IN THE SUPERIOR COURT OF GUAM 2
3 CHEN YU MACK, )
)
4 F~; ( ________ Plaintiff, )
5 )
vs. ) DECISION AND ORDER 6 )
DONALD B. DAVIS, )
7 )
8 Defendant. )
9 ----------------------------)
10 This matter came before the HONORABLE VERNON P. PEREZ on August 15,2011 II Attorney Daniel J. Bennan represented Plaintiff. Attorney Jehan'ad G. Martinez represent 12 Defendant. The Court took the motion under advisement. After having heard the Parties 13 arguments and considering the Parties' pleadings and the record, the Court now issues th 14 following Decision and Order.
15 BACKGROUND
16 This case arises from a complaint for Injunctive Relief and Damages. Plaintiff Chen Y 17 Mack (hereinafter "Plaintiff,) alleges that Defendant Donald B. Davis (hereinafter "Defendant" 18 granted her an irrevocable proxy. 19 Plaintiff and Defendant came to an agreement in 2008 where they would both put . 20 $1,525,000.00 of their own money to fonn IHIAC, Inc. in addition to acquiring a joint loan 0 21 $6,000,000.00 from the Bank of Guam. Plaintiff's Declaration at '5. The purpose of fo .
22 IHIAC was to Purchase Zurich Insurance Guam, Inc (hereinafter "ZIG''). Id After formin 23 IHIAC, both Parties were issued 1,999 shares of IHIAC stock and 2 shares went to Franci 24 Santos as a tie breaker. Id at ,8. The agreement came to fruition and IHIAC bought all of th 25 stock of ZIG, after which ZIG's name was changed to Island Home Insurance Compan 26 (hereinafter "IHIC"). Id at ,12. After the company consolidation was all said and done, Plainti 27 alleges that she invested $1,525,000.00 into IHIAC, transferred her Staywell Guam, Inc. stoc 28 worth approximately $3,000,000.00, to IHIAC, became jointly liable on a $9,415,000.00 10
Mack v. Davis, Decision and Order from Bank of Guam 1 and allowed her $1,960,000.00 valued real property to be used as securi 2 on the Bank of Guam loan. See PI. Declaration. 3 Thereafter, Plaintiff alleges that Defendant promised Plaintiff a proxy of Defendant' 4 shares to allow Narcissa Samonte (hereinafter "Samonte") to become a 10% shareholder i 5 IHIAC to calm Plaintiff's concerns over becoming a minority shareholder. Id at , 17-18
6 Plaintiff also alleges that Defendant granted her a proxy of his shares2 via an email dated Marc 7 20, 2009 but promised to grant the proxy back in January 23, 2009. Id at '23. Plainti 8 attempted to use the alleged proxy at a shareholders meeting on April 8, 2011 in order to pass 9 resolution that would grant her $10,000.00 a month payment and reduce Defendant's ann 10 salary from $378,937.00 to $180,000.00. Id at ,30; see Resolution No.1, labeled Exhibit 6. Ye II when attempting to use the alleged proxy, Defendant revoked his proxy and Plaintiff's resolutio 12 failed. The actions material to this case followed. 13 DISCUSSION 14 Standard 15 In analyzing a request for a preliminary injunction, the Guam Supreme Court has adopt 16 a two-part test. Carlson v. Guam Telephone Authority, 2002 Guam 15 at, 6. The moving p 17 carries the burden to demonstrate a likelihood of success on the merits and irreparable injury. L 18 at, 8. See also Sananap, et 01. v. Cyfred, Ltd et 01., 2009 Guam l3. Presumptions in favor 0 19 injunctive relief are improper. Ebay, Inc v. MercExhange, LLC, 547 U.S. 388, 392-3 (2006). 20 "[A] lower court's grant of a preliminary injunction is generally reviewed for an abuse of
21 discretion." HongKong and Shanghai Banking Corp., Ltd v. Kallingal, 2005 Guam l3 at, 17 22 "Issues of law underlying a trial court's grant of a preliminary injunction are reviewed de novo
23 The issue of whether the trial court abused its discretion in finding either irreparable harm or 24 likelihood of success on the merits is reviewed for abuse of discretion. The trial court abuses i 25
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27 1 After Plaintiff and Defendant acquired ZIG, they took out another $3,415,000.00 from Bank of Guam to purchase 28 the remaining stocks of Staywell Guam, Inc.
