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CLERK0? OfCBURT COURT 3
4 'BY=
7 IN THE SUPERIOR COURT COURT OF OF GUAM GUAM
MSU GUAM LLC LLC and DAVID SU, and DAVID so, crvlL CIVILCASE CASEno. NO.CV0077-24 CV0077-24 9
10 10 Plaintiffs,
II vs. DECISION ANDAND ORDER 12 12 WANG-CHIEH ANG-CHIEH "RONALD" "RONALD"SU SUand and Re: Defendaxlt's Defendant's Motion Motion to to Dismiss Dismiss under under GRCP 13 13 MANHATTAN MANHATTAN FINANCIAL FINANCIAL LLC, and 12(b)(6) 9(b) and 12(b)(6)
14 Defendants. Defendants. 15 15
16 16
This matter came came before before the the Honorable Barcinas on November 5, 2024 for aa Honorable Arthur R. Barcinas 17 17
hearing on motion hearing on Defendant Defendant Manhattan ManhattanFinancial, Financial,LLC's LLC's ("Manhattan") ("Manhattan") Motion to to Dismiss Dismiss 18 18
Under GRCP 9(b) and and l2(b)(6) 12(b)(6)("Motion"). ("Motion").Manhattan Manhattanwas wasrepresented represented by by Attorney Attorney Daniel Daniel J. J. 19 19
Berman, andPlaintiff Berman, and PlaintiffMSU MSU Guam, Guam, LLC LLC ("MSU") ("MSU")was wasrepresented represented by by Attorney Attorney Charles Charles H. 20 20
II. Upon McDonald II. Upon consideration consideration of ofthe thepleadings, pleadings, the thearguments, arguments, and and the applicable applicable law, the 21
Court DENIES.Manhattan's Motion. DENIES Manhattan's Motion. 22 BACKGROUND 23
2011, MSU In 2011, MSU executed executed aapromissory promissorynote noteininfavor favorof ofCommunity CommunityFirst FirstGuam Guam("CFG"). ("CFG"). 24
25 25 The note note was was secured secured by aa mortgage mortgage on on MSU's MSU's leasehold leasehold interest interest in Lot Lot No. No.5097-3-3, 5097-3-3,
26 Tamuning, Tamuning, Guam Guam (the (the ''Property"). This mortgage "Property"). This mortgage was was recorded recorded at at the the Department Department of Land Land 27 27 Management ("DLM") on Management ("DLM") onJuly July26, 26, 2011. 2011. 28 Decision and Decision and Order Re: Re: Defendant's Motion to Dismiss Motion to Dismiss under GRCP 9(b) and 12(b)(6) Civil Case Civil Case No. No. CV0077-24
In 2011, 2011, the note matured, leaving a payoff matured, leaving payoffamount amount of ofapproximately approximately $430,000. $430,000. On l
2 September 21, 2017, 2017, Manhattan Manhattanpurchased purchasedthe thematured maturednote noteand andmortgage mortgagefrom from CFG. CFG.
3 Subsequently, Manhattan Subsequently, Manhattaninitiated initiated non-judicial non-judicial proceedings against MSU. Manhattan proceedings against Manhattan 4 then issued issuedaaNotice Notice of Default and and Election to Sell Sell under under Mortgage, Mortgage, which which was was recorded recorded at at the 5 OLM on DLM onNovember November5,5,2018. 2018.On OnDecember December27, 27,2018, 2018,Manhattan Manhattan continued continued with with non-judicial non-judicial 6
7 foreclosure proceedings and issuedaaNotice and issued Notice of Sale Sale under Mortgage, which which was was recorded recorded at the
8 DLM OLMon onDecember December31 31, 2018. 2018. 9 In February 2019, Attorney February 2019, Attorney Cesar Cesar Cabot Cabot paid paid the the entire entire MSU MSU note balance to Attorney balance to 10 Michael Michael J. J. Berman, Berman, who represented represented both both Manhattan and CFG. Manhattan and CFG. As As aa result, result, CFG CFGand and Manhattan Manhattan ll executed releases releasesof of the themortgage mortgagein infavor favorof of MSU. MSU. 12 [2
13 13 On February 8, 2024, February 8, 2024,MSU MSU and andformer formerCo-Plaintiff Co-Plaintiff David So Su filed filed the the Complaint Complaint in in this this
14 case, alleging the case, alleging thefollowing: following: 15 15 1. 1. MSU MSUdid didnot notreceive receivecopies copies of ofthe the recorded recorded Notice of of Default of Sale. Default or Notice of 16 2. Manhattan Manhattan failed failed to to inform inform MSU MSUabout about the the assignment assignment of of the the note note and and mortgage from 17 17
CFG CFG to to Manhattan. Manhattan. 18
19 19 3. The TheNotices Noticesallegedly allegedlywent wentmissing missingdue duetotointerception interceptionand and withholding withholding by by Defendant. Defendant.
