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6 IN THE SUPERIOR COURT OF GUAM 7
8 JMSHLLC, CIVIL CASE NO. CV0451-18 9 Plaintiff, 10 vs. 11 DECISION AND ORDER 12 PACIFIC AW COMMERCE SERVICES, LLC; MICRONESIA AIR CARGO 13 SERVICES, LLC; and JOHN I. STEWART, 14 Defendants. 15
16 INTRODUCTION 17 This matter came before the Honorable Vernon P. Perez on October 5, 2018, for hearing 18 on Defendants Pacific Air Commerce Services, LLC; Micronesia Air Cargo Services, LLC; and 19 John J. Stewart’s (collectively, “Defendants”) Motion to Dismiss Amended Complaint Pursuant 20 to GRCP 12(b)(6), and Motion to Strike Declaration of Counsel Re: Declaration of Hee K. Cho. 21 Attorney Joyce Tang represents Defendants and Attorney Daniel Berman represents Plaintiff 22 JMSH LLC (“Plaintiff’). Having reviewed the pleadings, the arguments presented, and the 23 record, the Court now issues the following Decision and Order. 24 BACKGROUND 25 This matter stems from a dispute regarding an Airline Passenger Services Agreement 26 dated September 10, 2015 (“the Agreement”). Plaintiff accuses Defendants of (1) breach of 27 contract, (2) breach of the covenant of good faith and fair dealing, (3) violation of the deceptive 28 trade practices act, (4) fraudulent inducement; (5) fraudulent concealment; and (6) disregard of
JMSH LLC vs. Pacific Air Commerce Sen’ices, LLC, et a!. CV0451-18 Decision and Order
Page] of 13 1 corporate entity. See generally, Am. Compi. and Demand for Trial by Jury, Jul. 25, 2018 2 (“Amended Complaint”). Prior to the filing of the Amended Complaint on July 25, 2018, 3 Defendants had filed a Motion to Dismiss the May 9, 201$ Complaint pursuant to GRCP 4 12(b)(6). The matter came before the Court for a Motion Hearing on August 3, 201$, whereby 5 the parties agreed that the Motion to Dismiss was rendered moot upon the filing of the 6 Amended Complaint. Counsel for Defendants, however, indicated that a second Motion to 7 Dismiss would be forthcoming, and a Motion Hearing was set for October 5, 2018. 8 On August 8, 2018, Defendants filed a Motion to Dismiss the Amended Complaint. On 9 September 5, 2018, Plaintiff filed its Opposition, and on September 19, 2018, Defendants filed 10 their Reply. ii On September 14, 2018, Defendants filed a Motion to Strike Declaration of Counsel Re: 12 Declaration of Hee K. Cho. On October 1, 2018, Plaintiff filed its Opposition, and on October 13 3, 2018, Defendants filed their Reply. 14 On October 5, 2018, the Court heard oral arguments on both motions. At the conclusion 15 of the hearing, the Court gave the parties leave to submit proposed findings, and indicated it 16 would place the matter under advisement upon receipt. On October 31, 2018, Defendants filed 17 a [Proposed] Decision and Order Re: Defendants’ Motion to Dismiss Amended Complaint 18 Pursuant to GRCP 12(b)(6), and Plaintiffs filed [Proposed] Findings of Fact and Conclusions of 19 Law. 20 DISCUSSION 21 I. Motion to Strike 22 The Court will first address Defendant’s Motion to Strike as it affects how the Court will 23 address the Motion to Dismiss. Defendants move to strike the Declaration of Counsel re: 24 Declaration of Hee K. Cho filed on July 3, 20181 based on the limitations of the GRCP 12(b)(6) 25 Motion to Dismiss and because the filing of a copy of a declaration and not the original violates 26 GR 5.1 of the Local Rules of the Superior Court of Guam. See generally, Mot. Strike, Sep. 14, 27 This Declaration was filed in support of Plaintiff’s Opposition to the first Motion to Dismiss. On July 24, 2018, 28 Plaintiff filed the Submission of Original Signed Declaration of Hee K. Cho.
