Kim v. Kim

Opinion

FILED ,_ :r·,~:T~IOR COURT GUAM

2 nrrt - 7, p),1 ): I 8 \..,> \j' i ~ •

3 OF COURT 4

5 IN THE SUPERIOR COURT 6 OF GUAM

7 CHUNG SOOK KIM, ) Civil Case no. CV0710-11 8 ) Plaintiff, ) 9 ) vs. ) 10 MI HYE KIM, KI YOUNG KIM, MIN ) DECISION AND ORDER 11 KYONG KIM, HEE SOON JEONG, BYUNG) GON KIM, and DOES I through IV, ) 12 ) Defendants. ) 13 _____________________________) 14

15 INTRODUCTION 16 Pmsuant to Rule 7.1 of the Local Rules of the Superior Comi of Guam, Defendants' 17 Hee Soon Jeong and Byung Gon Kim's, Motion for Partial Summary Judgment was taken 18 under advisement by the Honorable Judge Michael J. Bordallo on September 4, 2014. 19 Defendants Hee Soon Jeong and Byung Gon Kim (hereafter Defendants Jeong) were 20

21 represented by attorney Helkei S. Hemminger. Mi Hee Kim, Special Administrix ofthe Estate

22 of Chung Sook Kim, was represented by attorney William C. Bischoff. The other named 23 Parties to this action did not file any papers related to this motion. Having received and 24 reviewed the arguments, papers, and file herein, the Court now issues the following order 25

26 granting in part Defendants Jeong's request.

Page 1 ofll BACKGROUND 2 I. 3 The instant matter anses out of a civil complaint for cancellation of instrument 4

5 containing three counts for breach of fiduciary duty, aiding and abetting breach of fiduciary

6 duty and constructive trust, filed by the Plaintiff on April 22, 2011. Plaintiff filed a first 7 amended complaint for cancellation of instrument on May 6, 2011. Plaintiffs first amended 8 complaint contained four counts: 1) breach of fiduciary duty, 2) fraud, 3) aiding and abetting 9 breach of fiduciary duty and 4) constructive trust. 10

11 On February 17, 2012, the Court entered an order dismissing count two of Plaintiffs

12 complaint and granting leave to amend a portion of her pleading. Plaintiff filed her second 13 amended complaint on March 9, 2012. In her pleading Plaintiff alleges counts of: 1) breach of 14 duty, 2) fraud, 3) aiding or abetting breach of duty, and 4) constructive trust. On April 9, 2013, 15 Defendants Jeong filed a pleading entitled, Answer to Complaint; Counterclaim as to Plaintiff; 16

17 Cross-claim as to Defendants' Mi Hye Kim, Ki Young Kim, Min Kyong Kim; Demand for

18 Arbitration. In their counterclaim and cross-claim Defendants Jeong allege four causes of 19 action and a section entitled Demand for Arbitration. The causes of action alleged in 20 Defendants Jeong's pleading are: 1) quiet title, 2) breach of warranty, 3) recission and fraud. 21 On July 16, 2014, the Court allowed Defendants Jeong to amend their pleading and include an 22

23 additional affirmative defense of bona fide purchaser and two additional causes of action for

24 ejectment and unjust enrichment. 25

Page 2 ofll II. 2 a) 3 On July 15, 2014, Defendants Jeong filed a motion for partial summary judgment. In 4

5 support of their motion they assert that the following facts are undisputed:

6 1. Defendants Jeong are husband and wife and are the prior owners of the minimart and water

7 supply business known as Pure H20 and MiniMart (hereafter MiniMart); a business they 8 owned for 5 years; Mot. at 1. 9 2. In 2010, Byung Gon Kim of Defendants Jeong was diagnosed with renal failure. This 10

11 necessitated their return to Korea for his medical treatment and possible kidney transplant

12 and motivated Defendants Jeong to attempt to sell their store; !d. 13 3. Their initial valuation for their business was $228,700.00; this valuation was derived from 14 their startup and acquisition costs and did not include profits, earnings or good will; the 15 initial lower valuation was based upon Defendants Jeong's desire to relocate quickly; !d. 16

