Summer Palace Homeowners Assoc v. Rodriguez, Den & Asuncion

Opinion

‘fFD L,JJ.%

1 2SPg2 02

IN THE SUPERIOR COURT OF GUAM 6

7 SUMMER PALACE SUBDIVISION CIVIL CASE NO. CV0880-1$ HOMEOWNERS ASSOCIATION, 8

9 Plaintiff, 10 vs DECISION AND ORDER

DENNIS G. RODRIGUEZ, SR. AND 12 ASUNCION S. RODRIGUEZ

13 Defendants. 14

15 INTRODUCTION 16 This matter came before the Honorable Judge Arthur Barcinas on June 6, 2019, upon 17 Plaintiffs Motion for an Order to Show Cause Why Defendants’ Should Not Be Held in 18 Contempt of Court for Violation of Order filed March 22, 2019. The Plaintiff Summer Palace 19 Subdivision Homeowners Association (“Plaintiff’ or “Summer Palace”) is represented by 20 Attorney Daniel J. Berman. Defendants Dennis G. Rodriguez, Sr. and Asuncion S. Rodriguez 21 (“Defendants” or collectively, “Rodriguez”) are represented by Attorney Carlos L. Taitano. 22 Having reviewed the pleadings and having heard oral arguments in this matter, the Court issues 23 the following Decision and Order. 24 BACKGROUND 25 On September 7, 2018, the Plaintiff filed its Complaint to Foreclose Lien. The 26 Defendants filed their Answer on November 13, 2018. Thereafter, the Defendants filed a first 27 Amended Answer on November 19, 2018, which included, inter alia, a request for certain 28 damages.

Decision and Order Civil Case No. CV0880-1 8; Summer Palace Subdivision Homeowners Association v. Dennis G. Rodriguez, et al.

On December 10, 2018, the Plaintiff filed a Motion for More Definite Statement 2 pursuant to GRCP 12(e), requesting that the Court order the Defendants to “identify whether or 3 not they are making a counterclaim, what are the grounds for the counterclaim, the relationship of relief requested to the grounds for counterclaim and the specific relief requested.” Mot. at 3 5 (Dec. 10, 2019). The Defendants, on the other hand, explicitly represented to the Court, in 6 pleadings and at oral argument, that the averments were expressly or specifically denominated 7 or described as defenses or affirmative defenses. On February 22, 2019, based on the $ Defendants’ representation to the Court, the Court ordered the parties to treat those averments 9 only as defenses or affirmative defenses as so described in the Defendants’ First Amended io Answer. Order (Feb. 22, 2019). Further, the Court estopped the Defendant from treating those ii matters designated as defenses or affirmative offenses as counterclaims at any point during this 12 litigation. Finally, to the extent the Defendants disagreed with the Court barring the use of their 13 defenses or affirmative defenses as counterclaims, the Court ordered the Defendants to 14 delineate and clarify which averments were proper counterclaims, and promptly file an i amended Answer reflecting the correct characterization and the specific relief requested. 16 The Defendants did not file an amended answer delineating or clarifying their previous filing. 17 On March 7, 2019, the Defendants served the Plaintiff with their Initial Disclosures, 18 which included a computation of damages. Subsequently, on March 22, 2019, the Plaintiff filed 19 a Motion for Order to Show Cause why Rodriquez Should Not Be Held in Contempt of Court 20 for Violation of Court Order Filed february 22, 2019. Plaintiff argues that the Defendants 21 continue to assert counterclaims and requests for damages and thus, are in violation of the 22 Court’s previous order. The Defendants filed their Opposition on April 19, 2019, maintaining 23 that they did not aver any counterclaims in their Initial Disclosures, but instead averred and 24 continue to aver, affirmative defenses. Specifically, the Defendants argue they simply 25 provided, in the Initial Disclosures, an explanation of, at least, recoupment damages to support 26 the Defendants’ defenses and affirmative defenses in order to diminish or nullify the Plaintiffs 27 claim for damages. The Plaintiffs filed their Reply on May 1, 2019. On June 6, 2019, the Court 28

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Decision and Order Civil Case No. CV0880-1 8; Summer Palace Subdivision Homeowners Association v. Dennis G. Rodriguez, et al.