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Page 2 of 13 1 2018. Plaintiff opposes, arguing that Defendants “opened the door” by raising a factual issue in 2 their Motion to Dismiss and “submitting documents outside the Complaint and its exhibits.” 3 (Opp’n at 1, Oct. 1, 201$). 4 As the Motion to Dismiss before the Court is based on GRCP 12(b)(6), the Court is 5 “limited to the complaint, written instruments attached to the complaint as exhibits, statements 6 or documents incorporated into the complaint by reference, and documents on which the 7 complaint heavily relies.” Newby v. Government of Guam, 2010 Guam 4 ¶ 14 (citation 8 omitted). The Court declines to utilize any documents submitted outside the Amended 9 Complaint and its Exhibits in review of the 12(b)(6) motion, and therefore GRANTS 10 Defendants’ Motion to Strike on that basis. Accordingly, the Court does not find it necessary to ii address any procedural defects with the filing of the Declaration pursuant to GR 5.1 of the Local 12 Rules of the Superior Court of Guam, as argued by Defendants. 13 II. Motion to Dismiss Amended Complaint 14 A. GRCP 12(b)(6) Legal Standard 15 When considering a Rule 12(b)(6) dismissal, the Court must: 16 construe the pleading in the light most favorable to the non-moving party, and resolve all doubts in the non-moving party’s favor. However, conclusory allegations of law and unwarranted inferences are insufficient to defeat a motion 18 to dismiss for failure to state a claim. Dismissal for failure to state a claim is appropriate only if it appears beyond doubt that the non-moving party can prove 19 no set offacts in support of his claim which would entitle him to relief 20 Taitano v. Calvo Fin. Corp., 2009 Guam 9 ¶ 6 (internal citations and quotation marks omitted) 21 (emphasis added). See also Core Tech Intern. Corp. v. Hanil Engineering & Const. Co., Ltd., 22 2010 Guam 13 ¶ 52. A Rule 12(b)(6) motion tests the sufficiency of the complaint. Navarro v. 23 Block, 250 F.3d 729, 732 (9th Cir. 2001). “Guam law only requires a short and plain statement 24 of the claim showing entitlement to relief.” Ukau v. Wang, 2016 Guam 26 ¶ 52. “In ruling on a 25 12(b)(6) motion, a court’s consideration is limited to the complaint, written instruments attached 26 to the complaint as exhibits, statements or documents incorporated into the complaint by 27 reference, and documents on which the complaint heavily relies.” Newby, 2010 Guam 4 ¶ 14 28
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Page3ofl3 i (citation omitted). Courts, however, “may consider a document the authenticity of which is not 2 contested, and upon which the plaintiff’s complaint necessarily relies.” Id. at ¶ 16 (citation 3 omitted). B. Whether Counts I & II should be dismissed as to Defendants MACS and Stewart because they are not parties to the contract Defendants first argue that Counts I & II should be dismissed against Defendants 6 Micronesia Air Cargo Services, LLC (“MACS”) and John I. Stewart (“Stewart”) because they are not parties to the Agreement. See Mot. Dismiss at 3-6. Count I of the Amended Complaint alleges Breach of Contract, and Count II of the Amended Complaint alleges Breach of the Covenant of Good Faith and Fair Dealing. See Am. Compl. at 6-8. Defendants argue that the Agreement was only entered into by two parties, Pacific Air Commerce Services LLC, doing business as “Island Hopper” (“PAC”) and JMSH. (Mot. Dismiss at 3, Aug. 8, 2018). 12 “Nowhere in the Amended Complaint does it allege that MACS and Stewart agreed to provide 13 any services, product, or an aircraft. Defendants argue that while “Stewart signed the Contract, 14 he expressly signed in a representative capacity, and not in his individual capacity.” Id. 15 The Agreement specifically identifies “Party A” as Pacific Air Commerce Services LLC 16 dba “Island Hopper” and “Party B” as JMSH LLC. dba “Interisland Travelers” on page one of 17 the Agreement under “Definitions” section. (Am. Compi., Ex. I). Nowhere in the Agreement is 18 Micronesian Air Cargo Services, LLC or John Stewart listed as a party to the contract, with the exception that the Agreement was signed by John Stewart as President, Micronesian Air Cargo 20 GUAM, LLC, and Micronesian Air Cargo CNMI, LLC is listed above his signature block as 21 “Party A.” Id. As MACS was not identified as a party to the Agreement, Count I must be dismissed. 23 Non-parties to a contract cannot “be liable for a tortious breach or for deceit in 24 connection with the making of said contract. Neither cause of action could be stated as to 25 them.” Clemens v. Am. Warranty Coip., 238 Cal. Rptr. 339, 343 (Cal. App. 1987). “[O]nly a 26 signatory to a contract may be held liable for any breach.” Id. “Directors and officers are not 27 personally liable on contracts signed by them for and on behalf of the corporation unless they 28