17 4. Defendant Mi Hye Kim (hereafter Defendant Kim) is Plaintiffs Daughter; she and her

18 husband Defendant Ki Yong Kim own a sushi and sandwich business and were MiniMart 19 suppliers; !d. at 2. 20 5. Defendant Kim and Defendants Jeong agreed that Defendant Kim could purchase the entire 21 MiniMart, its equipment, inventory and supplies for $180,000.00; !d. 22

23 6. After Defendant Kim informed Defendants Jeong that their application for a business loan

24 was declined she offered to exchange the store for a residential property in Mangilao 25 (hereafter the residential property). The residential property is a five bed room, two-story 26 duplex, the upstairs unit generating $1,200.00 each month and the entire property appraised 27

28 at $335,000.00; !d.

Page 3 ofll 7. Byung Gon Kim believed he was terminally ill and desired to provide a permanent income 2 source for his wife; !d. 3 8. Defendants Jeong agreed to purchase the residential property for $300,000.00 to be paid as 4

5 follows:

6 1. Transfer of the MiniMart for $180,000.00;

7 2. A cash payment of $60,000.00; and 8 3. A lease back agreement where Mye Hye Kim's family could lease the property for a 9 period of twenty four (24) months for an lease amount of $2,500 each month; !d. at 3 10

11 9. In January of2011, Plaintiff visited the MiniMart with Defendant Kim to inspect the store;

12 Plaintiff did not voice any objection to the transaction during the visit; 1 !d. 13 10. The title insurance company Title Guaranty was retained to conduct the escrow and closing 14 of the sale; !d. 15 11. Produced at the February 1, 2011, sale meeting was a recorded Deed of Gift between 16

17 Plaintiff and Mi Hye Kim and a warranty deed which was to be executed before a notary

18 public; !d. 19 12. Ms. Domon, the notary public who notarized the February 1, 2011 Warranty Deed, 20 specifically recalls that during the signing of the deed she inquired whether Plaintiff 21

understood the document; Plaintiff made no objection to the signing ofthe deed; !d. 22

23 13. On February 2, 2011, Mi Hye Kim and Hee Soon Jeong met at Title Guaranty to sign the

24 remaining documents and finalize the transaction; !d. 25 14. Defendants Jeong were not present when Plaintiff signed the 2009 Deed of Gift or the 2011 26 Warranty Deed and were not involved in the preparation of those documents; !d. at 4. 27

Page 4 ofll . ,·, ; 15. Subsequent to the February 2011 signing and closing Defendants Jeong went to Korea to •;

' 2 seek medical assistance and Defendants Kim took over operation of the MiniMart; !d. 3 16. A few months after closing Plaintiff sued Purchasers to rescind the transaction; Defendants 4 Jeong did not become aware ofthe suit until December 2012; !d. 5

6 17. Defendant Kim and her family retained the $60,000.00 and continue to operate the

7 MiniMart and occupy the residential property. !d. 8 Having asserted the above facts Defendants Jeong request that the Court enter an order of 9 partial summary judgment, in their favor, as to counts two and three of the second amended 10

II complaint filed against them. Additionally Defendants Jeong request the Court to find as a

12 matter of law that they are bona fide purchasers of the residential property and entitled to its 13 possession. !d. 14 As to count two of Plaintiffs second amended complaint Defendants Jeong argue that 15 elements of a fraud claim require: 1) misrepresentation; 2) knowledge of falsity; 3) intent to 16

17 defraud to induce reliance; 4) justifiable reliance; and 5) resulting damages. !d. at 5. Citing to

the rule requirement that a fraud claims be pled with specificity, Defendants Jeong first argue 19 that Plaintiff has for the second time, failed to assert sufficient specific facts to plead fraud. !d. 20 t