20 20 4. 4. MSU MSU did did not notbecome awarethat becomeaware that Manhattan Manhattan purchased the note purchased the note and and mortgage mortgage until until either 21 February 6, 2021, February 6, 2021, when when a title report report revealed the the purchase, purchase, or August 6, 6, 2021, 2021, when 22 22 Attorney Michael Michael Berman executedaacorrected Berman executed correctedRelease Releaseof ofMortgage Mortgagein infavor favor of of MSU 23
24 24 which revealed revealed that that Manhattan wasthe Manhattan was theowner owner of of the note and mortgage. and mortgage.
25 MSU contended contended in in the the Complaint Complaint that that the the actions actions ofofManhattan Manhattan and and Co-Defendant Co-Defendant 26 26 Wang-Chieh "Ronald" Su Wang-Chieh "Ronald" So - allegedly allegedly intercepting intercepting the the Notices Notices and and failing failing to to disclose disclose the the 27
28 28
Page 2 of 10 10 Decision Decision and Re: Defendant's and Order Re: Deflendant'sMotion Motion to to Dismiss Dismiss under under GRCP GRCP 9(b) 9(b) and and 12(b)(6) l2(b)(6) Civil Case Civil Case No. CV0077-24
assignment assignment -- forced MSU MSU to to sell sellthe theProperty Propertyat at aa discounted discounted price, resulting damages. MSU resulting in damages. MSU I
2 further arguedthat further argued thatthese thesealleged allegedacts actsform formthe thebasis basisfor forMSU's MSU's sole cause cause of of action for fraud. fraud.
3 On March March 5, 5, 2024, 2024, Manhattan Manhattan filed filed the the instant instant Motion, Motion, seeking seekingdismissal dismissal pursuant pursuant to 4 Guam Rules of Guam Rules of Civil Procedure ("GRCP") Rule Procedure ("GRCP") Rule9(b), 9(b ),for forfailure failuretotoplead pleadthe theelements elements of offraud fraud 5 with particularity, and12(b)(6), particularity, and l 2(b)(6), for for failure failure to to state state a claim for which which relief may be relief may be granted. granted. 6
Manhattan's l2(b)(6) argument Manhattan's 12(b)(6) argumentisisbased basedboth bothon onits its9(b) 9(b)argument argumentand andaaseparate separateargument argument that that 7
8 MSU's MSU's claim claimisistime-barred. time-barred. On April 2, 2, 2024, 2024, MSU MSUfiled fileditsitsOpposition, Opposition,arguing arguing that that itit has has
9 sufficiently sufficiently alleged a fraud fraud claim, claim, that that the the claim is is not not time-barred because MSU time-barred because MSU allegedly 10 discovered the discovered the fraud fraud on on February Feqruary 16, 16, 2021, 2021, and that, should the and that, the Court Court rule Mllefor for dismissal, dismissal, MSU MSU II should be given leave to should be to amend. amend. On On April April 12, 12, 2024, 2024, Manhattan Manhattan filed its its Reply, Reply, arguing arguing that that 12
13 MSU does does not not sufficiently sufficiently plead plead any any of ofthe the elements elements of offraud, fraud, that MSU had that MSU had constructive notice
14 ofany of any alleged allegedfraud fraud no no later laterthan than February February 5, 2019, 2019, and and that amendmentwould that amendment wouldbe be futile. futile.