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Page 4 of 13 1 purport to bind themselves individually.” United States Liab. Ins. Co. v. Haidinger-Hayes, Inc., 2 463 P.2d 770, 775 (Cal. 1970). The Court does not find that Stewart is a party to the Agreement 3 simply because his name appears in the signature line as a corporate representative of “Party 4 A.” As Stewart clearly signed the Agreement strictly in a representative capacity, Count I must 5 also be dismissed as to Stewart. 6 As MACS and Stewart are not parties to the Agreement, Count II, Breach of the 7 Covenant of Good Faith and Fair Dealing, must also be dismissed. “Although an action for bad 8 faith breach of the covenant of good faith and fair dealing sounds in tort, the duty of good faith 9 and fair dealing derives from and exists solely because of the contractual relationship between 10 the parties. Thus, one who is not a party to the underlying contract may not be held liable for it the breach of an implied covenant of good faith and fair dealing for as to him no such implied 12 covenant exists.” Austero v. Nat’t Cas. Co., 133 Cal. Rptr. 107, 110 (Cal. App. 1976). 13 Accordingly, as there no contract between Plaintiff, MACS, and Stewart, Count II is also 14 dismissed. is C. Whether Count III should be dismissed as to all Defendants 16 Defendants next argue that Count III, Deceptive Trade Practices Act (“DTPA”), should 17 be dismissed against Defendants Stewart and MACS because Plaintiff failed to provide notice to 18 them, as required under Guam law. (Mot. Dismiss at 10-11). 19 Under Guam law: 20 (a) As a prerequisite to filing a suit seeking damages under this chapter against any person by a consumer not represented by the Attorney General, a consumer 21 shall give written notice to the person at least thirty (30) days before filing the suit 22 advising the person, in reasonable detail, of the consumer’s specific complaint and the amount of actual damages and expenses, including attorney’s fees, if any, 23 reasonable incurred by the consumer in asserting the claim against the party. 24 5 G.C.A. § 32110(a). In the Amended Complaint, Plaintiff asserts that it sent Defendants a 25 notice of settlement letter on September 8, 2016, and March 30, 2017, as required under section 26 32110 of the DTPA. (Am. Compl. ¶ 57). The September 8, 2016 letter is addressed solely to 27 Pacific Air Commerce Services, LLC, through the care of John Stewart, whereas the March 30, 28
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Page5ofl3 1 2017 letter is addressed to Pacific Air Commerce Services, LLC and Micronesia Air Cargo 2 Services, LLC, through the care of John Stewart. See Am. Compi., Ex. J, K. Although the 3 March 30, 2017 letter is addressed to both PACS and MACS, it is a demand to pay made 4 against PACS only, alleging that PACS has violated Guam law and that the letter serves as a 5 notice of PACS (dba Island Hopper) actions and omissions giving rise to the claims currently 6 before the Court. See Am. Compl., Ex. K. Specifically, the letter states: 7 Based on a review of 5 GCA § 32201 (Deceptive Trade Practices Unlawful) (2005) and its subsections (b)(2), (3), (4), (10), (1$), (23) and (25), Pacific Air Commerce Services, LLC (herein “Island Hopper”) has violated, in several 9 different ways and manners, Guam law. 10 This letter serves as notice of Island Hopper’s actions and omissions which give rise to claims for breach of contract, fraud, misrepresentation and concealment, before, during and after the agreement dated September 10, 2015, together with 12 violation(s) of the Guam Deceptive Trade Practices Act (“DTPA”), and shall 13 constitute the Notice of Offer of Settlement.
