KCI Corporation v. Choi

Opinion

r i

vt l, 'i 1 IN THE SUPERIOR COURT OF GUAM .1 2

KCI CORPORATION, 23MMAR2 R 2 : C7 3

4 Plaintiff, CIVIL CASE No. CV0214-08

5 V. DECISION AND ORDER 6 SUNG MIN CHOI and KAREN YOUNG 7 SOOK KIM, 8 Defendants. 9 SUNG MIN CHOI and KAREN YOUNG to SOOK KIM, II Third Party Plaintiff, 12 V. 13 GLOBAL REALTY and MIKE LEE, 14

15 Third Party Defendants.

17 INTRODUCTION 18 This matter came before the Honorable Vernon P. Perez on May 22 2013, on 19 Defendants' Motion to Dismiss or In the Alternative, to Stay Proceedings to Add a Party 20 Defendant. Attorney Louie J. Yanza represents the Defendants. Attorney Jeha n'Ad G. 21 Martinez represents the Plaintiffs and Attorney Phillip Tones represents the Third-Party 22 Defendants. The Court took the matter under advisement. Having considered the parties'

23 arguments and pleadings, the Court now issues the following Decision and Order.

24 BACKGROUND This litigation concerns an alleged real estate transaction previously contemplated by 25 Plaintiff KCI and Defendants Mr. Sung Choi and Ms. Karen Kim ("Choi group"), with Brokers 26 used as intermediaries. The property at issue is commonly known as the Top Plaza Building or 27 the "I-Connect" building, located in Tamuning, Guam. In 1998, the Choi group was positioning 28 itself to purchase the property. Unable to finance the purchase and development of the property

Decision and Order CV0214-08; KCI v. Sung Min Choi and Karen Young Sook Kim

Page 1of8 themselves, the Choi group entered into an agreement with two third parties not named in this lawsuit, Dian Hong Song and Zhi Xia Yang ("the Songs"), under which the Songs were to 2 receive ownership of one half of the third floor of the completed building in return for services 3 provided during construction. This agreement was formally memorialized on December 14, 4 1998. 5 The property was formally purchased in 2000 by the Choi group and title was placed 6 only under the name of Sung Choi ("Mr. Choi"). On or about June 12, 2007, KCI issued an 7 offer to purchase the property to Mr. Choi. Mr. Choi later tendered an acceptance. Karen Kim

8 ("Ms. Kim") objected to the proposed sale. In October 2007, the Brokers advised the Choi

9 group that that the deal had to go forward as previously agreed. Ms. Kim then went to the Brokers' office and complained. Subsequently Mr. Choi executed a deed of gift purporting to 10 convey half ownership of the property to Ms. Kim, while retaining a one-half interest. The deed II describes the rights enjoyed by both Mr. Choi and Ms. Kim as joint tenancy with rights of 12 survivorship. The sale was never closed and KCI filed this action. 13 In its April 2010 Decision and Order addressing Motions for Summary Judgment, the 14 Court raised the issue of mandatory joinder as the remedy sought by KCI would seemingly 15 implicate the property interests of the Songs. The Court directed the parties to submit further 16 briefing on this issue. 17 DISCUSSION 18 At issue is whether the Songs must be joined in this action. Whether a party must be

19 joined in an action is governed by Rule 19 of the Guam Rules of Civil Procedure ("GRCP"). A court must first determine whether a party is necessary under GRCP 19(a). Agana Beach 20 Condo. Homeowners Assn v. Monte Mafnas, 2013 Guam 9 ¶ 57 (citing Benavente v. Taitano, 21 2006 Guam 15 ¶ 58). If so, then it must determine whether joinder is feasible. Id . ¶ 77. If 22 joinder is feasible, the court shall order the necessary party to be joined. Id. If joinder is not 23 feasible, then the court determines whether the party is indispensable. Id. Under GRCP 19(a), a 24 party shall be joined to an action if: 25 (1) in the person's absence complete relief cannot be accorded among 26 those already parties, or (2) the person claims an interest relating to the subject of the action and is 27 so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to 28 protect that interest or

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Page 2 of 8 (ii) leave any doubt of the persons already parties subject to a I substantial risk of incurring double, multiple, or otherwise inconsistent 2 obligations by reason of the claimed interest.