5-7. In support of this argument they specifically point to the second amended complaint's 21 failure to assert any facts supporting misrepresentation. !d. at 7. Defendants Jeong also refer to 22

23 Plaintiffs declaration that she had never knowingly met, corresponded or spoken with them,

24 reasoning that without this it is impossible to have met this element as a matter of fact or law. 25 !d. 26 As to count three, aiding and abetting breach of fiduciary duty, Defendants Jeong assert 27

1 Defendants Jeong by later referencing a statement in Plaintiffs declaration that Plaintiff has Page 5 ofll that this cause of action has not yet been recognized by the Guam Supreme Court. !d. 9. 2 However, Defendant asserts that it has been recognized in a majority of U.S. Jurisdictions and 3 that under the following elements, it has been recognized by the Guam Superior Court: 1) the ~. 4

5 primary tortfeasor breaches a fiduciary duty owed to defendant; 2) the aider-abettor has actual

6 knowledge of the breach; 3) the aider-abettor lends substantial assistance or encouragement; 4) 7 and the victim-plaintiff suffers proximately caused damage. Jd. Under these elements 8 Defendants Jeong assert that Plaintiff is unable to plead or show that they had lent support or 9 had actual knowledge ofMi Hye Kim's breach. !d. at 9-14. They argue that: actual knowledge 10

11 cannot be inferred from Plaintiffs age or literacy level, Plaintiff is unable to identify any facts

12 to support a secret meeting between them and Defendant Kim, or that under the above 13 undisputed facts, it cannot be persuasively argued that Defendants Jeong were obligated to 14 expressly discuss the sale with the Plaintiff. Jd. at 12-14. 15 In their motion for summary judgment Defendants Jeong's argue that as a matter of law 16

17 they are bonafide purchasers. Id. at 14. In support of this argument they assert that the elements

18 required for such a finding are that one must acquire title: 1) through payment of value; 2) 19 without actual or constructive notice of another's rights; 3) in good faith. Id. They assert that in 20 satisfaction of these elements they: 1) transferred Defendant Kim, $240,000.00 in cash and 21

22 assets, paid the relevant property taxes and granted a rent-free two year lease; 2) reasonably

23 relied upon a deed Plaintiff signed and had notarized and were aware of no further issues or

24 concerns that might subjectively or objectively indicate a lack of notice; and 3) performed all 25 agreed upon conditions in good faith. !d. 15-16. 26

never spoken with or met them, Defendants Jeong appear to concede that this fact is disputed. Page 6 ofll b) 2 Plaintiff filed its opposition on August 12, 2014. Opp. at 1. In it they argue and assert that 3 while Plaintiff signed a deed of the residential property, no consideration for that deed passed 4 from Defendants Jeong to Plaintiff. Id. at 2. They assert that only Mi Hye Kim received any 5

6 consideration. Id. Absent evidence of consideration, they argue that there was no contract

7 between Plaintiff and Defendants Jeong and at most Plaintiff and Defendants Jeong are each 8 entitled to half the residential property and joint judgments against Mi Hye Kim. Id. 2-3. 9 Plaintiff reasons that because her execution ofthe deed was necessary, Defendants were legally 10

II obligated to seek her out and discuss the terms. Id. at 3-4. In support of this reasoning she cites

12 to 1949 case from the California District Court of Appeals that discusses the standard to review 13 gifts from principles to their fiduciaries. ld. at 6. Extending this reasoning she argues that Mi 14 Hye Kim's fiduciary relationship to her mother required that Defendants Jeong question Mi Hye 15 Kim's deed and inquire whether any consideration would be given to Plaintiff as joint tenant. 16

17 Id. 6-7.

18 As to Defendants Jeong's assertion of the notary's inquiries, Plaintiff argues they should 19 be given no weight because the notary did not speak Korean and the question is outside the 20 scope a notary's duty. ld. 3-4. Further, Plaintiff argues that because Defendants Jeong did not 21 acquire the complete interest in the residential property through a third party, the bona fide 22