2 Defendant disputed ever granting Plaintiff a proxy to vote his shares. Defendant does admit saying that he would grant the proxy but denies ever actually granting the proxy. Mack v. Davis, Decision and Order Civil Case No. CV065 1-1 1 Page 2 of8 discretion when it misapprehend [s] the law with respect to the underlying Issues in th 2 litigation." Id. 3 "In order to grant a preliminary injunction, it is necessary that the movant show: (1 4 irreparable injury and (2) likelihood of success on the merits. HongKong and Shanghai Rankin 5 Corp., Ltd. v. Kallingal, 2005 Guam 13 at ~ 18. "The preliminary injunction judge als 6 addressed the likelihood of success on the merits, holding that "the Defendants [Kallingals] rna 7 likely prevail at a trial on their application for a permanent injunction." Id. at ~ 20. "Upo 8 examination of the two factors for granting preliminary injunctions, this court finds the tria 9 court's finding to be supported by the facts and law." Id. "The appellate court may affirm th lO trial court's grant of an injunction as long as the record produces any ground on which it rna 11 appear that the seeking party may recover on the merits." Id. at ~ 27. The elements must b 12 balanced and in terms of strength, "more of one excuses less of the other". Sananap, et al. v. 13 Cyfred, Ltd., et al., at ~42. 14 Irreparable Injury 15 As the examination of the two part test is a balancing of sorts and the Court a majority 0 16 the discussion on this matter will go to Plaintiff's likelihood of success on the merits of her cas 17 as the irreparable injury discussion is more easily resolved. Sizeable investment, the use of rea 18 property as security to a very large loan and Plaintiff's desire of the continued function of IHIA 19 lend great weight in favor of this element. 20 Defendant argues that Plaintiff has no irreparable injury absent an injunction and tha 21 Plaintiff really only seeks $10,000.00 a month compensation or this case would never have bee 22 filed. Defendant's Opposition to Plaintiff's Motion for Preliminary Injunction. 23 furthers his argument by asserting that Plaintiff has a assigned a monetary value to her claim an 24 that $10,000.00 a month for her time with IHIAC would satisfy her need for this lawsuit 25 Defendant finishes his argument on this issue by concluding that the availability of mone 26 damages forecloses her ability to obtain an injunction. 27 The Court agrees with Defendant that where money damages are the sole recovery the 28 injunction would be improper, however, here Plaintiffs claim to the proxy of Defendant's share
Mackv. Davis, Decision and Order would effectuate her control over IHIAC. Although money is an aspect of her claim, he 2 interests in control over IHIAC are the crux of the irreparable injury Plaintiff would receive i 3 injunction is not given by this Court. When Parties originally formed IHIAC they had equa 4 shares and Plaintiff alleges that control over the company would change after Samonte wa 5 brought on as a 10% owner. In essence, Plaintiff claims that by agreeing to Samonte, Defendan 6 promised Plaintiff voting control over IHIAC and if the injunction is not temporarily granted 7 Plaintiff will not have that control. 8 Plaintiff claims that the current situation at IHIAC allowed Defendant to take in 9 annual salary far beyond what was originally agreed upon during formation of IHIAC. Th 10 Court is concerned that Defendant may be able to put IHIAC in a direction that Plaintiff i 11 uncomfortable with or adversely affected by if no preliminary injunction is granted. If it is tru 12 that Defendant is receiving more than double his agreed upon salary due to Plaintiffs lack 0 13 equal voting control over IHIAC, then it is possible that additional business interests may b 14 jeopardized in the immediate future. In addition, Plaintiff also claims that her access to busines 15 records are being interfered with and that injunction would be able to prevent that continue 16 interference. The Court is aware that injunctions are extraordinary and rarely granted, but here 17 the Court believes injunction is warranted as it applies to this issue to save Plaintiff fro
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18 irreparable injury of her business interests which go far beyond mere monetary damages. 19 Probability to Succeed on the Merits 20 This part of the two part test will rely on whether or not the Court fmds that Plaintiff w 21 given an irrevocable proxy and whether or not a permanent injunction should issue at th 22 resolution of this case. If the Court feels that Plaintiff is unable to win on the merits, then even i 23 there are irreparable harms that could result, the Court will not issue injunction here. On th 24 other hand, even if the Court does issue injunction here, it does not mean that Plaintiff will 25 on the merits at trial and that the injunction will become permanent. 26
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28 3 The Court lUlderstands that many of the statements made by Plaintiff in her briefs are only allegations, but if proven, they would show a potential where lack of equal or more than equal control (if promised by Defendant) would jeopardize her interests in IHIAC and the future oflHIAC. Mack v. Davis, Decision and Order
