Michael R. Roberto v. Cynthia Duenas Terlaje, fka Cynthia P. Duenas and DOES

Opinion

FILED

2 “ 9: VC

UP1F!OR Cou 4

5 IN THE SUPERIOR COURT Of GUAM 6

MICHAEL R. ROBERTO, 8 CIVIL CASE NO. CV0969-19 Plaintiff, 9 DECISION AND ORDER

ii CYNTHIA DUENAS TERLAJE, formerly known as CYNTHIA P. DUENAS and DOES 12 1-10 inclusive, 13 Defendant. ‘4

INTRODUCTION

16 This matter is before the Honorable Vernon P. Perez on Defendant Cynthia Duenas

17 Terlaje’s (“Defendant”) Motion to Dismiss Complaint. Defendant is represented by Attorney

$ Anthony C. Perez, and Plaintiff Michael R. Roberto (“Plaintiff’) is represented by Attorney

19 Anita P. Arriola. Having reviewed the pleadings, the arguments presented, and the record, the

20 Court now issues the following Decision and Order.

21 BACKGROUND

22 On August 8, 2019, Plaintiff initiated this action, filing a Complaint for Partition of Real

23 Property and for Damages against Defendant. Plaintiff and Defendant had a romantic

24 relationship for ten (10) years and lived together for several years. (Compi. ¶ 9). During this

25 relationship, Plaintiff’s parents Juan and Joaquina Roberto conveyed and transferred real

26 property to Plaintiff and Defendant as their conjugal home. Id. The real property is identified

27 as:

Roberto vs. Terlaje CV0969-19 Decision and Order

Page 1 of$ Lot No. 4, Block No. 13, Municipality of Talofofo, Territory of Guam, Estate Number 12405, Urban, as said Lot is marked and designated on Drawing Number 2 M.A. 10003, as recorded January 23, 1950 in the Department of Land 3 Management, Government of Guam, under Document Number 20765. (Compl. ¶ 6). On December 22, 1995, Plaintiff and Defendant executed a promissory note and mortgage on the Property to First Savings and Loan for a loan in the amount of $123,900.00 to 6 renovate the house located on the property. Id. at ¶ 10. See also Compl, Ex. B. The Promissory Note sets forth a monthly payment of $976.89 beginning February 1997. (Compl., 8 Ex. B). Plaintiff and Defendant made timely payments on the Loan until May 1999. (Compl. at

10 ¶ 10. According to Plaintiff, Defendant failed and refused to make further payments on the loan since then. Id. To date, Plaintiff has made payments totaling over $247,380.00 of the principal and interest under the Loan. Id. at ¶ 11.

On August 29, 2019, Defendant filed the instant Motion to Dismiss. On September 27, 2019, Plaintiff filed his Opposition, and on October 14, 2019, Defendant filed her Reply. The - Court subsequently took the matter under advisement pursuant to Superior Court of Guam Local ID Rule 7.1(e). 16 DISCUSSION 17 Defendant moves the Court to dismiss the second and third causes of action, alleging Plaintiff has failed to state a claim upon which relief can be granted. 19 I. GRCP 12(b)(6) Legal Standard When considering a Rule 12(b)(6) dismissal, failure to state a claim upon which relief can be granted, the Court must: 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 24 allegations of law and unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a claim. Dismissal for failure to state a claim is 25 appropriate only f it appears beyond doubt that the non-moving party can prove 26 no set offacts in support of his claim which would entitle Izim to relief 27