14 Am. Compi, Ex. K. The Notice only described actions performed by PACS, and does not
15 advise MACS and Stewart “in reasonable detail, of the consumer’s specific complaint” against
16 them, only against PACS as required by section 32110(a). Therefore, the DTPA claims against
17 MACS and Stewart must be dismissed, as the statutory prerequisite to bringing a DTPA claim
18 has not been met.
19 Defendants also move for Count III to be dismissed against PAC because Plaintiff is not
20 a consumer under the DTPA. (Mot. Dismiss at 11). In the Amended Complaint, Plaintiff states
21 that “[t]he Agreement and the parties’ conduct . . . fall within the DTPA in that JMSH was a
22 consumer as defined under the DTPA and the services sold are covered under the DTPA.”
23 (Am. Compl. ¶ 56).
24 Consumers are defined under the DTPA as “an individual, partnership, association,
25 corporation, or the government of Guam who seeks or acquires by purchase or lease, any goods
26 or services, except that the term does not include a business consumer that has assets of Twenty-
27 Five Million Dollars ($25,000,000) or more, or that is owned or controlled by a corporation or
28 entity with assets of Twenty-Five Million Dollars ($25,000,000) or more.” 5 G.C.A. § 32103(d)
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Page 6 of 13 i (emphasis added). Plaintiff argues that “[nb preliminary proof or showing of plaintiff’s net 2 balance sheet, debts, loans, mortgages, obligations, assets and income are required under the 3 DTPA” and that Defendants are trying to “look past the corporate form of the Plaintiff.” 4 (Opp’n at 14-15). 5 Defendant seeks the Court to take judicial notice of January 21, 2016 Board Minutes 6 from the Guam Economic Development Authority (“GEDA”) stored on their website, 7 https ://investguam.comluserfiles/files/0 1.21.2016 %20Board%20Minutes .pdf. In ruling on a 8 12(b)(6) motion, the Court is limited to reviewing “the complaint, written instruments attached 9 to the complaint as exhibits, statements or documents incorporated into the complaint by 10 reference, and documents on which the complaint heavily relies.” Newby, 2010 Guam 4 ¶ 14 11 (citation omitted). The Court does not find that the GEDA minutes are a document “upon 12 which the plaintiff’s complaint necessarily relies.” Id. at ¶ 16 (citation omitted). Further, the 13 Court must “resolve all doubts in the non-moving party’s favor.” Taitano, 200$ Guam 12 ¶ 2. 14 Therefore, the Court will not dismiss Count III against PACS. D. Whether Counts IV and V should be dismissed as to all Defendants for failure to meet minimum pleading standards under GRCP Rule 9(b) 16 Next, Defendants move to dismiss Counts IV and V for failure to meet minimum 17 pleading standards under GRCP Rule 9(b). 18 The Guam Rules of Civil Procedure provide that “[un all averments of fraud or mistake, 19 the circumstances constituting fraud or mistake shall be stated with particularity.” Guam R. 20 Civ. P. 9(b). The elements of fraud are: “(1) a misrepresentation; (2) knowledge of falsity (or 21 scienter); (3) intent to defraud to induce reliance; (4) justifiable reliance; and (5) resulting 22 damages.” Taitano, 2008 Guam 12 ¶ 12. The Supreme Court of Guam has explained that “a 23 plaintiff need not prove his claim of fraud at the pleadings stage. Rather, what is required is that 24 a plaintiff set forth his claim with sufficient detail to provide notice to defendants as to what 25 particular fraudulent action is being alleged.” Id. at ¶ 16 (citation omitted). “Two separate 26 elements of the tort of fraud have very different pleading requirements: the fact that a 27 misrepresentation occurred must be plead with particularity, the fact that a defendant knew that 28
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Page 7 of 13 i the misrepresentation was false may be averred generally.” Id. at ¶ 19. “Rule 9(b) does not 2 require a plaintiff to prove a claim of fraud at the pleading stage. Rather, what is required is that 3 a plaintiff set forth his claim with sufficient detail to provide notice to defendants as to what 4 particular fraudulent action is being alleged. This standard has been described as a ‘who, what, 5 when, where, and how” requirement.” Ukau, 2016 Guam 26 ¶ 47. 6 In its Amended Complaint, Plaintiff alleges under Count IV - fraudulent Inducement 7 that Defendants (1) misrepresented that the SAAB 340 aircraft was under their control; (2) 8 misrepresented that they were willing and able to deliver services and provide or retain skilled 9 manpower and all necessary certifications; and (3) misrepresented that they had the authority to 10 deliver the services and equipment necessary under the Agreement. (Am. Compl. ¶[ 63-65). ii Defendants argue that “[tJhese broad allegations do not meet the minimum pleading standards 12 applicable to fraud claims.” (Mot. Dismiss at 14). In Opposition, Plaintiff argues that “all 13 representations and material omissions Plaintiff attributed to any and all Defendants were 14 obviously alleged to be made by Stewart himself to Plaintiff at the time indicated or estimated is in the Amended Complaint.” (Opp’n at 19-20). Plaintiff further argues that “the instant 16 Amended Complaint in fact identifies date-specific email correspondence and all factual 17 allegations are to be taken as true at the 12(b)(6) stage.” Id. at 20.
