Swegler v. Fadian Development

Opinion

•

IN THE SUP ERIOR COURT OF GUAM

BELEN Z. SWEGLER, individually and as ) f executrix of THE ESTATE OF DELBERT L. C IV IL C AS E N . CV1021-12 SWEGLER, PAC IFIC REALT Y )

CORPORATION, LOUISE HOMES, INC., )

and FADIAN HEIGHTS APARTMENTS, ) DECI SI O N AND O RDER I NC. , )

)

P laintiffs, )

vs. )

FADIAN DEVELOPMENT, INC. and )

10 MYUNG M. BAE, )

11 Defendants. ) 12

13 FADIAN DEVELOPMENT, INC. and )

MYUNG M. BAE, )

14 )

15 Counterclaimants/ )

Third-Party P laintiffs, )

16

vs. )

17

18 BELEN Z. SWEGLER, individually and as )

executrix of THE ESTATE OF DELBERT L. )

19 SWEGLER, PAC IFIC REALT Y ) 20 CORPORATION, LOUISE HOMES, INC., )

and FADIAN HEIGHTS APARTMENTS, )

21 INC., )

22 Counter-Defendants/ )

23 Third-Party Defendants. )

24

25 INTRODUCTION

26 This matter came before the Honorable James L. Canto II on Plaintiffs' cross-motion to 27 di smi ss co u nt ercl ai ms, fi l ed Janu ary 10, 2013. Oral arguments were heard on April 9, 2014.

28 At t o rney Bill R. Ma nn appeared o n be ha lf of Plaintiffs, Attorney Delia S. Lujan Wolff

28

represented Defendant s. Having considered the parties' briefs, oral argu ment s, and the applicable law, the Court now issues the following Decision and Order.

BACKGROUND

O n October 16, 2012, Plaintiffs filed a fi rst a mended complaint against Defendant s alleging breach of contract. Plaintiffs pray for (1) a judgment conveying to Plaintiffs respective interest in the real property conveyed to Defendant Fadian Development, Inc. by Plaintiff Belen Z. Swegler and the corporations under his control and (2) attorney's fees and costs. (F i rst Am.

8 Compl., 4, Oct. 16, 2012). 9 On November 13, 2012, Defendants filed a verified answer. Defendant s al so filed 10 counterclaims against Plaintiffs for the following causes of action: (1) voiding and canceling 11 agreements and (2) fraud. (Verified Answer & Counterclaims, 3-9, Nov. 13, 2012). 12 On December 27, 2013, Defendants filed a motion to dismiss Plaintiffs' claim for a lack 13 o f st a ndi ng. (Mot. Dismiss & Mot. Summ. J., 3-5, Dec. 27, 2013). Defendants also filed a 14 motion for summary judgment, arguing that Plaintiffs' claims are time-barred and that Plaintiffs 15 are not entitled to attorney's fees. (Mot. Dismiss & Mot. Summ. J., 5-7, Dec. 27, 2013). 16 On January 10, 2014, Plaintiffs filed an opposition to Defendants' motions and a cross- 17 motion to dismiss Defendants' counterclaims. Plaintiffs concede that, as of the filing date of the 18 motion, Plaintiffs do not have standing to proceed with this litigation and that Plaintiffs' claims 19 should be dismissed without prejudice. (Opp' n Mo t . & Mo t . Di smi ss Co u nt ercl ai m, 2 , Jan. 1 0 , 20 2014). By the same reasoning, Plaintiffs move to dismiss Defendants' counterclaims. Id. at 3. 21 On January 17, 2014, Defendants filed a reply and an opposition to Plaintiffs' cross- 22 motion. Because Plaintiffs' cross-motion was filed after the third dispositive motion cut-off 23 date of December 27, 2013, Defendants argue that it should be denied as untimely filed and 24 without leave of Court. (Re ply & Opp'n Mot. , 3, J a n. 17, 2014). F u rt hermo re, Defendant s 25 argue that the counterclaims are directed to all Plaintiffs, including Belen Z. Swe gle r in he r 26 individual capacity, and have no bearing on her lack of standing to bring a claim on behalf of 27 Delbert Swegler's estate. Id.