Roberto vs. Terlaje CV0969- 19 Decision and Order

Page 2 of 8 i Taitano v. Caivo Fin. Corp., 2009 Guam 9 ¶ 6 (internal citations and quotation marks omitted) 2 (emphasis added). See also Core Tech Intern. Corp. v. Hanil Engineering & Const. Co., Ltd., 3 2010 Guam 13 ¶ 52. A Rule 12(b)(6) motion tests the sufficiency of the complaint. Navarro v. 4 Block, 250 F.3d 729, 732 (9th Cir. 2001). “In ruling on a 12(b)(6) motion, a court’s 5 consideration is limited to the complaint, written instruments attached to the complaint as 6 exhibits, statements or documents incorporated into the complaint by reference, and documents 7 on which the complaint heavily relies.” Newby, 2010 Guam 4 ¶ 14 (citation omitted). Courts, 8 however, “may consider a document the authenticity of which is not contested, and upon which 9 the plaintiff’s complaint necessarily relies.” Id. at ¶ 16 (citation omitted). II. Second Cause of Action: Breach of Contract or Covenant of Good Faith and Fair Dealing Defendant first argues that the Second Cause of Action: Breach of Contract or Covenant I of Good Faith and Fair Dealing must be dismissed because no contract existed between Plaintiff and Defendant. Defendant argues that the contract at issue is the Promissory Note between 14 Plaintiff and Defendant together on one side and the Lender, First Savings and Loan, on the other, and not between each other. See Mot. Dismiss at 3. Specifically, Defendant argues that 16 the “obligations of the Promissory Note are personal to Plaintiff and Defendant, and do not 17 represent any sort of joint obligation or promise between them to make payments on the 18 Promissory Note.” Id. at 4. Plaintiff opposes, arguing that he and Defendant entered into an 19 oral contract “in which they both agreed to share equally in the loan payments due under the 20 note for as long as the loan was due and outstanding.” (Opp’n at 4). Defendant disputes whether Plaintiff properly alleged that she and Defendant entered into an “oral contract” in the

Complaint, and further argues that “[e]ven if an oral contract was properly plead, Plaintiff failed to adequately plead all elements of the contract” because “Plaintiff has failed to plead 24 consideration.” (Reply at 2).

For a contract to exist under Guam law, there must be: (1) parties capable of contracting; (2) consent; (3) a lawful object; and (4) a sufficient cause or consideration. 1$ G.C.A. § $5102. “The question of whether an oral contract was formed is determined by 28

Roberto cs. Tericeje CV 0969-19 Decision and Order

Page 3 of 8 i looking to the intent of the parties.” Takano-Towa Guam Co., Ltd. v. Cox. 1993 WL 128214*5 2 (D.Ct. Guam 1993) (citing Beta Sigmci Tati v. Shrine Civic Attditorium, 323 P.2d 406, 499 (Cal. 3 Dist. Ct. App. 1958)). “Generally, in the case alleging a defendant’s breach of an oral contract, 4 definite contractual terms are necessary to make the contract enforceable.” Mack v. Davis, 2013 5 Guam 13 ¶ 33 (citation omitted). Tn the Complaint, Plaintiff alleges: 6 16. On or about December 22, 1995, when Plaintiff and Defendant executed the mortgage and promissory note for the Loan, Plaintiff and Defendant agreed that they would each pay their fair and equal shares of the amount due under the Loan 8 for as long as the Loan was due and outstanding. 9 17. Defendant was aware that Plaintiff would not have taken out the loan if he had to pay the Loan by himself and she also knew that he took out the Loan based 10 upon Defendant’s agreement that she would pay her fair and equal share of the II amount due under the Loan for as long as the Loan was due and outstanding. 12 18. Plaintiff has performed his contractual obligations by paying his fair and equal 13 shares of the amount due under the Loan.

14 19. Defendant initially paid her share of her obligations on the Loan but subsequently in May 1999 she breached her agreement with Plaintiff and refused 15 to pay and continues to refuse to pay her obligations on the Loan. 16 20. At all relevant times herein, Defendant was in a contractual relationship with 17 Plaintiff and owed a duty to Plaintiff to act in good faith and deal fairly with him.

18 21. Defendant breached that duty on more than one occasion by failing and refusing to pay her fair and equal share of the monthly payments due under the 19 Loan. 20 22. Such acts and omissions leading to Defendant’s breach of contract were the 21 actual and proximate cause of harm to Plaintiff.

22 23. Accordingly, in breach of said contract, Defendant is liable to Plaintiff in excess of $125,000.00 or the exact amount to be proven at trial. In breach of the -‘3 covenant of good faith and fair dealing, Defendant is liable in damages to Plaintiff 24 in an amount to be proven at trial.

25 (Compl. ¶Jt 16-23).

