18 herein from GRMC (rather than such amounts being paid through DCK). DCK agrees that GRMC i may rely on this Agreement in engaging in negotiations directly with I M O and i n payi ng IMO 19 directly."
20 T. Pike Declaration in Supp. Mot. Lift Slay and For Leave Amend Compo. Ex B. at 1-4 (July 25, 2017). 21 3 T he new Cause of Action reads, in relevant pan: 22 ", . . (R ecov ery of Assigned and P ass-T hrough C laim Against G R MC )
23 ... IMO and DCK also entered into a Severin Agreement for Pursuit of Claims in which the parties agreed that to the extent and in the amount of IMO's claims and the Arbitration Award, 24 DCK assigned to IMO and agreed to pass-through to GRMC DCK's rights to pursue such claims directly against GRMC ...
25 GRMC is liable to DCK under the terms of the CM Contract for IMO's claims against DCK.
26 The Severin Agreement provides for IMCOls pass~through of amounts recoverable by DCK directly against GRMC. GRMC is liable for the total amount of $l,762,392.00 plus any pass 27
28 i through claims in an amount to be determined at trial.
PTs Mot. Lift Stay and For Leave to Amend Con pl, Ex. 1, at 6 (July 25, 2017).
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1 leave to amend the Complaint to add the amount of the Stipulated Arbitration Award entered on 2 I June 29, 2017. Finally, Plaintiff seeks to amend the Complaint to add the assigned and pass- 3 through claims against GRMC. The Court further notes that in the Opposition, GRMC 4 expressly states that "GRMC does not oppose lifting the stay now that the arbitration between 5 DCK and Plaintiff has completed." GRMC's Opp'n 3 (Sept. 1, 2017). Therefore, the Court 6 hereby GRANTS the first request, to lift the stay entered on July l, 2016. The stay entered in the 7 Courts July l, 2016 Decision and Order is hereby lifted as of the date of this Decision and Order.
Second, in the July l, 2016 Decision and Order, the Court expressly stated that the 9 mechanic's lien claim in Plaintiffs Fourth Cause of Action in the Complaint depended on the 10 amount reached in arbitration between the Plaintiff and DCK. Thus, the arbitration having 11 concluded on June 29, 2017, the Court hereby GRANTS Plaintiffs motion insofar as it requests 12 leave to add the amount of the Stipulated Arbitration Award. 13 5 Finally, GRMC opposes the Motion for Leave to Amend insofar as it relates to the 14 request to amend the complaint to add the new Pass-Through Claim against GRMC. GRMC's 15 Opp'n 3 (Sept. 1, 2017). Thus the Court is confronted with the issue of whether to grant 16 Plaintiffs request for leave to amend as it relates to the Pass-Through Claim against GRMC. 17 Rule l5(a) of the Guam Rules of Civil Procedure ("GRCP"), in relevant part, provides ". 18 .. a party may amend the party's pleading only by leave of court ... and leave shall be freely 19 given when justice so requires." Guam R. Civ. P. l5(a) (2014). The Supreme Court of Guam has 20 held that the factors laid out in, Foman v. Davis, 371 U.S. 178 (1962), guide courts in Guam 21 when deciding whether to grant leave to amend under Rule 15. See Arashi & Co., Inc.. v. 22 Nakashima Enterprises, Inc., 2005 Guam 21 'I 16. Additionally, because the language of Rule 15 23 of the Federal Rules of Civil Procedure ("FRCP") is similar to the language in Rule 15 of the 24 GRCP, "[f`jederal interpretation of FRCP 15 is persuasive when interpreting ... GRCP 15." M 25 Electric Corporation v. Phil-Gets (Guam) Int'l Trading Corp., 2016 Guam 35 *][ 40 (citing 26 Sumitomo Constr. Co. v. Zhang Ye, Inc., 1997 Guam 8 'll 17 (reasoning "[g]enerally when a 27 legislature adopts a statute which is identical to one in effect in another jurisdiction, it is 28
CVl168-15 IMO General Construction v. DCK Pacific Guam LLC, et al. Page 5 of 13 DECISION AND ORDER (re: PTs Mol. Lift Stay and For Leave Amend Compo.)
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1 presumed that the adopting jurisdiction applies the construction placed on the statute by the 2 originating jurisdiction.")).
3 Ki Foman, the U.S. SupremeCourt held,
4 "... in the absence of any apparent or declared reason .- such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure 5 deficiencies by amendments previously allowed, undue prejudice to the opposing 6 party by virtue of allowance of the amendment, futility of amendment, etc., - the leave sought should, as the mies require, be 'freely given."'