23 purchaser doctrine does not apply. ld. at 5. Plaintiff argues that the circumstances of the sale

24 put Defendants Jeong on inquiry notice. ld. at 7-8. This required their further investigation of 25 the contracting parties and invalidated Mi Hye Kim's deed. Id. at 7-8. 26 c) 27

28 Defendants Jeong filed their reply on September 2, 2014. Reply at 1. In it they highlight

Page 7 of 11 Plaintiffs failure to oppose their request for summary judgment as to counts two and three of 2 Plaintiffs second amended complaint. !d. Defendants Jeong concede that Plaintiff was not a 3 signatory to the purchase agreement. !d. at 5. However, Defendants Jeong dispute Plaintiffs 4 argument that she received no consideration. !d. Citing several California Appellate Court 5

6 cases decided from 1915 to 1967, they argue that when purchasing property from joint tenants,

7 the purchaser has no obligation to provide separate consideration to each because the 8 consideration retains the joint tenancy characteristic. !d. 2-5. They further argue that while 9 Plaintiff did not receive consideration in the form of cash, she constructively participated in the 10

II operation of the store, enjoyed the lease proceeds of the upstairs unit of the residential property

12 and continued to live in the residence during the two years of the lease back term. !d. at 5. In 13 conclusion Defendants Jeong appear to concede that there are questions of disputed material 14 fact regarding whether Plaintiff agreed to sell her interest in the residential property for the 15 consideration offered. !d. 5-6. 16

17 DISCUSSION

18 I. 19 Rule 56 of the Guam Rules of Civil Procedure regulates when a court may grant 20 summary judgment. Guam R. Civ. P. 56. Summary Judgment is appropriate if the pleadings, 21 deposition, interrogatories and admissions on file together with the affidavits, if any show that 22

23 there is no genuine issue as to any material fact and that the moving party is entitled to

24 judgment as a matter of law. Guam R. Civ. P. 56(c); Izuka Corp. V: Kawasho International, 25 (Guam), Inc., 1997 Guam 10, ~7. 26 [A] party seeking summary judgment always bears the initial responsibility of 27 informing the district court of the basis for its motion, and identifying those 28 portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any," which it believes

Page 8 ofll demonstrate the absence of a genuine issue of material fact. 2 Celotex Corp. v. Catrett, 477 U.S. 317,323 (1986). 3 In rendering its decision on a motion for summary judgment, a court must draw 4 inferences and view the evidence in the light most favorable to the non-moving party. Bank of 5

6 Guam v. Flores, 2004 Guam 25. If however, the movant can demonstrate that there are no

7 genuine issues of material fact, the non-movant cannot merely rely on allegations contained in 8 the pleading, but must produce at least some significant probative evidence to support the 9 pleading. Edwards v. Pacific Financial Corporation, 2000 Guam 27 ~ 7. 10

11 Consequently, a court's "ultimate inquiry is to determine whether the 'specific facts' set

12 by the nonmoving party, coupled with undisputed background or contextual facts, are such that 13 a rational or reasonable jury might return a verdict in its favor based on that evidence." 14 Edwards, 2000 Guam 27 ~ 7; Iizuka, 1997 Guam 10 ~ 8. A material fact is one that is relevant 15 to an element of a claim or defense and whose existence might affect the outcome of the suit. 16

17 Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment.

18 A genuine issue precluding summary judgment exists "if there is 'sufficient evidence' which 19 establishes a factual dispute requiring resolution by a fact-finder." M Electric Corporation v. 20 Phil-Gets (Guam) International Trading Corporation, 2012 Guam~ 11. 21 II. 22

23 Defendants Jeong first request that summary judgment be entered against Plaintiff as

24 count II of her second amended complaint. Mot. at 5-8. In 2008 the Guam Supreme Court 25 explained that, "[t]he elements of fraud are: (1) a misrepresentation; (2) knowledge of falsity (or 26 scienter); (3) intent to defraud to induce reliance; (4) justifiable reliance; and (5) resulting 27

damages." Taitano v. Calvo Finance Corp., 2008 Guam 12 , ~12. After a review of the 28

