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4 'BY=
5
6
7 IN THE SUPERIOR COURT
COURT OF
OF GUAM
GUAM
8
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.
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
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
28
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 nonnon
-
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
28
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
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
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
Page 9 of 10
of 10
Decision and Order Re:
Re: Defendant's
Defendant's Motion
Motion to Dismiss
Dismiss under GRCP 9(b)
9(b) and
and 12(b)(6)
Civil Case No. CV0077-24 Case No. cv0077-24
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_ __
14 14
~
15 15
16 '-H6NORABLE ARTHUR
A~nruR R. R. BARCINAS
17 17 Judge, Superior Court of Guam
18
19
20 20
21 21
22 22
23 23
24
25 25
26 26
27
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