1 heard oral arguments on Plaintiffs Motion for Order to Show Cause. At the conclusion of the 2 hearing, the Court took the matter under advisement. 3 DISCUSSION 4 I. Motion for Contempt

5 To establish contempt, the Plaintiff must show by clear and convincing evidence that

6 there is: 1) a valid order; 2) knowledge of the order; 3) an ability to comply with the order; and 7 4) a willful failure to comply with the order. Rodriguez v. Rodriguez, 2003 Guam 8 J 15. Here, $ the Court issued a valid order prohibiting the Defendants from treating those matters 9 designated as defenses or affirmative offenses in their F irst Amended Answer as counterclaims io at any point during this litigation. See Order (Feb. 22, 2019). Further, to the extent the ii Defendants disagreed with such order, the Court ordered the Defendants to then delineate and 12 clarify which averments were proper counterclaims, and promptly file an amended Answer 13 reflecting the correct characterization and the specific relief requested. Id. The Defendants 14 knew of this order and assert that they can and have complied, and thus, should not be held in is contempt of Court. Having found that Defendants established the first three prongs above, the 16 Court turns to the last factor, and Plaintiffs allegation, of whether the Defendants exhibited a 17 willful failure to comply with the Court’s order. is II. Defendants’ affirmative defenses.

19 As a preliminary matter, an affirmative defense is a “defendant’s assertion of facts and 20 arguments that, if true, will defeat the plaintiffs . . . claim, even if all the allegations in the 21 complaint are true.” Affirmative Defense, Black’s Law Dictionary (11th ed. 2019). Generally, a 22 responsive pleading must include all affirmative defenses. Guam R. Civ. P. 2(c). Failure to 23 assert affirmative defenses in an answer results in waiver and precludes a party from asserting 24 it at a later point in litigation. See Hemlani v. Hemlani, 2015 Guam 16 ¶ 23; see also Citizens 25 Sec. Bank (Guam), Inc. v. Bidaure, 1997 Guam 3 ¶ 10 (“Courts have interpreted [GRCP Rule 26 8(c)] to mean that affirmative defense not included in the pleadings are waived.”). Further, 27 affirmative defenses need not be pleaded in specific terms so long as the plaintiff is put on 28 notice of the defense at the outset of litigation. See M Elec. Corp. v. Phil-Gets (Guam) Int’l

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Decision and Order Civil Case No. CV0880-1 8; Summer Palace Subdivision Homeowners Association v. Dennis G. Rodriguez, et a!.

i Trading Corp., 2016 Guam 35 ¶J 95 (holding that the core purpose of GRCP Rule 8(c) is to 2 safeguard against surprise and unfair prejudice). 3 On the other hand, a counterclaim is “[a] claim for relief asserted against an opposing 4 party after an original claim has been made. Counterclaim, Black’s Law Dictionary (11th ed. s 2019). A counterclaim, whether compulsory or permissive, may or may not diminish or defeat 6 the recovery sought by the opposing party. See Guam R. Civ. P. 13(c). Further “[i]t may claim 7 relief exceeding in amount or different in kind from that sought in the pleading of the opposing 8 party.” Counterclaims differ from affirmative defenses in that counterclaims seek 9 affirmative relief whereas affirmative defenses attempt to defeat a plaintiffs cause of action. 10 Indus. Eng’g & Dev., Inc. v. Static Control Components, Inc., 45 F. Supp. 3d 1311, 1320 n (M.D. Fla. 2014).’ Nonetheless, those pleadings for affirmative relief that fail to explicitly label 12 such relief as a counterclaim do not lose the right to that claim. See Guam R. Civ. P. 8(c); see 13 also Hawaiian Rock Prod. Corp. v. Ocean House, Inc., 2016 Guam 4 ¶ 40 (an argument that is 14 pleaded as an affirmative defense but which is more appropriately evaluated as a separate 15 counterclaim shall be treated as such). 16 Here, the Plaintiff argues that the Initial Disclosures provided by the Defendants 17 continue to assert counterclaims and requests for damages in violation of the Court’s Order 18 issued February 22, 2019. Conversely, as aforementioned, the Defendants state that they have 19 averred, and continue to aver, the affirmative defense of, at least, recoupment, with averments 20 of damages in order to, at least, diminish or nullify the Plaintiffs claim for damages. 21 Recoupment is the right of a defendant to have the plaintiffs monetary claim reduced by 22 reason of some claim the defendant has against the plaintiff arising out of the same transaction 23 that is the subject matter of the plaintiffs action. First Nat’l Bank of Louisville v. Master Auto 24 Serv. Corp., 693 F.2d 308, 310 n.1 (4th Cir. 1982); see also Imbesi v. Carpenter Realty Corp., 25 357 Md. 375, 381 (2000) (“recoupment means a diminution or a complete counterbalancing of 26 the adversary’s claim based upon circumstances arising out of the same transaction on which 27

28 ‘ The Guam Rules of Civil Procedure mirror the corresponding Federal Rules of Civil Procedure therefore, cases

that interpret and apply the federal rules are instructive. Pelowski v. Taitano, 2000 Guam 34.