Page 9 of 11 undisputed facts and assertions of Defendants Jeong, the Court is unable to find that Plaintiff 2 has appropriately identified any specific facts upon which a reasonable jury might find 3 Defendants Jeong committed any ofthe elements of fraud. Edwards, 2000 Guam 27 ~ 7. While 4

5 there is a disputed issue of fact whether Defendants Jeong ever met with Plaintiff or discussed

6 and agreed upon the terms of the sale, Plaintiff has not appropriately alleged any specific facts 7 to support her claim. !d. 8 III. 9 Second, Defendants Jeong request that the Court similarly dismiss count three of 10

II Plaintiffs second amended complaint, aiding or abetting breach of duty. Mot. at 8-14. This

12 claim first requires a showing of facts which might, when viewed in their best light, establish a 13 cognizable duty on the part of the primary tortfeasor. Newsome v. Gallacher, 722 F.3d 1257, 14 1272-1273 (lOth Cir. 2013); Wright v. Apartment Inv. and Management Co., 726 S.E.2d 779, 15 788 (Ga. Ct. App. 2012)(abetting breach of fiduciary duty requires a showing of the following 16

17 elements: (1) through wrongful conduct the defendant procured a breach of the primary

18 wrongdoer's fiduciary duty to the plaintiff; (2) with knowledge of the duty and with malice and 19 the intent to injure; (3) the defendant's procured a breach of the duty; and (4) damages which 20 where proximately caused); Gordon v. Busbee, 723 S.E.2d 822, 830 (S.C. Ct. App. 2012)(The 21

22 elements for a cause of action of aiding and abetting a breach of fiduciary duty are: (1) a breach

23 of a fiduciary duty owed to the plaintiff; (2) the defendant's knowing participation in the breach; 24 and (3) damages). In instant matter, Defendants have properly shown the lack of any facts 1,.-, 25 which might support any of the above elements. Edwards, 2000 Guam 27 ~ 7. Plaintiff has 26 failed to identify any significant probative evidence to support it. !d. 27

Page 10 of 11 III. 2 Lastly Defendants Jeong request that the Court summarily find that they are bona fide 3 purchasers of the residential property. In 1991 the Guam Appellate Division held that, "[t]o 4 become a bona fide purchaser of property one must acquire title through payment of value, in 5

6 good faith, and without actual or constructive notice of another's rights." Morioka v. I & F

7 Corp. Guam, No. CIV. 91-00027A, 1991 WL 255842 at *3 (D. Guam App. Div. 1991). 8 Inherent in these elements and necessary to a finding of a bona fide status requires that the 9 property in question was acquired through third person or unrelated transaction. !d. The IO

II undisputed facts in this case contain no assertions which would support such a finding. The

12 asserted sale of residential property and the MiniMart occurred directly with no asserted I3 intervening break in ownership. 2 14 CONCLUSION 15 For the reasons set forth above Defendant Jeong's requests are Granted in part. Counts I6

I7 two and three of Plaintiffs second amended complaint are under the above standards hereby

I8 summarily dismissed and Defendants Jeong's request for quiet title as a bona fide purchaser is I9 denied. 20 /}-f)A SO ORDERED, this _J__ day of (}-~ 2014. 2I

22 S~RVICE VIA COURT BOX :; /') /~~ -\___ ·······

23 BLE MICHAEL J. BORDALLO 24

25 Deputy k Su nor ourt10f uam 2 26 In Plaintiffs opposition as well as Defendants Joeng's reply the Parties concede that Defendants Jeong are entitled to a partial summary judgment as to their quite title to any interest 27 Defendant Kim may retain in the residential property. However this argument was not initially 28 raised or analyzed in Defendants Jeong's intitial brief and Plaintifflacks standing to concede it on behalf of Defendant Kim. Absent it being initially raised the Court is not able to without adequate notice grant it. Page 11 ofll