On J a nua ry 23, 2014, Plaintiffs fi l ed a repl y to Defendant s' opposition to Plaintiff's

cross-motion to dismiss Defendants' counterclaims. Plaintiffs argue that Defendants' cross-

motion i s no t untimely because Plaintiffs agreed that Defendants could fi l e t hei r mo t i o n to

dismiss and motion for summary judgment at a later date when the scheduling order at the time

required all dispositive motions be filed on or before August 16, 201 3. (Reply, 2, Jan. 23, 2014). Furthermore, Plaintiffs argue that (1) the first counterclaim is moot because Plaintiffs do

not have standing to assert the documents of which Defendants seek cancellation upon which relief may be granted, and (2) the second counterclaim fails to state a claim. Id . at 2-4.

On March 11, 2014, the Court granted Defendants' motion to dismiss and for summary 10 j u dgment . Consideration o f Defendant s' counterclaim was held in abeyance until the 11 conclusion of Delbert Swegler's trial in PROI 18-12 before the Honorable Arthur R. Barcinas, 12 scheduled for March 7, 2014. The trial date in PROI 18-12 having been vacated, this matter is 13 now before the Court's review. 14 D IS C U S S IO N 15 1. Mo tio n to Dismiss 16 Plaintiffs' cross-motion to dismiss Defendant s' two counterclaims i s based o n the 17 following grounds: (1) the first counterclaim is moot because Plaintiffs do not have standing to 18 assert the documents of which Defendants seek cancellation and (2) the second counterclaim 19 fails to state a claim. (Reply, 2-4, Jan. 23, 2014). The parties are not in dispute over the first 20 co u nt ercl ai m as P l ai nt i ffs agreed t o set asi de t he do cu ment s i n qu est i o n and do no t o ppo se t he 21 Co u rt grant i ng Defendant s' requ est ed rel i ef as t o t he fi rst co u nt ercl ai m. (Status Hr'g, Record 22 Log at 9:20, Apr. 9, 2014); (Pre Trial Conference, Record Log at 10:09, Feb. 26, 2014); (Mot. 23 Hr'g, Record Log at 2:38, Jan. 27, 2014). The second counterclaim is in dispute. 24 a. Time l ine ss 25 Defendants argue that Plaintiffs' cross-motion to dismiss Defendants' counterclaims is 26 untimely because it was filed on January 10, 2014, after the dispositive motion cut-off date of 27 December 27, 2013. (Reply & Opp'n Mot., 3, Jan. 17, 2014).

Under the Local Rules of the Superior Court of Guam, "[p]apers not timely filed by a party including any memoranda or other papers required to be filed under this Rule shall not be

co nsi dered without leave of court." Local R. Super. Ct . Gu am CVR 7 . 1 (f). In this case, Plaintiffs' cross-motion to dismiss Defendants' co u nt ercl ai ms was filed aft er t he d i spo si t i ve motion cut-off date of December 27, 2013, without leave of court. Therefore, Plaintiffs' cross-

motion failed to conform to the requirements of CVR 7.1(f). The Court need not consider motions tha t do not c omp ly with the a bove rule . Local R. Su per. Ct . Gua m C VR 7. 1(k).

Ho wever, in the interest of judicial economy and a speedy resolution o f t hi s matter for all

9 parties involved, the Court shall consider Plaintiffs' cross-motion. 10 b. Failure to State a Claim

11 Under Guam R. Civ. P. 12(b)(6), a claim may be dismissed where it, "appears beyond 12 doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him

13 to relief." Core Tech Intn'1 Corp. v. Hanil Engineering & Const. Co., Ltd., 2010 Guam 13 ¶ 52 14 (citing Bell Atlantic Corp. v. T wo mb l y, 550 U.S. 544, 555 (2007)). In order to dismiss a claim

15 pursuant to Rule 12(b)(6), a court must review the pleading in the light most favorable to the 16 non-movant, accept its material allegations of fact as true, and resolve any doubts in favor of the

17 no n-mo vant . First Hawaiian Bank v. Manley, 2007 Guam 2 ¶ 9.