15 The Court took took the the matter under underadvisement advisementon on November November 5, 2024. 16 16 DISCUSSION 17
18 I. 1. Legal Standard
19 19 a. GRCP GRCP 9(b) 9(b)--Pleading PleadingFraud, Fraud, Mistake, Mistake. Condition of of the Mind.
20 Under Guam Guam law, law, "[i]n "[i]n all allaverments avermentsofofraud fraudorormistake, mistake,the thecircumstances circumstances constituting constituting 21 fraud mistake shall fraud or mistake shallbe be stated statedwith withparticularity." particularity."GRCP GRCP 9(b). 903)."When "When applying applying Rule Rule 9(b)'s 9(b)'s 22 22 heightened pleading requirements heightened pleading requirementsto to determine determine whether whetheraa complaint complaint should should be be dismissed dismissed for 23
failure to state state a claim, the the Court must construe the must construe thecomplaint complaintin in the thelight light most most favorable favorable to the 24
25 plaintiff" plaintiff." Smith Smith v. Allstate Ins. Ins. Co., 160 160 F.Supp.2d 1150, 1153 F .Supp.2d 1150, 1153(S.D. (S.D. Cal. Cal. 2001) 2001) (citing Parks Parks 26 School School of ofBusine5s Business v. v. Symington, Symington, 51 F.3d 1480, 1484 (9th 1480, 1484 (9th Cir. Cir. 1997). 1997). "A complaint complaint should should not 27
Page Page33 of of 10 Decision Decision and Order Re: Motion to Dismiss under Defendant's Motion Re: Defendant's GRCP 9(b) under GRCP and12(b)(6) 9(b) and l2(b)(6) Civil Case No. CivilCase CV0077-24 No. CV00'7'7-24
be dismissed unlessitit appears dismissed unless appearsbeyond beyonddoubt doubtthat thathe theplaintiff plaintiffcan canprove proveno set of no set facts in of facts 1
2 support of his support of hisclaim claimwhich whichwould wouldentitle entitlehim himtotorelief." relief" Id.
3 b. QQCP GRCP l2(b)(6) 12(b)(6)- -Failure Failureto_State to State aa Claim Claim for for Which Which Relief ReliefMay MayBe BeGrants Granted 4 As As above, above, in in ruling ruling on on a motion to dismiss underGRCP dismiss under GRCP 12(b)(6), l2(b)(6), the theCourt Courtmust must accept accept 5 all the the well-pleaded well-pleaded facts facts as as true, true, construe the pleading construe the pleading in in the the light most favorable to the the non- non- 6
moving party, party, and resolve resolve all doubts in the doubts in thenon-moving non-moving party's party's favor. favor. Cruz Cruz v. Cruz, 2023 Guam 7
8 20 ,r 1110. Dismissalfor 10.Dismissal forfailure failuretotostate stateaaclaim claim is is appropriate appropriate only only if if itit appears appears beyond beyond doubt doubt that that
9 the non-moving party party can can prove prove no no set set of of facts in support of his claim which would entitle him support of 10 to relief. relief Id. II II. 11. Whether MSU MSU pled pied fraud fraud with with particularity. particularity. 12 12
13 13 In the the instant Motion, Manhattan instant Motion, now moves Manhattan now moves for for dismissal againstMSU, dismissal against MSU, as as its its Co-
14 Defendant Wang-Chieh''Ronald" Defendant Wang-Chieh "Ronald" Su did against againstformer formerCo-Plaintiff Co-plaintiff David David Su Su in March 1, hisMarch in his l,
15 15 2024 2024 Motion to Dismiss Dismiss ("Su ("Su Motion"). Motion"). As Asininthe theSuSuMotion, Motion,Manhattan Manhattanseeks seeks dismissal dismissal 16 16 pursuant pursuant totoGRCP GRCP 12(b)(6) l 2(b)(6) on allegations allegations that that MSU failed failed to to plead plead with withparticularity particularity the the 17 17 elements for fraud as required fraud as requiredby byGRCP GRCP 9(b). As As MSU's MSU'scounsel counsel noted noted at at the the hearing hearing for this this 18 18
19 Motion, the the Court Court in in its its July July 23, 2024 2024 Decision and Order on and Order on the the Su Motion Motion found that that MSU MSU