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Decision and Order Civil Case No. CVO88O-1 8; Summer Palace Subdivision Homeowners Association v. Dennis G. Rodriguez, et al.

i the adversary’s claim is based.”). Recoupment is an equitable doctrine and therefore, cannot be 2 used to obtain affirmative relief. Overboe v. Brodshaug, 751 N.W.2d 177, 182 (N.D. 2008) 3 (citing Minex Res., Inc. v. Morland, 467, 699 (N.D. 1991)). “[R]ecoupment differs from a 4 counterclaim, which may arise out of a separate transaction and allows for affirmative relief s and recovery in excess of that sought by the plaintiff, and from a setoff, which involves a 6 transaction unrelated to the plaintiffs action.” Id In other words, recoupment is purely 7 defensive and is not “a weapon of offense.” 8 In their Initial Disclosures, the Defendants state that they provided the Plaintiff with a 9 preliminary computation in support of their affirmative defense of, at least, recoupment, as io required by GRCP Rule 26(a)(1)(C), and maintain that they have never asserted, or intend to ii assert, any counterclaims in their First Amended Answer or Initial Disclosures2. See Pl.’s 12 Counsel Decl. ¶ 3 Ex. A at 3 (citing Paragraph 8.ac of the First Amended Answer). As 13 previously determined in the Court’s February 22, 2019 Order, the Court continues to accept 14 the Defendants’ representations that the averments contained in the First Amended Answer are 15 in fact affirmative defenses, and the parties shalt continue to treat those averments only as 16 defenses or affirmative defenses as so described. Furthermore, by designating, inter alia, the 17 equitable doctrine of recoupment as an affirmative defense in their pleadings, the Defendants 18 have sufficiently put Plaintiff on notice of the defense at the outset of this litigation. i9 Elec. Corp., 2016 Guam 35 ¶ 95; see also N.H. Ins. Co. v. Marinemax of Ohio, Inc., 408 20 F.Supp.2d 526, 530 (N.D. Ohio 2006) (providing knowledge that the issue exists, not precisely 21 how the issue is implicated under the facts of a given case, is the purpose of requiring 22 averments of affirmative defenses). Nonetheless, as explained, supra, the Defendants averred, 23 and continue to aver, those designated affirmative defenses in both the First Amended Answer 24 and Initial Disclosures in an effort to, at least, diminish or nullify the Plaintiffs claim for 25 damages. Thus, based on the Defendants’ representations that the Initial Disclosures support 26 those designated affirmative defenses contained in the First Amended Answer, the Court finds 27

2 28 The Court also notes that the Defendants’ Initial Disclosures is not a “pleading” required under GRCP Rule 7.

Guam R. Civ. P. 7(a).

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Decision and Order Civil Case No. CV0880-l 8; Summer Palace Subdivision Homeowners Association v. Dennis G. Rodriguez, et al.

1 that the Defendants did not willfully violate the Court’s February 22, 2019 Order and 2 therefore, are not in contempt of court. Accordingly, the Court DIMES Plaintiffs Order to 3 Show Cause Why Defendants’ Should Not Be Held in Contempt of Court for Violation of 4 Order. 5 CONCLUSION 6 For the reasons set forth above, the Court hereby DENIES the Plaintiffs Order to Show 7 Cause Why Defendants’ Should Not Be Held in Contempt of Court for Violation of Order. $ Further, the Court and the parties shalt continue to treat those averments only as defenses or 9 affirmative defenses as so described in the Defendants’ First Amended Answer. Further, the 10 Court reminds the parties that the Defendant is estopped from treating those matters designated 11 as defenses or affirmative defenses as counterclaims at any point in this case. 12

14 IT IS SO ORDERED SEP §62019 15

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HONORABLE ARTHUR R. BARCINAS 19 Judge, Superior Court of Guam 20

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