18 Even when the Court takes as true all factual allegations listed in the Amended 19 Complaint for the purpose of this 12(b)(6) Motion, the Amended Complaint does not identify 20 any communications made by Stewart prior to the parties’ execution of the Agreement on 21 September 10, 2015. The Amended Complaint identifies communications in 2016 and after. 22 See Am. Compl. fi 25-34. As there are no communications listed prior to the execution of the 23 Agreement that would identify who, what, when, where and how misrepresentations occurred, 24 the Court finds that Plaintiff has failed to plead its fraudulent inducement claim with
25 particularity, and Count IV must be dismissed.
26 Defendants next argue that Count V — fraudulent Concealment also “suffers from the 27 same defect.” (Mot. Dismiss at 14). Under this count, Plaintiff alleges that since entering into
28 the Agreement: (1) Defendants never informed Plaintiff that all or substantially all of the
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Page 8 of 13 i scheduled passenger flight services necessary and that the SAAB 340 aircraft was under the 2 control of ACI and not Defendants; (2) Defendants fraudulently concealed that they had no 3 authority to deliver what was promised under the Agreement for air travel between Guam, Rota 4 and Saipan, CNMI; (3) Defendants concealed crucial information relating to performance 5 obligations under the contract but nonetheless took payment from Plaintiff under the 6 Agreement; and (4) this concealment was material to the Agreement. See Am. Compi. ¶91 73- 7 77. Defendants argue that Plaintiff “has failed to allege, with regard to all Defendants, (1) who 8 was responsible for making the allegedly necessary statement to JMSH, and (2) the time and
9 place such person or entity failed to speak when he should have.” (Mot. Dismiss at 14). 10 To satisfy the particularity requirement for claims of fraud by nondisclosure, plaintiffs 11 are generally required to allege: 12 (1) the relationship or situation giving rise to the duty to speak (2) the event or events triggering the duty to speak and/or the general time period 13 over which the relationship arose and the fraudulent conduct occurred; 14 (3) the general content of the information that was withheld and the reason for its materiality; 15 (4) the identity of those under a duty who failed to make such disclosures; 16 (5) what those defendant(s) gained by withholding information; 17 (6) why plaintiffs reliance on the omission was both reasonable and detrimental; and 18 (7) the damages proximately flowing from such reliance. 19 Zimmerschied v. JP Morgan Chase Bank, N.A., 49 F.Supp. 3d 583, 596 (D.Minn. 2014) 20 (citation omitted). 21 The Court finds that Plaintiff has sufficiently plead facts supporting a claim of fraud by 22 nondisclosure in the Amended Complaint against PACS. In the Amended Complaint, Plaintiff 23 identifies that Defendant did not inform JMSH that it did not own the subject aircraft; that it did 24 not have the proper and required FAA licensure; and that it intended to keep all payments 25 provided under the Agreement and not provide a refund if FAA certification was not timely 26 obtained. See Am. Compl. ¶9f 24-35. The Amended Complaint identifies date-specific email 27 correspondence describing the concealed information about the pursuit of promised and 2$
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Page 9 of 13 1 required flight service permits. Id. “[A]llegations of fraud based on information and belief 2 usually do not satisfy the particularity requirements under rule 9(b). However, the rule may be 3 relaxed as to matters within the opposing party’s knowing. For example, in cases of corporate 4 fraud, plaintiffs will not have personal knowledge of all the underlying facts. In such cases, the 5 particularity requirement may be satisfied if the allegations are accompanied by a statement of 6 the facts on which the belief is founded.” Moore v. Kayport Package Exp., Inc., 885 F.2d 531, 7 540 (9th Cir. 1989). $ With regard to Stewart and MACS, Defendants also argue that Plaintiff failed to allege a 9 relationship or event that created a