Sugumi Guam, LLC v. Chao-Chun Su

Opinion

vo; ii

9 |. »=-"-

}is?"&

2'.12§.n??. \ 1; a >&i he au-'

§»'3t%»¢g*;

IN THE SUPERIOR COURT OF GUAM

SUGUMI GUAM, LLC and WANG-CHIEH C IVIL C ASE no. CV0507-24 sU, P laint if f s/ C ount er claim- D ef endant s, DECISION AND ORDER GRANTING MOTION TO DISMISS AND STRIKE v s. DEFENSES AND COUNTERCLAIM S

CHAO-CHUN SU aka DAVID SU and DOES 1-10, INCLUSWE, .r

D ef endant s/ C ount er claim- P laint if f s.

I n t his par t it ion act ion, t he C our t consider s P 1aint if f s/ C ount er claim- D ef endant s Sugumi

Guam, LLC and Wang- C hieh "R onald" Su's mot ion seeldng t o dismiss and st r ike def enses and

count er claims f iled by D ef endant s/ C ount er claim- P laint if f C hao- C hun "D avid" Su. H aving

r eview ed t he br ief s, t he C our t f inds D avid' s count er claims t o be t ime- bar r ed. M or eover , D avid' s

af f ir mat ive def ens es ar e neit her applic able, nor , even if t r ue, s er ve t o def eat t he par t it ion c laim.

The Motion is therefore GRANTED.

I. PR OC ED U R AL BAC KG R OU N D P laint if f s init iat ed t his act ion seeking t o par t it ion t w o par cels in Tamuning. C omal.

P ar t it ion R eal P r op. ( O ct . l, 2024) . D avid answ er ed and alleged, among ot her af f ir mat ive

def enses, unclean hands, equit y, and f ailur e t o r ecor d a lie r endens. D e£' s Answ er at 4- 5 ( N ov.

5, 2024) . D avid also aver r ed count er claims f or an account ing, br each of f iduciar y dut y, unj ust

enr ichment , and f or punit ive damages. I d. at 6- 10.

L,

.'r:"

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Page 2 STRIKE DEFENSES AND COUNTERCLAIMS

In response, Plaintiffs move to dismiss all counterclaims for being outside the applicable

statutes of limitations and further argue that David has not stated a claim for the existence of a

fiduciary duty. As for David's affirmative defenses, Plaintiffs assert they must be stricken for

not being adequately pled. The motion was hilly briefed and taken under advisement at the

motion hearing on January 29, 2025.

11. FACTUAL BACKGROUND

The parties agree that David and Ronald each hold an undivided 16.66% interest in

certain property and have held such interests as co-tenants since 1995. Comal. Partition Real

Prop. W 10, 11, Def.'s Answer at 7.1 The property is a leased commercial retail and warehouse

building. De£'s Answer at 7.

However, according to David, Ronald solely receives the rental income. Id David

iixrther alleges that Ronald has assumed sole control of management of the income, and is the

"co-tenant with exclusive control" of the Property. Id Finally, David claims that Ronald has

assumed a position of trust and confidence in the management of the income, and has not

produced any accountings to David. Id.

1. LAW AND DISCUSSION A . Applicable statutes of limitations bar David's claims.

Guam law imposes a four-year statute of limitations for an accounting action, and three

years for claims involving a breach of fiduciary duty and unjust enrichment. 7 GCA §§ 11305(a),

(d), 11312. Since Ronald has held an interest in the property jointly with David since 1995 and

since Plaintiffs allege Sugumi has held an interest in the property four years and three months

1 Ronald alleges that Sugumi has held the majority interest in the Property since August 2020. Comal. Partition Real Prop. 119. David denies this. De£'s Answer 1]9.

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Pa g e 3 STRIKE DEFENSES AND COUNTERCLAIMS

before the counterclaims were filed, the counterclaims appear to be outside the relevant statutes

of limitations.

When a complaint shows on its face that the applicable statutes of limitations bar the

cause of action, the claimant must plead facts showing an excuse, tolling, or some other basis for

avoiding the statutory bar. Amsden v. Yamon, 1999 Guam 14 1112. However, David's pleading

fails to mention any facts to justify excusing the limitations bar. Instead, in his Opposition

Memorandum, David asks the Court to apply the "continuing violations doctrine" and cites in

support Doe v. Roman Catholic Archbishop of Los Angeles, 202 Cal. Rptr. 3d 414 (Ct. App.