3 If the person has not been so joined, the Court shall order that the person be made a party. If the person should be joined as a plaintiff but refuses to do so, the 4 person may be made a defendant, or, in a proper case, an involuntary plaintiff. 5 GRCP 19(a). A party needs to meet only one of the above criteria to be considered a necessary 6 party. Benavente, 2006 Guam 15 ¶ 58. 7

8 Under subsection (a)(1), an absentee's presence is required when "complete relief cannol

9 relief to be effective, be accorded the Songs among those must already be joined parties." as a19necessary GRCP that for anoyi any judgment first assert party, otherwise, (a)(1). Defendants 10

11 relief afforded to the Plaintiff may be upset by subsequent litigation by the Songs. Def's. Mot 12 pg. 10. In other words, Defendants argue that the absence of the Songs prevents complete reliel 13

14 from being awarded to the parties and also subjects Plaintiff to multiple or inconsisten

1s judgments or liability. Dees. Mot. pg. 11. Plaintiff argues that since no other parties held titl 16 to the subject property, complete relief can be afforded between the parties already joined in the 17 litigation. P1's. Mot. pg 4. 18

19 Subsection (a)(1) calls for the Court to consider the relief between the current parties.

20 "Under the express terms of the rule, the focus is on the relief between the parties to the present 21 action, and not on the possibility of further litigation between a party and the absentee." 22 Benavente v. Taitano, 2006 Guam 15 ¶ 48 (citing Morgan Guar. Trust Co. v. Martin, 446 F.2 23 593, 598 (7th Cir. 1972). Thus, for the Court to find that complete relief can be afforded to the 24

25 current parties, it would have to agree with Plaintiff that no other parties, not even the Songs

26 held title to or had any interest in the subject property. However, Defendants claim, unde 27 subsection (a)(2), that the Songs do, in fact, have an interest in the subject property. Therefore 28 the Court finds that the more apposite issue in this matter is relative to subsection (a)(2

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Page 3 of 8 whether the Songs claim an interest relating to the subject of the action and are so situated that'

2 disposition of this action may as a practical matter impair or impede their ability to protect that)

3 interest.1 4 Under subsection (a)(2)(i), an absentee's presence is required for just adjudication when 5 the absentee claims an interest relating to the subject of the action, and a disposition of th e 6 action, without the absentee may "(i) as a practical matter impair or impede the person's ability 7

8 to protect that interest." The resulting inquiry is twofold: "first, what are the absentee's interests

9 if any; and second, as a practical matter, will a judgment impair or impede the absentee's ability 10 to protect that interest." Benavente v. Taitano, 2006 Guam 15 ¶ 62. "The purpose of Rule 11 19(a)(2)(i) is to protect the legitimate interest of absent parties." Id. (citing United States ex rel. 12

13 Morongo Band of Mission Indians v. Rose, 34 F.3d 901, 908 (9th Cir. 1994). The Supreme

14 Court of Guam recognized that other jurisdictions arrive at different interpretations of t he 15 "interest" that subsection (a)(2)(i) was designed to protect. On the one hand, some courts hav e 16 held that such interest must be a "legally protected interest." Id.¶ 63 (citing Liberty Mut. Ins. 17 Co. v. Treesdale, Inc., 419 F.3d 216, 230 (3rd Cir. 2005). On the other hand, some courts have 18

19 held that the absentees need only "claim an interest" in the subject matter of the litigation. Id.

20 64. The Supreme Court in Benavente, held that the absentee showed an interest in the subjec t 21 matter of litigation, but the Court did not determine the precise nature of the asserted right 22 "[W]ith respect to impairment or impediment of [the asserted] right, the inquiry is practical 23 opposed to theoretical." Agana Beach v. Mafnas, 2013 Guam 9 ¶ 67. "Joinder will be insisted 24

25 upon if the action might detrimentally affect a party's or the absentee's ability to protect hi s

26 property or to prosecute or defend any subsequent litigation in which the absentee might becom 27