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8 Foman, 372 U.S. at 182.
9 The Forman court also made clear that the FRCP " accept the principle that the 10 purpose of pleading is to facilitate a proper decision on the merits." (citing Conlev v. Gibson, 11 355 U.S. 41, 48 (1957), abrogated by Bell Atlantic Corp. v, Twomblv, 550 U.S. 544 (internal 12 quotations omitted)). The Federal Ninth Circuit Court of Appeals has expounded on the policy 13 undergirding Rule 15, reasoning the 'leave shall be freely given when justice so requires' policy 14 is to be "applied with extreme liberality." Eminence Capital, LLC v. Aspen_ Inc., 316 F.3d 15 1048, 1051 (9th Cir. 2003) (citing Owens v. Kaiser Found. Health Plan, Inc., 244 F.3d 708, 712 16 (9th Cir. 2001) (internal citations and quotations omitted).
17 In determining whether leave to amend should be granted, courts construe "all inferences 18 in favor of granting the motion." Griggs v. Pace Am. Grp.. Inc., 170 F.3d 877, 880 (9th Cir.
19 1999). However, the Ninth Circuit has also acknowledged that not adj courts apply the factors 20 equally. Eminence Capital. LLC, 316 F.3d at 1052 (reasoning it is the "... the consideration of 21 prejudice to the opposing party that carries the greatest weight."). The Ninth Circuit has gone 22 even further, holding "[a]bsent prejudice, or a strong showing of any of the remaining Foman 23 factors, there exists a presumption under Rule 15(a) in favor of granting leave to amend."
24 The Guam Supreme Court has not indicated whether Guam Courts should grant the 25 factors equal weight or follow the Ninth Circuit application which weighs the prejudice factor 26 the heaviest in the Rule 15 inquiry. Here however, GRMC invokes the prejudice and futility
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factors in opposition to the Motion for Leave to Amend. Thus the Court will address the
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I 1 prejudice and futility arguments raised by GRMC independently herein to determine whether the
2 : requested leave to amend should be granted. 3 a. Undue Prejudice to the Opposing Party by Virtue of Allowance of the Amendment. 4 GRMC raises several prejudice-related arguments in opposition to the Motion for Leave 5 to Amend insofar as it relates to the request to add the Pass-Through Claim. First, GRMC argues 6 that the Court should deny leave to amend because "the Guam Supreme Court has not 7 recognized pass-through claims, and such claims should not be recognized under the facts of this 8 : case." Def. GRMC's Opp'n 5 (Sept. l, 2017). GRMC further argues that "Guam law mandates 9 that to sue on a contract the plaintiff must have privily with the defendant" which is lacking here. 10 ; GRMC further argues that "by allowing IMO to assert DCK's rights to sue GRMC under 11 the CM Agreement, GRMC will be forced to assert both set-off defenses against IMO ro defeat 12 any liability claimed through DCK, as well as cross-claims against DCK for breach of the CM 13 agreement and indemnity." at 6. GRMC also argues that if the pass through claim is allowed,
14 "GRMC would be forced to litigate its claims against DCK on two fronts - in the arbitration and
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15 in this court action ... at 7. Lastly, GRMC argues that it is entitled to attorney's fees under
16 the CM Agreement however the Severin Agreement immunizes "IMO from any liability 17 whether under the contract or otherwise." at 8. 18 Courts have held 'prejudice' to the non-movant, in the context of a motion to amend, 1 19 means "undue difficulty in prosecuting a lawsuit as a result of a change of tactics or theories on
20 the part of the other party." Wizards of the Coast LLC v. Cryptozoic Entertainment LLC, 309 21 F.R.D. 645, 652 (W.D. Wash. 2015) (citing Deaknye v. Commissioners of Lewes,416 F.2d 290, 22 300 (ad Cir. 1969). The Party opposing amendment "bears the burden of showing prejudice." 23 DCD Programs. Ltd. v. Leighton, 833 F.2d 183, 187 (9th Cir. 1987). 24 l 25
26 4 The Court notes these arguments appear under the heading "Recognizing the Proposed Pass-Through Claim Would Result in Confusion of the Issues and More L itigatio n ." G R MC 's Opp'n 4. As discussed herein, Foman is the 27 controlling authority on analyzing whether a court should grant leave to amend a pleading. Thus the Court construes the arguments under this heading as arguments under the 'undue prejudice to the opposing p ar ty b y vir tu e o f 28 allowance of the amendment' factor, as the arguments raised are not clearly made under any other factor.