20 20 had sufficiently plead its case with particularity particularity in the the Verified Verified Complaint. Complaint. In In this this Decision Decision and and 21 Order, the Verified Verified Complaint Complaint being being the the same same document document previously analyzed by the the Court, the 22 22 Court employs employs below below the the same same analysis as in its previous Decision Decision arid and Order. 23 23
Under Under Guam law, there Guam law, there are are five elements elements of of fraud: fraud: (1) (1) AAmisrepresentation, misrepresentation; (2) 24 24
25 Knowledge of of falsity falsity (or (orsci enter), (3) scienter); (3) Intent Intent to to defraud defraud to to induce induce reliance, reliance; (4) (4) Justifiable Justifiable
26 26 reliance, reliance; and and (5) (5)Resulting Resultingdamages. damges. Ukase Ukau v.v. Wang, Wang, 2015 Guam 26,r1136. Guam26 "[GRCP] 9(b) 36. "[GRCP] 9(b) provides, 27 in relevant relevant part, part, that that "the "the circumstances circumstances constituting fraud or constituting fraud or mistake mistake shall shall be stated stated with 28 28
Page Page44 of of 10 IO . Decision and Order Order Re: Re: Defendant's Defendant's Motion Motion to Dismiss under under GRCP GRCP 9(b) 9(b) and and 12(b)(6) l2(b)(6) I Civil Case No. CV0077-24 Civil Case
particularity" and that particularity" and that"[m]alice, "[m]alice, intent, intent, knowledge, and other conditions and other conditions of of mind of aa person person l
2 may be averted averred generally." generally." Id. ,r 35. This Id. 1135. This standard is known as standard is as the the "who, "who, what, when, when, where,
3 and and how" requirement. Id. While requirement. Id. While ititisisaamore moreheightened heightenedstandard standard than than the the notice notice pleading pleading 4 established byGRCP established by GRCP 12(b)(6), l2(b)(6), ititstill stilldoes doesnot notrequire require aa plaintiff plaintiffto to prove prove aa claim claim of offraud fraud at at the 5 pleading stage. Id. ,r1147. stage. Id. Instead,a aplaintiff 47. Instead, plaintiffmust mustprovide providefacts factswith with"sufficient "sufficient detail detail to to provide 6
notice notice to defendants as to defendants as to what what particular fraudulentaction particular fraudulent actionisisbeing being alleged. alleged.Id. Id. "While "While 7
8s statements of time, statements of time, place, place, and nature of and nature of the the alleged fraudulent activities are fraudulent activities are sufficient, sufficient, mere
9 conclusory allegations of fraud are insufficient. Taitano Taitano v. Calvo Finance Corp., 2008 Guam 12 10 ,r 15. 11 15.Similarly, Similarly,allegations allegationsbased basedentirely entirelyon oninformation information and andbeliefs beliefs do do not usually usually satisfy the 11 particularity requirement particularity requirementof of Rule Rule 9(b). 9(b). Id. Id. 12 12
13 13 Manhattan movestoto dismiss Manhattan moves dismissMSU's MSU's Verified Verified Complaint pursuantotoGRCP Complaint pursuant GRCP12(b)(6), l2(b)(6),
14 14 that MSU alleging that failed to MSU failed toplead pleadwith withparticularity particularitythe the elements elements for for fraud fraud as as required required by Guam Guam 15 15 R. Civ. Civ. P. P. 9(b). 9(b). Because Because MSU's MSU'sonly onlycause cause ofofaction action isisfor forfraud, fraud, the the Court Court finds finds that that the the 16 heightened pleading standard set forth standard set forth in GRCP GRCP 99 applies. applies. Id. Id. at ,r 35. The at 1135. The Court is bound by the 17 Guam Supreme Supreme Court's Court's fraud fraud standards standards in Wang Wang and will thus thus conduct conduct its analysis analysis under under those 18 18
19 19 standards. standards. Wang, Wang, 2015 Guam 26 2015 Guam ,r 36. 26 11 36.As As noted noted above, above, "[ "[w]hen applying Rule 9(b)'s applying Rule
20 20 heightened pleading requirements heightened pleading requirements to to determine determine whether whether a complaint should be dismissed complaint should dismissed for 21 failure to state state a claim, the Court must construe construe the thecomplaint complaintin inthe thelight light most most favorable favorable to the 22 22 MSU." Symington, Symington, 51 F.3d at at 1484. 1484.Viewing Viewing the the Motion in the light most favorable favorable to to MSU as as 23 23