28 The fact that Defendants, instead of the Songs, are asserting necessary joinder does not affect the Court's analysis. See Agana Beach v. Mafnas, 2013 Guam 9 ¶ 66 (holding that the absentee party does not necessarily have to be the one to claim an interest). Decision and Order CV0214-08; KCI v. Sung Min Choi and Karen Young Sook Kim

Page 4of8 involved." 7 Charles Alan Wright, Arthur R. Miller, Mary Kay Kane & Richard L. Marcus

2 Federal Practice and Procedure: Civil § 1604 (3d ed. 2012).

3 based by virtue onDefendants the of the claims 1998first toPartnership beargue presented the and1998 have SongsThe at trial. thatAgreement, that an Partnership ownership they may lose interest agreement their in interest the basically subject in thestates property tha 4 5 6

7 the Songs shall provide labor, tools, forms, shoring jacks and scaffolding for the use o

8 construction. See Partnership Agreement. The agreement further states that the Songs shall o

9 one half of the third floor of the building. Id. Defendants also point out that the Songs' partial 10 ownership of the property is made even more evident by the fact that Mr. Song signed what II purported to be a settlement agreement prior to Mr. Choi's agreement to sell the property 12

13 Essentially Defendants argue that the Songs' interest in the property was substantial enough tha

14 Plaintiff's agent was aware that the Songs owned an interest in the property and furthe 15 attempted to have the Songs settle before the purchase agreement was executed. See Def s. Mot 16 pg. 11. 17 Plaintiff argues that the Songs' purported interest in the property is merely speculative 18

19 and not grounded in any legal basis. See P1's. Opp. pg. 4. First, Plaintiff asserts that the 199 8

20 Partnership Agreement is incapable of acting as an instrument of conveyance because it fails t 21 conform with 21 GCA § 29148, which sets forth the requirements when instruments are offered 22 for filing with the registrar which affects registered land. See 21 GCA § 29148. Secondly 23 Plaintiff argues that insomuch as the 1998 Partnership Agreement purports to convey a severe 24

25 interest in the building, it does not comply with the requirements of the horizontal property act 26 which operates to separate property into "apartments" and common elements. See 21 GCA § 27 45104 and 45106. As a result, Plaintiff asserts that no property interests were severed from th 28 building and the Songs have no legal interest in the property. Next, Plaintiff argues that the 199

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Page 5of8 Partnership Agreement fails to operate as a Mechanic's Lien, if that is what was intended, as the I

2 document fails to comply with the requirements for Mechanic's Liens under 7 GCA § 33302

3 Lastly, Plaintiff argues that even if the partnership owned the property, Mr. Choi's conveyance

of the property in his own name binds the partnership because Mr. Choi was an agent.

The Court is not convinced that Plaintiff's legal conclusions necessarily preclude joindei

of the Songs. Plaintiffs arguments further their position that the Songs lack any legal interest i

8 the property. As discussed above, the Guam Supreme Court adopted the notion that "[jjoinde

9 will be insisted upon if the action might detrimentally affect ... the absentee's ability to protec 10 his property . . . . " Agana Beach v. Mafnas, 2013 Guam 9 ¶ 67. The Court construes thi s II language as giving Rule 19 broader application than that given by Plaintiff. In its April 201 12

13 Decision and Order, the Court recognized that the Songs, by all accounts, have been for over

14 decade the purported owners of a 1/6 interest in the building at issue in this case. The Court als 15 recognizes that the 2007 document, which purports to be a Settlement Agreement, could 16 arguably have imputed notice upon Plaintiff of any of interest in the property that the Songs ma 17 possess. See Def s. Ex. B. The Court concludes that the evidence is sufficient for 18

19 determination that the action might detrimentally affect the Songs' ability to protect their

20 property or to prosecute or defend any subsequent litigation in which the Songs' might becom 21 involved. For example, if the Court awarded specific performance, the Songs could stand to lose 22 their interest in the property. On that basis, the Court finds that the Songs are a necessary party. 23