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1 A court may deny leave to amend where the new claims would greatly alter the course of i I 2 I litigation and where the motion to amend was brought after a two-year delay. Morongo Band of I 3 Mission Indians v. Rose, 893 F.2d 1074, 1079 (9th Cir. 1990) (reasoning the amended complaint
4 would have required an entirely new defense at a late stage in the litigation and thus
5 I impennissibly prejudiced the Defendant). A court may similarly deny leave ro amend where the 6 motion for leave to amend is filed after a long period has elapsed since the initial pleading was
7 filed, where the parties have already completed discovery, and where trial is imminent. Texaco
8 Inc. v. Ponsoldt, 939 F.2d 794, 798-99 (9th Cir. 1991) (affirming denial of motion for leave to i 9 amend where the motion was brought more than a year after the initial complaint was filed, and
10 where discovery had concluded and only four months remained before trial), see also Kaplan v. 11 Rose, 49 F.3d 1963, 1370 (9th Cir. 1991) (affirming a trial court's denial of leave to amend 12 where the parties had already engaged in and completed 'voluminous and protracted discovery,' 13 where the Complaint had already been amended twice, where trial was only two months away, 14 and where the basis for the amendment was known to the moving party since the beginning of
15 litigation) overruled on other grounds by Citv of Dearborn Heights Act 345 Police and Fire I
16 Retirement Svstem, v. Align Technologv Inc., 856 F.3d 605 (9th Cir. 2017). 17 The authorities cited above make clear that courts that have found prejudice to the non- 18 movant reason that such prejudice existed because the parties had already prepared for litigation 19 with the in-amended pleadings in mind. Thus, allowing amendment would have altered the
20 nature of the litigation, requiring more a nd /or ne w d i sc ove ry be c a use of t he re que st e d
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21 amendments. Finally, the courts reasoned prejudice existed because the amendments occurred
22 late enough during the proceedings that the non-movant would be adversely affected due to the 23 imminence of triad. 24 None of the type of facts contemplated by Courts that have found prejudice are apparent 25 in the prejudice-related arguments raised by GRMC. On the first argument that the Court should 26 deny leave to amend because the Guam Supreme Court has not recognized pass-through claims 27 and the second argument that Plaintiff lacks the required privily to bring the action, the Court 28
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1 finds that the pass through claim has been overwhelmingly embraced by jurisdictions who have 2 considered whether to recognize such claims. See Intrastate Contracting Corp, v. Citv of Dallas, 3 135 S.W. ad 605, 613-14 (Tex. 2004) (reasoning "[o]f the nineteen states that have addressed
4 [pass through claims] in published opinions, eighteen treat pass-through claims favorably, and
5 only Connecticut explicitly rejects them). 6 The benefit of recognizing pass through claims, as discussed in Intrastate Contracting
7 Corp., and further in, Morse/Diesel, Inc, v. Trinitv Indus., Inc., 875 F Supp 165 (S.D.N.Y. 1994), 8 cited infra, are sufficient for this Court to allow the claims here. Allowing pass-through claims 9 consolidates what might otherwise be two actions into one. Additionally, the harsh effect of a 10 lack of privily in these types of subcontractor-contractor-owner disputes in the construction
11 industry can be dispensed with where the parties do not dispute that work was done and benefits 12 received. The Court finds there is no prejudice apparent from the Court's recognition of the pass 13 through claim here because GRMC still has the opportunity to defeat the claim on the merits, 14 The Court further finds GRMC's other argument that GRMC will be forced to assert both 15 i set-off defenses against IMO to defeat any liability claimed through DCK, as well as cross- 16 claims against DCK for breach of the CM agreement and indemnity is similarly unconvincing.
17 Again, this is not the type of prejudice contemplated by courts that have addressed prejudice 18 3 under the Foman factors as cited above. This matter has been stayed and no discovery has taken
19 . place. Trial is not imminent, and while the litigation may be altered somewhat, GRMC has been !
20 on notice of the basis of the Plaintiff's claims via the mechanic's lien and attempt to foreclose 21 the same. The Court agrees with Plaintiff that all this argument seems to indicate is that GRMC
22 may have to litigate both the claims against it and its crossclaims on the merits. Even without the 23 i pass through claim, GRMC would need to litigate the cross claims and potentially would have 24 set-off defenses. Thus, there does not appear to be prejudice of the type contemplated by the 25 Foman factors, which are some type of delay, a significant change in the nature of trial, or 26 prejudice due to the imminence of trial and already conducted discovery. 27 28
CV1168-15 IMO General Construction v. DCK Pacific Guam LLC, Er al. Page 9 of 13 DECISION AND ORDER (re: PTs Mot. Lift Stay and For Leave Amend Comal.)