the non-moving party the Court finds that that MSU has plead plead the the elements elements for for fraud fraud with with sufficient 24 24
25 25 particularity. Because Because the the elements elements alleged alleged in the Complaint have not changed since the the Court's
26 26 ruling on the the Su SuMotion Motion to to Dismiss, Dismiss, the the Court Courtfollows follows its own analysis below. below. 27 27
Page 5 of 10 Decision Decision and and Order Re: Re: Defendant's Motion Motion to to Dismiss Dismiss under under GRCP 9(b) and 12(b)(6) Civil Civil Case Case No. CV0077-24
Misrepresentation 1
2 The Court finds finds that, that, at at the the pleading pleading stage, stage, MSU MSU pleads the element of misrepresentation
3 with particularity. In this case, MSU alleged alleged that that Defendants Defendants purchased the note to to the the mortgage mortgage 4 held by MSU MSU and and concealed concealed their their ownership. ownership. See SeeVerified VerifiedCon ,i,r 20, 22, 31,l, 37. Accepting pl.1. 'lm Comp 5 the factual allegations in the Verified Complaint as true, the factual allegations the events events giving rise to this cause of 6
action took place from September September 17, 17, 2018, 2018, through through August August 6,6, 2021 2021. 7
8 In the Complaint, under the section entitled "Cause of Action - Fraud," MSU al l eg es alleges
9 that, that, "[o]n or about about November November 2, 2, 2018, 2018, Manhattan Manhattan ... .. caused caused to to be be issued issued aa Notice Notice of of Default Default 10 tha thatt mi srepresented the misrepresented the actual ctu a l mortgagee mortg a g ee a nd concea l ed Ma concealed rl ha tta n's i nvolvement Manhattan's ol v ement inn the the l11l transaction." Id. ,i1142. transaction." Id. MSU further 42. MSU further alleges alleges that, that, "[o]n "[o]n or about about December December 27, 27, 2018, Manhattan 12 12
13 13 ... caused to to be issued a Notice of Sale that misrepresented misrepresented the the actual actual mortgagee mortgagee and concealed
14 Manhattan's Manhattan's involvement involvementininthe thetransaction." transaction."Id. ,i 43. Id.1143 15 Viewed iin the the l light i g ht most most fav orabl to favorable to MSU MSU,, the the Cou rt fifinds Court nds that that these these alallegations eg ati 16 16 sufficiently plead the misrepresentation element element of of fraud with particularity. 17 Knowledge Knowledge of of Falsitv Falsity and Intent Intent to Induce Induce Reliance 18 18
19 19 The Court further filrther finds finds that that MSU MSU sufficiently sufficiently pleads pleads Defendants' Defendants' knowledge of falsity
20 20 and intent to to defraud defraud to to induce induce reliance. reliance. Intent Intent and and knowledge knowledge of falsity falsity need need only be averred 21 generally. generally. See Ukase, Ukau, 2016 Guam Guam 26 26 1] 35. Manhattan ,i 35. Manhattan purchased purchased the the note note and and mortgage mortgage from firm 22 CFG on SSeptember eptember 21,, 2017,, and aan As sig Assignment of Mortg Mortgagee was ex ecu ted in ffavor of executed of 23
24 24 Manhattan and recorded at the the DLM on September September 22, 22, 2017. 2017. See See Verified VerifiedCon ,r 16. pl. 'H Compl. 16. MSU MSU
25 25 alleges that Manhattan did not inform inform "[MSU] "[MSU] of of the assignment assigmnent to Manhattan of the the MSU MSU note
26 and mortgage," mortgage," and MSU MSU "did "did not not receive receive communications communications from from Manhattan Manhattan or Community Community 27 27 First regarding regarding the the note note and and mortgage." mortgage."Id. ,r,i 18-19. Id.1111 18-19. MSU MSU asserts that "[n]eithler the Notice of "[n]either the 28
Page 6 of 10 10 Decision Decision and and Order Re: Re: Defendant's Motion Motion to to Dismiss Dismiss under under GRCP 9(b) and 12(b)(6) Civil Civil Case Case No. CV0077-24