26 Looking at the facts as plead, in a light most favorable to the non-moving party, the 27 Court finds that Plaintiff has not plead facts in support of his breach of contract claim which

28 would entitle him to relief. See Taitano, 2009 Guam 9 ¶ 6. The Promissory Note only requires

Roberto us. Terlaje CV0969-19 Decision and Order

Page 4 of 8 . i that payments on the loan be made by either borrower. The Court does not find that an oral 2 contract was alleged and that all elements of an oral contract, specifically “sufficient cause or 3 consideration” received by Defendant from Plaintiff were set forth in the Complaint. Without a 4 valid contract, there can also be no cause of action for breach of the covenant of good faith and 5 fair dealing. See Rest.2d Contracts § 205 (“Every contract imposes upon each party a duty of 6 good faith and fair dealing in its performance and its enforcement.”). The Court must therefore 7 grant Defendant’s Motion to Dismiss the second cause of action for failure to state a claim upon 8 which relief can be granted. Nonetheless, the Court will give Plaintiff an opportunity to file an 9 Amended Complaint, as requested by Plaintiff pursuant to GRCP 15. The Court declines to 10 address any of the statute of limitations arguments set forth by Defendant at this time, as they ii differ depending on the type of contract alleged in the complaint. Further, Defendant’s 12 arguments regarding the statute of limitations as to oral contracts were set forth in her Reply, 13 and Plaintiff therefore did not have an opportunity to respond to such arguments. 14 III. Third Cause of Action: Unjust Enrichment 15 Defendant next moves the Court to dismiss the Third Cause of Action: Unjust 16 Enrichment because Plaintiff has failed to adequately plead the elements required and because 17 Plaintiff failed to plead unjust enrichment in the alternative. (Mot. Dismiss at 7-8). 18 “Unlike implied in fact contracts, quasi-contracts are not recognized in Guam by statute. 19 Cf Title 18 GCA § 86101 (1994) (“A contract is either express or implied.”); Title 18 GCA § 20 86103 (1994) (“An implied contract is one, the existence and terms of which are manifested by 21 conduct.”).” Tanaguchi-Ruth & Assocs. v. MDI Guam Coip., 2005 Guam 7 9[ 27. “The 22 underlying basis for awarding quantum meruit damages in a quasi-contract case is unjust 23 enrichment of one party and unjust detriment to the other party. A person is enriched if the 24 person receives a benefit at another’s expense.” Id. at ¶ 29 (internal citations and quotation 25 marks omitted). 26 “The elements for a claim of unjust enrichment are receipt of a benefit and unjust 27 retention of the benefit at the expense of another. The theory of unjust enrichment requires one

28 who acquires a benefit which may not justly be retained, to return either the thing or its

Roberto vs. Tertaje CV 0969-19 Decision and Order

Page 5 of$ i equivalent to the aggrieved party so as not to be unjustly enriched.” Lyles i. San gcideo-Pcztel, 2 171 Cal. Rptr. 3d 34, 40—41 (Cal. App. 2014) (internal citations and quotation marks omitted). 3 “[TIhe mere fact that a person benefits another is not of itself sufficient to require the other to 4 make restitution therefor. There is no equitable reason for invoking restitution when the 5 plaintiff gets the exchange which he expected.” Peterson v. Cettco P’ship, 80 Cal. Rptr. 3d 6 316, 323 (Cal. App. 200$) (internal citations and quotation marks omitted). 7 Here, Defendant argues that Plaintiff has “failed to allege that Defendant received a $ benefit and unjustly retained that benefit.” (Mot. Dismiss at 7-8). In support of his opposition 9 to the Motion, Plaintiff notes that he has alleged the following in his Complaint: 1. Defendant owns an undivided one-half interest in the Property (Compl. ¶ 7) 2. Plaintiff and Defendant executed a Note and Mortgage for the puipose of renovating the house on the Property (Compl. ¶ 10) 2 3. Plaintiff and Defendant made timely payments on the loan until May 1999, 13 when Defendant failed and refused to make further payments on the loan (Compi. ¶ 10) 14 4. Plaintiff has been making all payments on the loan since then in order to 15 prevent a default on the loan. (Compl. 9111) 5. Plaintiff has made payments totaling over $247,380.00 of principal and 16 interest under the loan, with no further contribution from Defendant. (Compl. 17 ¶ll)and 6. Defendant is liable in damages to Plaintiff in excess of $125,000.00, or an 18 amount to be proven at trial. (Compl. ¶ 23). 19 (Opp’n at 8). Plaintiff sets forth that based on these facts, it is clear that Defendant unjustly 20 retained the following benefits: “Terjale’s one-half interest in the property has been improved 21 . . .

physically and financially by the renovations on the house made possible by the loan; Roberto’s

payments prevented a default on the loan, which protected Terlaje’s credit status; Terlaje’s 23 equal share of the loan payments, in excess of $125,000.00 were never paid and she has had the 24 benefit and use of such monies instead of paying down the Loan.” Id. The Court is inclined to - agree and will not dismiss the third cause of action on this ground. 26 . . . Lastly, Defendant argues that the third claim for unjust enrichment must be dismissed .