I 1 Finally, as to the arguments related to potential arbitration and attorney's fees under the
2 CM Agreement, the Court finds again, these arguments are not the type of prejudice-related 3 arguments contemplated by Foman and its progeny. This matter has already been stayed pending
4 arbitration and should GRMC feel that the required arbitration under the CM Agreement is 5 | necessary before this litigation can proceed, nothing, and certainly not the addition of the pass 6 through claim, precludes GRMC from similarly moving to stay these proceedings while such 7 claims are arbitrated. Regarding the Attorney's fees, the prayer for relief in GRMC's Cross- 8 claim at *][ 6 already seeks attorney's fees from DCK and is no longer stayed as a result of this
9 i Decision and Order. Thus nothing precludes GRMC from pursuing attorney's fees as called for 10 under the CM Agreement. GRMC is not a party to the Severin Agreement, thus it is unclear to 11 the Court how said agreement or allowance of the requested amendment affects GRMC's rights 12 to enforce provisions of the CM Agreement against DCK and/or Per fix. 13 b. Futilitv of Amendment.
14 Finally in opposition to granting leave to amend, GRMC argues the Proposed Amended 15 Complaint does not state a claim for which relief can be granted and therefore would be futile.
16 Courts addressing the Foman futility factor have made clear that "[w]here the underlying facts 17 or circumstances of a case may be the proper subject of relief, a plaintiff ought to be afforded an 18 opportunity to test his claims on the merits. DCD Programs, Ltd. v. Leighton, 833 F.2d 183, 188
19 (9th Cir. 1987) (citing Foman v. Davis, 371 U.S. 178, 182 (1962) (quotations omitted)). In 20 analyzing the futility factor, the Ninth Circuit has held leave to amend should be granted unless
21 the party moving to amend could "prove no set of facts in support of their claims which would 22 entitle them to relief." DCD Programs. Ltd., 833 F.2d at 188 (citing Conlev v. Gibson, 355 U.S. 23 41, 45-46 (l957)). Stated differently, "[a] proposed amendment is futile if no set of facts can be 24 proved under the amendment which would constitute a valid claim." Lockheed Martin Corp. v. 25 Network Solutions, Inc., 175 F.R.D. 640, 645 (C.D. Cal. 1997) (citing Miller v. rvkoff-Sexton, 26 Inc., 845 F.2d 209, 214 (9th Cir. 1988). 27
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CV1168-15 IMO GeneralConstruction v. DCK Pacific GuamLLC, et al. Page10 of 13 I DECISION AND ORDER (re: PTs Mot.Lift Stay and For Leave Amend Comal.)
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1 | The language used to determine futility tracks the language employed by the Supreme 2 Court of Guam in addressing a motion to dismiss for failure to state a claim for which relief can 3 l be granted under Rule 12(b)(6) of the GRCP because futility is assessed. See Lucan v. J.L.H. 4 Trust, 2016 Guam 24 iI 12 (citing Conlev v. Gibson, 355 U.S. 42, 45-46 (1957)) (holding
5 I dismissal under rule l2(b)(6) is appropriate when it appears "beyond doubt that the plaintiff
6 could prove no set offsets in support of his claim which would entitle him to relief." (emphasis 7 l added)). The Court has made clear that Guam law "requires only notice pleading, not fact 8 pleading." Ukau v. Wang, 2016 Guam 26 <l[ 21 (citing Joseph v. Guam Bd. of Allied Health 9 Examers, 2015 Guam 4 q19)). In applying the l2(b)(6) standard, the court must "take as true the 10 material facts alleged in the [pleading], construe the pleading in the light most favorable to the 11 non-moving party and resolve all doubts in the non-moving party's favor." First Hawaiian Bank 12 v. Manley, 2007 Guam 2 'll 9. 13 New York and other states recognize pass through claims and the agreements that create 14 the claims, 'liquidating agreements.' As one court in New York stated, "liquidating agreements 15 are commonly employed in the New York construction industry as a means to apportion 16 liability among owners, general contractors, and subcontractors, among whom such efforts are 17 otherwise hindered by a lack of privily." Morse/Diesel. Inc. v. Trinitv Indus., Inc., 875 F Supp 18 165 (S.D.N.Y. 1994) rev'd on other grounds by Morse/Diesel. Inc. v. Trinitv Indus.. Inc., 67 19 F.3d 435 (2d Cir. 1995). 20 While Plaintiff and DCK entered into a 'Severin Agreement] the authorities that discuss 21 pass through claims also use the phrase 'liquidating agreement." Such an agreement is 22 constituted where "(l) the contractor acknowledges its liability to the subcontractor, thereby 23 providing the general contractor with a basis for legal action against the owner, (2) the general 24 contractor's liability is liquidated to the extent of its recovery against the owner, and (3) the 25 general contractor agrees to pass its recovery to the subcontractor." Bovis Lend Lease LMB v. 26 GCT Venture, 285 A.D. ad 68, 70-71 (N.Y. App. Div. 2001). 27 28
CVI168-15 IMO General Construction v. DCK Pacific Guam LLC, et al. Page 11 of 13 DECISION AND ORDER (re: PTs Mot. Lift Stay and For Leave Amend Comal.)