Default Default nor nor Notice of ofSale Salemade madeany anyreference referencetotoManhattan. Manhattan. Ronald, Ronald, through through [Attorney [Attorney 1
2 Michael] Berman, Berman, kept kept hidden hidden the the fact factthat thatMarlhattan Manhattan assumed the Community assumed the Community First note and and
3 mortgage and that that Manhattan Manhattanwas wasthe thenew newmortgagee." Id. ,ri124. mortgagee." Id. MSU further 24. MSU further alleges that that they 4 did not receive the above Notices because Co-Defendant Su because Co-Defendant Suwithheld withheldthem themfrom fromMSU. Id. ,r,r MSU. Id. W 5 23, 25. 25. Finally, Finally,MSU MSUalleges allegesthat that"Ronald, "Ronald,Marlhattan's Manhattan'smanager, manager, knew knew that that the the information information 6
contained in the contained in theNotice Notice of Default and and Notice of ofSale Sale were were false, false, and and despite despite this this knowledge, 7
8 Ronald continued to pursue pursuethe theforeclosure foreclosure to to cause cause MSU MSU to lose the Lot." Lot."Id, ,r Id.1146.
9 Taking these factual factual allegations together, together, MSU asserts asserts that that Defendants did not Defendants did not inform 10 MSU MSU of ofthe the change change in in ownership ownership of ofthe the note and prevented prevented MSU MSU from learning of ownership by 11 II withholding MSU's mail withholding MSU's mail in in order order to to defraud defraud MSU. At At this this stage stage of ofthe the pleadings, pleadings, MSU is is not not 12
13 13 expected to to plead plead Defendants' Defendants' state stateof of mind mind with with specificity. Taitano, 2008 Guam 12 ,rii 17. specificity. See Taitano, 17.
14 As As such, such, the the Court Court isis satisfied satisfied that that these these allegations allegations sufficiently plead the sufficiently plead the elements elements of 15 15 knowledge of offalsity falsityand and intent intent to to defraud defraud to induce reliance with particularity. 16 16 Justifiable Reliance and Resulting Damages 17 17 The Court Court iiirther further finds finds that that MSU MSU sufficiently sufficientlypleads pleads justifiable justifiable reliance reliance and and resulting resulting 18 18
19 19 damages. Id.,I,r damages. Id. W 26, 26, 28, 28,47-49. 47-49. As As to to justifiable justifiable reliance, reliance, MSU MSU alleges that that "[u]pon "[u]pon discovering
20 the Notice of ofSale, Sale, itit was was too too late late for for MSU MSUtotosecure securefinancing financing to to save save the the property property and and MSU 21 21 was forced to sell sell the the property property at a discounted price to discounted price to stop stop the theforeclosure." Id. ,Iii 28. foreclosure."Id. 28. MSU 22 22 further that they further alleges that they"would "would not not have have allowed a foreclosure foreclosure of their property as the value as the value of of 23 23
the property with with twenty twenty seven seven (27) (27)apartment apartment units units far far exceeded exceeded the the loan loan payoff payoffamount." amount."1d.1l Id.,r · 24 24
25 25 26. Finally, MSU alleges 26. Finally, alleges that that based onthe basedon theNotice Notice of of Default Default and andNotice Notice of of Sale, Sale, MSU was was
26 26 "forced "forced to to sell sellthe the Lot Lotat at aa discounted discounted price in order to to avoid avoid the the foreclosure." foreclosure." Id. Id. 'H ,I 47. 27 As to to damages, damages, MSU alleges alleges that, that, "[b]ut "[b Jut for forthe theimminent imminent foreclosure foreclosure sale sale and and its its 28
Page Page77 of 10 Decision Decision and and Order Re: Re: Defendant's Motion Motion to to Dismiss Dismiss under under GRCP 9(b) 9(b} and 12(b)(6) Civil Case Civil Case No. CV0077-24
potential impactto potential impact to MSU's MSU's financial financial suitability, MSU would not have sold the Lot suitability, MSU Lot at at such such aa 1
2 2 discounted price." price."Id. ,r 48. \\ Id.1148.