2016)-a case involving lapsed child sexual abuse claims. This case is of limited use,

particularly because the Guam Supreme Court has already commented on the continuing claims

doctrine in Bautista v. Tories, 2020 Guam 28-a case more akin to the present as it dealt with

property, rent, and fiduciary duty issues. In Battista, the plaintiffs argued that the continuing

claims doctrine applied a new statute of limitations expiration date to each payment they claimed

their family attorney owed them.

Th e Guam Supreme Court rejected this argument. "That doctrine appears almost

exclusively in cases involving periodic compensation claims against the federal government."

Id. 1]21. Moreover, to apply the doctrine, "(1) the case must tum on pure issues of law (or

specific issues of fact to be decided by the court for itself), (2) any facts involved must be 'sharp

and nalTow', and (3) no discretionary agency decision can be at issue." Id ii 22. Breaches of

fiduciary duty, however, do not qualify as sharp and narrow issues. Id.

David fails to address Bautista 's three-part test or any Guam law in his briefing. Bautista

nonetheless provides a conclusive resolution that David cannot utilize the continuing wrongs

doctrine to revive stale claims in the context of an accounting, breach of fiduciary duty, and

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Page 4 STRIKE DEFENSES AND COUNTERCLAIMS

unjust enrichment case. The Court therefore dismisses all counterclaims, and the associated

requests for relief, as being time-barred. In turn, the arguments regarding the existence of a

fiduciary duty and punitive damages are moot.

B. Affirmative Defenses 1. The equitable defenses to a partition action are subject to striking.

Ronald next asks the Court to strike David's affirmative defenses of unclean hands and

equity. He claims diesel contentions are not proper defenses to a partition action, which an owner

may bring "as a matter of absolute right." Am, Med Intern., Inc. v. Feller, 131 Cal. Rptr. 270,

273 (ct. App. 1976).

The Court first examines the asserted affirmative defense of unclean hands. The Guam

Supreme Court has declared that the unclean hands doctrine may preclude recovery for a quiet

title action, as long as the misconduct directly relates to the cause of action. Hawaiian Rock

Prods. Corp. v. Ocean Hows., Inc., 2016 Guam 4 1] 43. Any u conscientious conduct may give

rise to the defense, but in examining applicability, the court should examine the analogous case

law, the nature of the misconduct, and again, the relationship of the misconduct to the claimed

injuries. Guam Top Builders, Inc. v. Tanota Partners, 2012 Guam 12 1]26.

Here, while Plaintiffs seek a partition of property, a portion of which it claims title, David

alleges as a defense misconduct in the handling of the property and the relationship of the co-

owners: "Plaintiffs have intentionally withheld material financial information about the Subj act

Property, failed to provide a transparent accounting of income and expenses despite requests, and

misrepresented key financial details, all in bad faith." Def 's Answer at 4. Whether or not

Ronald withheld financial information, failed to provide an accounting, or misrepresented

finances, however, do not directly relate to the partition of the property according to the

1

h

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Pag e 5 STRIKE DEFENSES AND COUNTERCLAIMS

established ownership interests. Moreover, recovery based on any such alleged misconduct is

time-barred.

Other courts find unclean hands to be inapplicable in a partition matter. For example, in

Colorado Korean Ass 'n v. Korean Senior Ass 'n of Colo., the court found that partition is

"absolute and unqualified," unaffected by unclean hands. 151 P.3d 626, 629 (Colo. App. 2006).

Colorado Korean Ass 'n made this finding after reviewing that at least eleven other jurisdictions

reached the same conclusion. Id. Similarly, in A m. Me d In te r n ., In c ., the court recognized only

limited defenses to a partition action such as express or implied waiver to partition by contract.

131 Cal. Rptr. at 273, see also Colorado Korean Ass 'n, 151 P.3d at 630 (only recognized

defenses to partition are waiver, when interests are not contemporaneous, or homestead

property). Because the asserted affirmative defenses are not directly related to partition, and

because generally the doctrine cannot be raised as a defense to partition, the Court finds this

affirmative defense to be subject to striking.

Second, the affirmative defense of equity suffers a similar fate i t is not a recognized

defense to a partition action. Furthermore, applying equity in an action is entirely within die

Court's discretion, as described in a case cited by David, Precision Instrument Mfg. Co. v.

Automotive Maintenance Machinery Co., 324 U.S. 806, 814 (1945). In Precision Instrument

Mfg. Co., the U.S. Supreme Court equated the doctrine of equity to unclean hands, and justified a

court's application of equity particularly when there are public interests at stake: " if an equity

court properly uses the maxim to withhold its assistance in such a case it not only prevents a

wrongdoer from enjoying the hits of his transgression but averts an injury to the public. The

determination of when the maxim should be applied to bar this type of suit thus becomes of vital

significance." Id. at 814-15. But the present partition case does not involve public interest

AL

I

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND P age 6 STRIKE DEFENSES AND COUNTERCLAIMS

concerns. Moreover, even if equity can be applied in a private action between private parties, for

the same reasons cited above used to strike the affirmative defense of unclean hands (i.e., not

directly related, time-barred, and partition is an absolute right), the Court here in its discretion

strikes the affirmative defense of equity.