I A11 three requirements are satisfied by the Agreement here. First, DCK's liability is 2 acknowledged by virtue of the Stipulated Arbitration Award entered into on June 29, 2017. 3 DCK acknowledges its liability to Ill[CO in the amount of $1,68l,392.00. T. Pike Decl. Ex. B at 4 l (July 25, 2017). This amount, similar to establishing the amount for the mechanic's lien,
5 provides DCK a basis for action against GRMC, and DCK and HVICO both acknowledge I 6 ! I DCK's liability to the amount of the award. Finally, the parties expressly agree that the recovery I
7 will pass through to Plaintiff by virtue of the 'Severin Agreement.' 8 . As the Court finds the requirements for the liquidation agreement are met, the Court 9 agrees with Plaintiff that Plaintiff is not pursuing DCK's claims against GRMC. Rather, 10 Plaintiff is pursuing a claim, liquidated and acknowledged by DCK in the agreement, through ll DCK against GRMC. This is not a separate claim alleging GRMC's breach of the CM 12 : Agreement with DCK, rather the claim is for the liquidated amount of damages suffered by 13 Plaintiff directly against GRMC, The pass through claim uses DCK to bridge the gap between 14 the Plaintiff and GRMC. Without the pass through, GRMC would be shielded from liability 15 from the Plaintiff in this action due to a lack of privily. Thus Plaintiff would need to prevail
16 I against DCK, the prime contractor, and then DCK would have to initiate a second action against I
17 GRMC. The lack of privily and harsh result is bridged by DCK passing through the claim, thus 18 eliminating the need for a second action.
19 The Court finds that under the l2(b)(6) standard, for a pass through claim, all that need I I 20 be plead are facts that put GRMC notice of the claims against it, the Court need not address the
21 merits of the claim. Here the liquidation agreement is attached as Exhibit E to the Proposed 22 Amended Complaint and gives sufficient notice of Plaintiffs claim that DCK is passing through 23 to GRMC for Plaintiff to pursue directly against GRMC. Thus Plaintiff is alleging that GRMC 24 is liable to Plaintiff to the extent of the Stipulated Arbitration Award. The Court finds GRMC is 25 on notice of the pass-through claim by virtue of the language in the Proposed Amended 26 Complaint and the 'Severin Agreement' attached to the Proposed Amended Complaint. 27 Therefore, the Court finds the amendment would not be futile. 28
CV1168-15 IMO General Construction v. DCK Pacific Guam LLC, et al. Page 12 of 13 DECISION AND ORDER (re: PTs Mot. Lift Stay and For Leave Amend Comal.)
1 CONCLUSION Thus by a preponderance of the evidence and for the reasons stated herein, the Court i
3 hereby GRANTS Plaintiffs motion to Lift Stay and For Leave to Amend Complaint. The 4 Court ORDERS the following: 5 u 1. The stay entered in the Courts July 1, 2016 Decision and Order is hereby lifted as of 6 the date of this Decision and Order. 7 2. The Court hereby GRANTS Plaintiff leave to add the amount of the Stipulated 8 Arbitration Award. 9 3. The Court hereby GRANTS Plaintiff leave to add the Pass Through Claim to the 10 | Complaint.
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13 A Status Hearingis set for /lllmeh /f z0/9 at •
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16 SO ORDERED I
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The Honorable Anita A. Sukola 19 Judge, Superior Court of Guam 20 !
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24 thana copy Ur the yes placed m the
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27 &. arnes 1 " ' 1
Uqwty Clerk, Super of caun01 Gunn 28 E
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