3 At this At this stage stage of of the the pleadings, pleadings, viewing the pleading the light most pleading in the most favorable favorable to to MSU 4 as the non-moving non-moving party, the Court party, the Court finds finds that that MSU has has sufficiently sufficiently plead plead both both justifiable justifiable 5 and resulting damages. reliance and damages. 6
Based on the the foregoing, foregoing, and viewing the pleading in the the light most favorable favorable to to MSU as as 7
8 the non-moving non-moving party, the Court finds that party, the MSU's fraud that MSU's fraud claim claim does does not notdemonstrate demonstrate beyond beyond 9 doubt thatMSU doubt that MSU can prove no can prove no set setof of facts facts in in support supportof ofits itsclaim claimwhich whichwould would entitle entitleitit to to relief. relief. 10 Thus, the Thus, the Court Court is is satisfied satisfied that thatMSU MSU has hassufficiently sufficiently pied pled allegations of of fraud fraud with with particularity 11 11 in the the Verified Verified Complaint, Complaint, satisfying satisfying the the heightened pleading standard heightened pleading standardofof GRCP GRCP 9(b). 9(b). 12 12
13 13 Accordingly, Accordingly, the the portion portion of of Manhattan's Manhattan's l12(b)(6) argument based on argument based on its 9(b) 9(b) argument argument is is
14 DENIED.
15 15 111. III. 12(b)(6) 12(b)(6) -- Failure Failure to to State a Claim Claim For For Which Relief May May Be Granted 16 16 a. MSU's MSU'sfraud fraudclaim claimisistimely. timely. 17 Manhattan also asserts Manhattan also assertsthat thatMSU's MSU's fraud claim is is time-barred, time-barred, arguing arguing that, that, based based on 18 18
19 19 allegations in the Complaint, Complaint, Plaintiffs Plaintiffs would would have have been on notice of ofany any and and all claims of of fraud fraud
20 20 related to the foreclosure related to foreclosure action action no no later later than than February February 5, 2019, 2019, immediately immediately after Attorney 21 Cabot paid paid the MSU note note and and mortgage. mortgage. Manhattan arguesthat, Manhattan argues that,ifif MSU MSU intended to toll intended to toll the the 22 22 statute of limitations statute of limitations on on the the fraud fraud claim, claim, itit was required required to to plead plead affirmatively specific facts facts 23 23
24 24 showing showing that that tolling had had occurred. occurred. (citing Amsden Amsden v. Yamon, Yamon, 1999 1999 Guam ,r 16). Guam 14 11 16). In its
25 25 opposition, MSU argues argues itit only only became became aware aware of ofthe thealleged allegedfraud fraudon onFebruary February16, 16, 2021, 2021, upon upon
26 26 receipt of ofaa title titlereport report disclosing disclosingthat that Manhattan Manhattan was the mortgage holder. MSU MSUargues argues that that this 27 allegedly delayed delayed discovery discovery extends extends the statute of limitations, statute of as the limitations, as the time time would would only only begin to 28
Page 8 of 10 10 Decision Decision and Re: Defendant's and Order Re: Defendant's Motion Motion to to Dismiss under GRCP GRCP 9(b) 9(b) and and 12(b)(6) l2(b)(6) Civil Case Civil Case No. CV0077-24
accrue upon discovery accrue upon discovery of of the the alleged alleged fraud. MSU argues fraud. MSU that, even argues that, even if they they had had received received l
2 2 constructive notice prior constructive notice prior to to 2021, 2021, it would would not not invalidate invalidate their their fraud fraud claim claim under under Guam Guam law
3 because constructive notice because constructive notice does not start start the thestatute statuteof of limitations limitations in in a fraud fraud case. case. ((citing Cruz Cruz 4 v. Cruz, 2023 Guam 20 ,r1127). Cruz, 2023 Finally, should 27). Finally, should the the Court Court grant grantdismissal, dismissal, MSU requests to amend amend 5 the Complaint on grounds grounds that thatthe theamendment amendmentwould wouldserve servejustice justiceby byallowing allowing MSU MSU to correct 6
any any deficiencies in their their Complaint Complaint without without causing causing undue delay. In its undue delay. its Reply, Reply, Manhattan Manhattan 7
8 reiterates its argument reiterates its thatthe argument that the fraud fraudclaim claim isis time-barred time-barredbecause becauseMSU MSU was was allegedly made made 9 aware aware of the foreclosure no later later than February2019 than February 2019when whenthey theyallegedly allegedly chose choseto to pay pay off off the 10 debt. debt. Manhattan also argues Manhattan also argues against against amendment, amendment,claiming claiming that thatany any amendment amendmentwould wouldbe be futile futile 11 because the fraud because the fraud claim claim is fundamentally thaweddue fundamentally flawed duetotothe the statute statuteof of limitations limitations and and MSU's MSU's 12
13 alleged lack of ofparticularity particularity in in its claims. claims.