duty on the part of each to speak, given that they were not 10 parties to the Contract.” (Mot. Dismiss at 14; Reply at 10). “[A] duty to disclose material facts 11 can arise not only in situations involving a fiduciary relationship, but also where disclosure is 12 necessary to make a previous statement not misleading or where one party has special 13 knowledge of material facts.” Zimmerschied, 49 F. Supp. 3d at 597. The Court does not find 14 that there is a duty on the part of MACS to speak, as it was not a party to the Agreement. It is does find, however, that there may have been a duty on the part of Stewart to speak. Although 16 Stewart was also not a party to the Agreement, he signed the Agreement as a corporate officer. 17 Stewart’s status as a corporate officer or director does not immunize him from personal liability 18 for tortious conduct. See, e.g., Frances T. v. Village Green Owners Assn., 723 P.2d 573, 581 19 (Cal. 1986). “[A]n officer or director will not be liable for torts in which he does not personally 20 participate, of which he has no knowledge, or to which he has not consented.... While the 21 corporation itself may be liable for such acts, the individual officer or director will be immune 22 unless he authorizes, directs, or in some meaningful sense actively participates in the wrongful 23 conduct.” Id. at 580. Accordingly, the Court will dismiss Count V only as to Defendant 24 MACS. 25 E. Whether Count VI should be dismissed as to PACS 26 Lastly, Defendants argue that Count VI must be dismissed because the Amended 27 Complaint fails to adequately allege alter ego liability against Stewart and MACS. (Mot. 28 Dismiss at 6). In the Amended Complaint, Plaintiffs allege that “Defendant PACS was a mere
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Page 10 of 13 i sham and shell organized and operated as the alter ego of the Defendants Stewart and MACS 2 for a personal benefit and advantage.” (Am. Compl. ¶ 84). Specifically, Plaintiff sets forth the 3 following facts that it believes supports the allegation that PACS was a mere sham and shell 4 organization: a. Defendant PACS was grossly undercapitalized; b. Defendants Stewart and MACS exercised total dominion and control of 6 Defendant PACS at relevant times; 7 c. Defendant Stewart was the only constant member of PACS; d. Defendant Stewart was the only constant manager of PACS; 8 e. Defendant Stewart comingled his personal finances with Defendant PACS; f. Defendant Stewart treated the assets of Defendant PACS as his own; 10 g. Defendant PACS failed to maintain adequate corporate records; h. No records were kept of the loan provided to Defendants Stewart and MACS 11 by Defendant PACS; and 12 i. No records were kept of the advances given to Defendants Stewart and MACS by Defendant PACS. 13 Id. Plaintiffs further allege that “Defendant MACS was a mere sham and shell organized and 14 operated as the alter ego of the Defendants Stewart and PACS for a personal benefit and 15 advantage,” listing the same allegations like those against PACS in paragraph $4. (Am. Compl. 16 ¶ $5). Defendants argue that the “alter ego liability allegations in Paragraph $4 of the Amended Complaint plainly do not properly state a claim upon which relief can be granted under GRCP 19 12(b)(6) because they are nothing more than conclusory statements of alter ego status and 20 should be dismissed.” (Mot. Dismiss at 6). In opposition, Plaintiff argues that the Amended 21 Complaint “sufficiently pleads alter ego liability” as “the Exhibits and factual allegations show 22 identical manager, identical place of business, identical members and common purpose of 23 organization.” (Opp’n at 11). 24 “The alter ego doctrine arises when a plaintiff comes into court claiming that an 25 opposing party is using the corporate form unjustly and in derogation of the plaintiffs interests. 26 In certain circumstances the court will disregard the corporate entity and will hold the individual 27 shareholders liable for the actions of the corporation. The purpose of the doctrine is to bypass 28