27 . . .

because it was not plead in the alternative. (Mot. Dismiss at 8). Plaintiff, in opposition, sets . . . . . .

Roberto vs. Terlaje CV0969-i9 Decision and Order

Page 6 of 8 e . i forth that Rule 8(e)(2) of the Guam Rules of Civil Procedure’ allows for alternative pleading of 2 inconsistent claims. (Opp’n at 8-9). Defendant acknowledges that alternative pleading is 3 permitted under Rule 8(e)(2), but argues, however, that “Plaintiff did not plead unjust 4 enrichment in the alternative, but plead it collectively, as the Prayer asked for judgment for 5 damages for breach of contract and unjust enrichment.” (Reply at 7) (emphasis in original). 6 It is undisputed that Plaintiff is permitted to plead an unjust enrichment claim in the 7 alternative, which would normally mean that dismissal of that claim based solely on the 8 existence of a contract or potential for an adequate remedy at law would be premature and 9 inappropriate. However, although Plaintiff says that he has pled an unjust enrichment claim in 10 the alternative, the Complaint as currently written does not clearly state so. Plaintiff’s third 11 cause of action does not say that it is pled in the alternative or that he seeks alternative relief. 12 further, the unjust enrichment claim is based on the same predicate common facts underlying 13 the other counts. See Compi. ¶ 24 (‘Plaintiff re-alleges the allegations set forth in paragraphs 1- 14 23 above and incorporates the same herein by reference.”). Additionally, Plaintiff has not 15 alleged - in the alternative or otherwise - that he lacks an adequate remedy at law, even though 16 he does allege that a valid contract exists in the second cause of action (breach of contract). 17 See, e.g., Kleiiz v. Chevron U.S.A., Inc., 137 Cal. Rptr. 3d 293, 331—32 (Cal. App. 2012), as 18 mothfied on denial of reh’g (Feb. 24, 2012) (Although a plaintiff may plead inconsistent claims 19 that allege both the existence of an enforceable agreement and the absence of an enforceable 20 agreement, that is not what occurred here. Instead, plaintiffs’ breach of contract claim pleaded 21 the existence of an enforceable agreement and their unjust enrichment claim did not deny the 22

23 Rule 8 provides in relevant part: 24 (2) A party may set forth two or more statements of a claim or defense alternately or hypothetically, either in one count or defense or in separate connt or defenses. When two or more statements are made in the alternative and one of them if made independently would be sufficient, the pleading is not made insufficient by the insufficiency of one or more of the 26 alternative statements. A party may also state as many separate claims or defenses as the party has regardless of consistency and whether based on legal or equitable grounds. All statements 27 shall be made subject to the obligations set torth in Rule 11. 28 Guam R. Civ. P. 8(e)(2) (2014) (emphasis added).

Page 7 of 8 e . i existence or enforceability of that agreement. Plaintiffs are therefore precluded from asserting a 2 quasi-contract claim under the theory of unjust enrichment.”). Accordingly, the Court finds that 3 Plaintiff has failed to adequately plead an unjust enrichment claim, and grants Defendant’s 4 Motion to Dismiss the third cause of action on this ground. The Court, however, will give 5 Plaintiff an opportunity to file an Amended Complaint, as requested by Plaintiff pursuant to 6 GRCPY5. 7

8 CONCLUSION 9 for the foregoing reasons, the Court hereby GRANTS iN PART Defendant’s Motion to io Dismiss. Plaintiff shall file an Amended Complaint within thirty (30) days of the issuance of ii this Decision and Order. 12 IT IS SO ORDERED this day of January, 2019. 13

17 HONORABLE VERNON P. PEREZ Judge, Superior Court of Guam 18

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