The Parties brought in Samonte by Defendant surrendering 6% of his shares and Plainti 2 surrendering 4% of her shares. In essence, with Samonte obtaining 10% and Defendant retainin 3 roughly 43%, Plaintiff would not have enough voting power to win over both Samonte an 4 Defendant voting together as she only has 45%. Plaintiff claims that this consideration is wha 5 made Defendant's promise to grant the proxy essential. Plaintiff alleges that Samonte no 6 follows Defendant's vote in all business matters which, if true, effectively would give Defendan 7 53% voting power and control of IHIAC. The Court finds this claim highly reasonable bu 8 questions the adequacy of evidence to prove that an irrevocable proxy was granted. 9 Irrevocable Proxy 10 Plaintiff argues that the promise was oral, but that Defendant confmned the proxy vi 11 email which Plaintiff has filed for the Court's review. That email does provide some insight 0 12 the issue of whether or not Defendant made the promise orally. In that email to Plaintiff date 13 March 20, 2009 at 5:41 p.m. labeled as Exhibit A, Defendant states "I think that it is unfair tha 14 you are forcing me to keep the commitment we both made". Plaintiffs Declaration Exhibit A a 15 '6. Defendant also states later in the email "I let it go and agreed because I wanted the busines 16 to move forward and figured you would begin to trust me at some point, I guess I was wron 17 about that". In context, the Court must assume that Defendant "agreed" to grant the proxy 18 two sentences before, Defendant wrote "I remember your asking me to give you my proxy in th 19 new company". The email will likely be admissible at trial and on its merits, appears to confi 20 the oral promise Defendant made to Plaintiff when attempting to bring on Samonte. What is als 21 convincing to the Court is that Defendant acknowledges making a promise to give the Plaintiff 22 proxy, both in the March 20, 2009 email and in his Declaration filed with this Court July 29 23 2011. 24 Defendant claims that he revoked any proxy granted to Plaintiff. Part of the discussio 25 goes to whether the proxy was granted and is effective, yet either way it must also be irrevocabl 26 if Plaintiff aims to maintain the proxy. Yet, as explained above, Defendant knows and admits h 27 promised to give Plaintiff the proxy. In any event, a proxy is irrevocable only if it is be based 0 28 consideration, coupled with an interest or given as security. See Cyclopedia of Corporations
Mack v. Davis, Decision and Order 2062 at p.305-06; See also 18 GCA § 28718. The writing itself does not need to mention that th 2 proxy is irrevocable. Id To determine whether or not the interest requirement is met, the Court 3 have looked at the following three part test: (i) the agent or proxy holder must have parted wi 4 value, incurred liability or assumed obligations, (ii) these actions must be at the principal' 5 request or with his or her consent; and (iii) the agent or proxy holder must look to the exercise 0 6 the proxy power as a means of reimbursement, indemnity or protection. Id Factor three is me 7 as Plaintiff aims to use the proxy as protection from Defendant and Samonte taking over contro 8 of IHIAC. Factor two is met as Defendant admitted to consenting to the proxy, at least orally 9 Issue arises over whether or not Plaintiff surrendered any value, incurred any liability or assume 10 any obligation. Here, the Court finds that by allowing Samonte to come in as a 10% shareholde 11 she parted with equal control over IHIAC. The Court fmds that if, the email is sufficient to mee 12 the writing requirement, the proxy would be irrevocable as all three requirements have been me 13 and Guam law allows proxies to be electronic transmissions. 18 GCA § 28718. 14 As to the issuance of a preliminary injunction, all issues have been resolved but one. Tha 15 issue is whether or not Defendant's email meets the written requirements under IHIAC Bylaw 16 to constitute a grant of proxy. If the Court finds that an irrevocable proxy can be granted orally 17 then Plaintiff will likely win on the merits and the Court should grant the preliminary injunction 18 If the Court finds that Defendant made a promise, but the proxy is otherwise invalid, then th 19 Court should deny the injunction. The requirements for a proxy to be effective and b 20 irrevocable are governed by statute and common law. For a proxy to be effective it must be i 21 writing. The Court fmds that a written instrument must exist for a proxy to be effective. 22 Plaintiff, here, claims that the email mentioning or confirming the oral proxy satisfies the writin 23 requirement. Although the Court believes that a signed email could easily meet the writin 24 requirement, the Court has doubts as to the March 20,2009 email effectuating Defendant's gran 25 of proxy. The Court must leave some discussion of these issues for trial as they are not yet rip 26
27 4 IHIAC bylaws require the proxy to be in writing. IHIAC's Bylaws are controlling under 18 GCA § 2203.