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Page 11 of 13 I the corporate entity for the purpose of avoiding injustice. Its essence is that justice be done, and 2 thus the corporate form will be disregarded only in narrowly defined circumstances and only 3 when the ends of justice so require.” Neilson v. Union Bank of California, N.A., 290 F. Supp. 4 2d 1101, 1115 (C.D. Cal. 2003) (internal citations, quotation marks, and alterations omitted). 5 To invoke the doctrine of alter ego, Plaintiff must allege facts that, if true, would 6 establish “(1) that there is such a unity of interest and ownership that the separate personalities 7 of the corporation and the individuals no longer exist and (2) that failure to disregard the 8 corporation would result in fraud or injustice.” Larsen v. Hyatt Intern Corp., 2011 Guam 26 ¶ 9 13 (citation omitted). “Fraudulent intent is also a factor to consider.” Guam Eco. Dev’t Auth. 10 vs. Island Equipment Co., Inc., 1999 Guam 7 ¶ 11. (citation omitted). “Conclusory allegations ii of “alter ego” status are insufficient to state a claim. Rather, a plaintiff must allege specifically 12 both of the elements of alter ego liability, as well as facts supporting each.” Neilson, 290 13 F.Supp.2d at 1116 (applying Conley v. Gibson, 335 U.S. 41, 45-46 (1957), no set of facts 14 standard) (citations omitted). See also, Kingdom 5-KR-4], Ltd. V. Star Cruises PLC, No. 01 15 CIV. 2946 (AGS), 2002 WL 432390 at *12 (S.D.N.Y. Mar. 20, 2002) (“in order to overcome 16 the ‘presumption of separateness’ afforded to related corporations, [the plaintiff] is required to 17 plead specific facts supporting its claims, not mere conclusory allegations.”); In re Currency 18 Conversion Fee Antitrust Litig., 265 F. Supp. 2d 385, 426 (S.D.N.Y. 2003) (“purely conclusory 19 allegations cannot suffice to state a claim based on veil-piercing or alter-ego liability, even 20 under the liberal notice pleading standard”). Here, the Court finds that the allegations in the 21 Amended Complaint do not contain sufficient facts to support the elements required under the 22 alter ego doctrine. The Court finds that they are conclusory allegations that do not properly 23 state a claim. 24 Plaintiff also argues that Stewart is individually liable for PAC’s obligations under the 25 Agreement as he may be held personally liable for wrongful acts committed before the LLC was 26 formed. See Opp’n at 9. The Court does not find that Stewart is individually liable for PAC’s 27 obligations under the Agreement. Although PACS was formed on September 11, 2015, the day 28 after the Agreement was signed, the Amended Complaint alleges that the breach of contract
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Page 12 of 13 i occurred “on or before September 8, 2016 and March 30, 2017, when Plaintiff allegedly 2 requested that the Defendants’ perform, and which they claim Defendants refused to do so. 3 (Am. Compi. ¶ 41). The wrongful conduct alleged therefore occurred after the LLC was 4 formed. Thus, viewing the Amended Complaint in the light most favorable to Plaintiff, the 5 allegations regarding the date PACS was formed pre-date the alleged breach of the Agreement 6 by one year, and therefore cannot support an alter ego theory of liability against Stewart. 7 Accordingly, in the absence of sufficient facts alleged, the Court dismisses Count VI against all 8 Defendants. 9 CONCLUSION 10 For the foregoing reasons, the Court hereby GRANTS Defendants’ Motion to Strike. ii The Court GRANTS IN PART and DENIES IN PART Defendants’ Motion to Dismiss. The 12 Court dismisses Counts I, II, and III against Defendants MACS and Stewart; Count IV against 13 all Defendants; Count V against Defendant MACS and Stewart; and Count VI against all 14 Defendants. Defendants shall file their Answer to the Amended Complaint within fifteen (15) 15 days of the issuance of this Decision and Order. further Proceedings are set for 16 NARtSfl at9:OOa.m. 17 IT IS SO ORDERED this 3O day of January, 2019. 19
21 HONORABLE VERNON P. PEREZ Judge, Superior Court of Guam 22
24 SERVICE VIA COURT BOX I acknowledge that a copy of the 25 original hereto was placed in the box of: 26
27 28 . ) fr 5ø1 DeCleiK Su3of Guam
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