2. The omission of a Lis Pendens does not deprive the Court of jurisdiction.

Finally, the Court considers Plaintiffs' request to strike the affirmative defense of failure

to record a lie rendens pursuant to 7 GCA § 24405. That provision states,

Immediately after filing the complaint in the court having jurisdiction, the plaintiff must record in the Department of Land Management a notice of the pendency of the action containing the names of the parties so far as known, the object of the action, and a description of the property to be affected thereby. From the time of tiling such notice for record, all persons shall be deemed to have notice of the pendency of the action.

7 GCA §24405. Plaintiffs argue that under Guam law, there are no actionable consequences for

failing to record a lie rendens, defying the point of an affirmative defense which is to state a

theory that will defeat the plaintiffs claims. See 7 GCA §24405, M Elem. Corp. v. Phil-Gets

(Guam) Int'l Trading Corp., 2016 Guam 35 'll91 ("an affirmative defense is a defendant's

assertion of facts and arguments that, if true, will defeat the plaintiffs claim"). David offers no

rebuttal to these arguments.

The Court constnles section 24405 according to its plain language and in the context of

the statute as a whole. Aguon v. Gutierrez, 2002 Guam 14116. The plain language directs the

recording of a lie rendens immediately after filing a partition action. See 7 GCA §24405.

However, it also indicates that the action must be filed in a court already having jurisdiction. Id.

Thus, jurisdiction must already exist, and there is no language indicating that filing of the lie

rendens cements or alters that jurisdiction.

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Pa g e 7 STRIKE DEFENSES AND COUNTERCLAIMS

Caselaw appears to agree. In California, from which section 24405 derives, failure to file

a lie rendens does not result in a dismissal of the action unless the defendant has suffered some

prejudice. See Blackburn v. Bucksport & E.R.R. Co., 95 P. 668, 669-70 (Cal. D. Ct. App. 1908),

Rutledge v. Rutledge, 259 P.2d 79, 82 (Cal. D. Ct. App. 1953). Notably, David does not claim to

have suffered prejudice due to Plaintiffs' failure to file a Its rendens.

Moreover, Blackburn determined that the point of the lie rendens is not to establish

subject matter jurisdiction, but rather to effectuate notice.

The purpose of the Legislature was thus to furnish the most certain means of notifying all persons of the pendency of the action and thereby warning them against attempting to acquire a legal or equitable interest in the property concerning which the suit was brought and to bind such persons as might acquire any interest in the property in controversy aler the recording of the notice by any judgment which might be secured affecting said property. This is all that the Legislature intended by the present mode of giving constructive notice of the pendency of such actions, and the legislation does not, as we before observed, nor was it intended that it should, affect in the slightest degree the question of the court's jurisdiction of the subject-matter of the suit or of the persons of the parties thereto.

95 P. at 670. Based on this persuasive authority, as well as the plain language of section 24405,

the Court does find that the recording of a lie rendens is mandatory to give constructive notice to

other parties, but its omission does not deprive this Court ofjurisdiction nor serves as an

affirmative defense so as to defeat Plaintiffs' claims.

11. CONCLUSION AND ORDER

The Court GRANTS Plaintiffs' Motion to Dismiss all of David's counterclaims, and

STRIKES the unclean hands, equity, and its rendens affirmative defenses. The Court lifts the

stay of discovery and sets a Scheduling Conference on May 14, 2025, at 9:00 a.m. A Proposed

Scheduling Order and Discovery Plan are due no later than April 30, 2025.

~ \

' ;

A I r

it 0

CV0507-24 DECISION AND ORDER GRANTING MOTION TO DISMISS AND Page 8 STRIKE DEFENSES AND COUNTERCLAIMS

so ORDERED, 14 April 2025.

HON_.j§EY;E.M_`

Judgel§.'§_}_1p*gx=li_¢lir Coulffof Guam '/ I

"`-6-2;-~ / .r

, ',, al

K / _,

_'m:*,,:;, _1

Appearing Attorneys : Jacques G. Bronze, Esq., Law Offices of Jacques G. Bronze, PC for Plaintiffs Sugumi Guam, LLC and Wang-Chieh Su Jon R. Ramos, Esq., Cabot Mantanona LLP, for Defendant Chao-Chun Su aka David Su

WL