14 14 Under Guam Under Guam law, the statute law, the statuteoflimitations of limitationsfor for aa fraud fraudaction actionisisthree three(3) (3) years. years.77GCA GCA § § 15 ll305(d). 11305(d). AAfraud fraudcause cause ofofaction actionisisnot notdeemed deemed toto have haveaccrued accrued until until the the discovery discovery by the the 16 aggrieved aggrieved party party of ofthe the facts facts constituting constituting the the fraud fraud or or mistake. mistake. Id. The The Supreme Supreme Court Court has has held 17
that, that, when aa fraud fraudcase caseinvolves involves recordation, recordation, the the trial trial court court should shouldnot notconflate conflate "the "the constructive 18
19 notice given given to to subsequent subsequent purchasers underGuam's purchasers under Guam's recording recording statute statutewith with the the inquiry inquiry notice
20 that thestatute startsthe that starts statuteof of limitations limitations in in a fraud case." Cruz fraud case." v. Cruz, Cruz v. Cruz, 2023 Guam 20 2023 Guam 20 ,r1121. "[A] 21. "[A] 21 fraud fraud plaintiff does not have the 'duty 'duty of ofinquiry' inquiry'that thataapurchaser purchaser of ofreal real property propertydoes." does."Id. ,r Id.11 22 33. 33. The Supreme Supreme Court has further held has further held that that"[p]ublic "[p]ublic records cannot be used to defend fraud,77" records cannot 23
and that"[w]here and that "[w]here fraud fraud is involved, involved, public public records records are are not constructive notice of ofthe the true true facts to 24
25 the defrauded defraudedparty." party."Viewing Viewing the facts facts in the the light light most most favorable favorable to to MSU, MSU, and taking MSU's and taking MSU's
26 allegations as true, the the Court Court finds that that MSU MSU did not become aware as true, aware of ofthis this matter matter until until February February 27 27 16, 16, 2021. The Court acknowledges that, 2021. The that, under underGuam Guamlaw, law, aa plaintiff plaintiff must must affirmatively plead plead 28
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specific facts facts to toll toll the statute limitations when statute of limitations when a pleading on its face appears appears to be time- I
2 barred. Yamon, Yamon, 1999 1999 Guam Guam 14 ~~ 4-15. 141111 l4~15.However, However,the theCourt Courtfinds findsthat thatthe the pleading pleading here does
3 not appear time-barred on its face, and that the statute of limitations did not need to be tolled, as 4 it would not have started to run based on mere constructive notice. 5 Accordingly, the Court Accordingly, the Court finds finds that that MSU's MSU's fraud claim isis not not time-barred, time-barred, and thus thus this this 6
7 part of Manhattan's l12(b)(6) 2(b)(6) motion motion is also DENIED. Having denied the Motion Motion to Dismiss,
8 the Court will will not address address MSU's MSU's request for for amendment. 9 CONCLUSION 10 Based on the foregoing, the Court Court hereby DENIES Manhattan's Motion to to Dismiss in II full. 12
13 IT IS SO ORDERED _ JAN 3 ii 2025 _..J_,_,_,AN-'----><....;30><------=<-202=5_ __
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16 '-H6NORABLE ARTHUR A~nruR R. R. BARCINAS 17 17 Judge, Superior Court of Guam
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