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Mack v. Davis, Decision and Order and this Decision and Order does not resolve a motion for summary judgment. The Cou 2 suspects that Parties will delve into this matter at length at a later date. As it stands now, th 3 Court believes that enough evidence exists, Plaintiffs probability of success on the merits is hig 4 enough and that irreparable injury is great enough such that preliminary injunction is warranted. 5 According to Section 9 of the IHIAC's Bylaws, which are controlling here, the writte 6 proxy must be filed with the Secretary. Here, the email is hardly concrete evidence tha 7 Defendant's promise to Plaintiff was effectuated. Yet, for a motion to obtain a prelimin 8 injunction to be successful, the case does not have to be actually proven on the merits, as tha 9 would subject the case to summary judgment. For Plaintiff to acquire preliminary injunctio 10 from this Court she only must show the two factors in such a manner that the Court find 11 irreparable injury and a probability to win on the merits. The Court finds that Plaintiff has don 12 that. Just because the probability of winning on the merits is not tremendous does not preclud 13 injunction. The potential irreparable injury is great and the likelihood of success on the merits i 14 enough that injunction should issue based on the balancing of the elements as explained . 15 Sananap, et at. v. Cyfred, Ltd, et ai., 2009 Guam 13 at ~42. The Court desires that Parties spen 16 more time on future matters breaking down the legal issues relating to the effect of the promis 17 made by Defendant. This matter, once at trial, will hinge on whether or not the Court shoul 18 find that Defendant's March 20, 2009 email meets the writing requirement under IHIAC' 19 Bylaws regarding proxies or under applicable Guam Law. 20 In any event, Plaintiff also brings in her complaint two counts for breach of contract. 21 to both Counts 3 and 4, this Court finds that Plaintiff is fairly likely to succeed on the merits 0 22 her case. From the record and pleadings thus far, Plaintiff has apparently complied with eve -' t
23 part on her 'end of the agreement made with Defendant. She has put her property up as security 24 invested $1,525,000.00 and allowed her name to be responsible for a sizeable loan from Bank 0 25 Guam. Any agreement proven to exist, which the Court finds is highly probable, appears to hav 26 been satisfied by Plaintiff. Defendant has acknowledged that he made promises to Plaintiff an 27 has yet to fully perform on them. Defendant told Plaintiff he would provide Plaintiff with 28 proxy to vote his shares. Even if Plaintiff fails to prove that a proxy exists through the March 20
Mack v, Davis, Decision and Order Civil Case No. CV0651-11 Page 7of8 2009 email, Plaintiff will still win at trial if she can show that Defendant promised to make 2 proxy and failed to perform at his end by never providing Plaintiff with a written proxy under th 3 oral contract. Even without getting into detail over whether the proxy is revocable or not, th 4 facts appear to show that Defendant never made any proxy in writing with the intention 0 5 fulfilling his end of the bargain. As it stands, the record appears to indicate that Defendant wil 6 either be liable for failing to allow Plaintiff to use her valid proxy or, in the alternative, fo 7 breaching a contract in which he promised to grant Plaintiff a proxy and failed to ever do so. 8 addition, if the contract is proven to exist, the appropriate remedy could be damages or specifi 9 performance. Thus, the preliminary injunction appears to be wholly appropriate. To win on th 10 merits and allow this Court to grant a more permanent injunction, Plaintiff would only need t 11 present evidence of the oral agreement and that she performed. The record currently reflect 12 enough evidence so that the second part of the two part test is also met. 5 13 CONCLUSION 14 The Court hereby GRANTS Plaintiff's Motion for Preliminary Injunction. Defendant i 15 hereby ordered to desist from voting his share of the IHIAC stock until the resolution of thi 16 matter at trial.
JAN 1220\1
17 So ORDERED this ~ qay o( Janu Jnglllai ~
18 . .J (Yf\T ~""w."'"
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19 HONORABLE VERNON P. PEREZ JUDGE, SUPERIOR COURT OF GUAM 20 I do hereby ce!nlfy that tile fore.oloa 21 Is a rull true aod rorrect copy or tile origin I 00 me io tbe office of cbe! , ekr" 0 uperlor Coutt o( Gil.. ,
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28 5 The Court is not making conclusion on the legal issues present in this case.The Court only aims to evaluate the probability ofPlaintifrs ability to obtain a more permanent injunction or specific performance at trial. Mack v. Davis, Decision and Order