24 Global Realty and Mike Lee, as Third Party Defendants ("TPD"), joined in Plaintiffs

25 Opposition to Defendants' Rule 19 Motion. TPD cites to Hamilton v. Bradford, 502 F. Supp 26 822 (1980), where a court held that Rule 19 did not require the joinder of a third party. The 27 Court finds the facts of Hamilton distinguishable from the facts of the instant case. In Hamilton 28 the plaintiff brought an action against three defendants who were all siblings. The plainti

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Page 6of8 alleged that he entered into a contract with defendants for the purchase of certain real property, I

2 and that the defendants breached their agreement with plaintiff and subsequently negotiated the

3 sale of the property to a third party, who at all times had knowledge of the contract between 4 plaintiff and defendants. Id. at 825. The court considered to what extent granting specific 5 performance would abrogate any possible contractual rights of the third-party. The coull 6 right ofataction ultimately action held law that hehe that that themay maythirddesire party elect to at pursue " Id. was not necessary 833. becausetothis theaction actionwill as itnot "would notjudicata be res of an y be denied 7

10 In the present case, the Defendants assert that the Songs have, at the very least have I1 equitable interest in the subject property, which they have held for over a decade. The Court i 12

13 convinced that the claimed interest in the present case is distinct from any possible contractual

14 rights the third-party may have had in Hamilton. Furthermore, the Guam Supreme Court held 15 that "even where a judgment would not be preclusive, it may impair a party's right if it reduce 16 the probability of winning a subsequent lawsuit or places that party in a less favorable position." 17 Agana Beach v. Mafnas, 2013 Guam 9, ¶ 67. 18

19 TPD also cites to Bethell v. Peace, 441 F.2d 495 (1971) for the proposition that the Song

20 are not necessary to this action. In Bethell, a successor in title to one of six co-owners who 21 signed an agreement to sell foreign realty brought suit against the broker who persuaded all but 22 one of seven co-owners to sell the property. Bethell v. Peace, 441 F.2d 495, (1971) The distric 23 court declared the contract invalid. Id. at 496. On appeal defendant broker alleged, among 24

25 other things, that all co-owners who signed the agreement were indispensable party plaintiffs

26 The main distinction in Bethel was that defendant sought to join all co-owners who signed the 27 agreement, without regard for one non-signatory co-owner. Id. The Court de termined tha 28 defendant's interests would not have been injured by a failure to join the non-signatory co-owne

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Page 7 of 8 because defendant was "willing to purchase less than the entire ownership interest." Id. at 497. I

2 In the present case, Plaintiff seeks to purchase the entire property. Thus, the Court finds Bethel

3 inapplicable to the facts of the instant case. 4 Because the Court finds that the Songs' claimed interests render them necessary to thi s 5 action, the Court must next determine whether joinder is feasible. "Federal courts have 6

7 considered joinder infeasible in three situations: when venue is improper, when the absentee i

8 not subject to personal jurisdiction, and when joinder would destroy subject matter jurisdiction."

9 Agana thus gives service2013 risev.toMafnas, Beach Guam 9,Further, of process. on Guam any reason situated not awareis of is property subject TheCourt ¶ 67. the that an thde 10

II addition of the Songs would harm the Court's jurisdiction. Accordingly, because the Songs are 12

13 necessary parties and there is no reason apparent as to why joinder is not feasible, the Court nee

14 not consider whether, under Rule 19(b), the Songs are indispensable. 15 Finally, pursuant to Rule 19(a), "[i]f the person has not been so joined, the court shall 16 order that the person be made a party." GRCP 19(a). To minimize any further delays, the Co 17 declines to stay the proceedings and instead orders that the Songs be joined in this action. 18

19 CONCLUSION

20 Based on the foregoing reasons, the Court DENIES Defendants' Motion to Dismiss, or

21 in the alternative to Stay Proceedings to allow Plaintiff time to add the Songs as party

22 Defendants. The Court, instead, ORDERS Plaintiff to join the Songs. 23

24 IT IS SO ORDERED this day of March dN , 2014. 25 SERVICE VIA COURT BOX 26 I acknowledge that a copy of the orlpinal hereto was placed in the

28 HONORABLE VERNON P. PEREZ n m e : _ Judge, Superior Court of Guam uty clerk superior Decision and Order CV0214-08; KCI v. Sung Min Choi and Karen Young Sook Kim

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