18 A complaint that is attacked under Guam R. Civ. P. 12(b)(6), "need not contain detailed 19 factual allegations , [bu t] a plaintiffs obligation to provide the grounds of his entitlement to

20 relief `requires more than labels and conclusions, and a formulaic recitation of the elements of a

21 cause of action will not do."' Co re T ech , 2 0 1 0 Gu am 1 3 ¶ 5 2 (qu o t i ng T wo mb l y, 5 5 0 U.S. at 22 555 ). Guam R. Civ. P. 12(b)(6) was adopted from Fed. R. Civ. P. 12(b)(6) and a federal court's

23 interpretation of the analogous federal rule is persuasive authority. Guam R. Civ. P. 12(b)(6); 24 see also Sananap v. Cyfred, Ltd., 2011 Guam 21 ¶ 24 n. 13; Pelowski v. Taitano, 2000 Guam 34

25 ¶ 12. The U.S. Supreme Court holds the following regarding how substantive a pleading must 26 be to survive a Civil Procedure Rule 12(b)(6) motion:

27 To survive a motion to dismiss, a complaint must contain sufficient factual matter, 28 accepted as true , to `state a claim to relief that is plausible on its face . '. . . T he plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully... But where the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has a lle ge d - but it ha s not `sho wn' - `t h a t t h e pleader is entitled to relief.' Fed. Rule Civ. Proc. 8(a)(2). In keepi ng wi t h t hese principles a court considering a motion to dismiss can choose to begi n by identifying pleadings that, because they are not more than conclusions, are not entitled to the assumption o f t ru t h. While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.

Ashcroft v. Igbal, 556 U.S. 662 (2009) ( citations omitted).

Pursuant to Guam R. Civ. P. 8( a), a complaint shall contain, "a short and plain statement o f t he cl ai m showing that the pleader is entitled to relief." The U. S. Supreme Court explains

that:

10 [T]he pleading standard Rule 8 anno u nces do es not require "detailed factual allegations," but it demands more than an unadorned, the-defendant-unlawfully-

11 harmed-me accusation. A pleading that offers "labels and conclusions" o r " a formulaic recitation of the elements of a cause of action will not do." No r do es a 12 co mpl ai nt suffice if it tenders "na ked assertions" devo i d of "furthe r fact ual 13 enhancement. ...a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face."

14

15 Ashcroft v. Igbal, 556 U.S. 662, 678 (2009) (citations omitted).

16 The Court goes on to explain: "Threadbare recitals of the elements of a cause of action,

17 supported by mere conclusory statements, do not suffice... Rule 8 marks a notable and generous

18 departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock

19 the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. (citations

20 omitted).

21 Defendant s' second counterclaim is based o n allegations o f fraud o n the part o f 22 Plaintiffs. Under Gu am l aw, "[t ]he el ement s of fra ud include: 1) a misrepresentation; 2)

23 knowledge of falsity (or scienter); 3) intent to defraud to induce reliance; 4) justifiable reliance;

24 5) resulting damages. The absence of any of these required elements will preclude recovery." 25 Wi l k i n so n v. Jo n es, 2 0 0 4 Gu am 14 (quoting Trans Pa cific Export Co. v. Oka Towers Corp., 26 2000 Guam 3 ¶ 23). 27 In this case, t he Co u rt finds that Defendant s' counterclaim o f frau d l acks sufficient

28 factual matter, accepted as true, which would state a claim for relief that is plausible on its face.

Igbal, 556 U.S. at 678. In the counterclaim for fraud, Defendants fails to sufficiently allege how Defendant s j u st i fi abl y rel ied o n Plaintiffs' alleged misrepresentations. (Ve rifie d Ans we r & Counterclaims, 8-9, No v. 13, 2012). Furthermore, Defendant s cla im t hey have suffered

compensatory, general, and special damages as a result of Plaintiffs' al l eged frau d. Id . at 9 .

Ho wever, this is a formulaic reci t at i o n o f an element of fraud, and without further factual

enhancement relating to how Defendants' reliance caused the damages suffered, the claim is not plausible on its face. Igbal, 556 U.S. at 678.

Under Guam law, dismissal for a failure to state a claim is only proper if "it is clear [on

9 de novo review] that the complaint could not be saved by any amendment." Taitano v. Calvo 10 Finance Corp., 2008 Guam 12 ¶ 9 (quoting Simpson v. AOL Time Warner, Inc., 452 F.3d 1040,

1046 (9th Cir. 2006)). Leave to amend pleadings shall be liberally granted when justice so requires. Guam R. Civ. P. 15 (a) (2010). However, the existence of the following factors may

mitigate against the granting of leave to amend: "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed,

15 undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of 16 a me ndme nt. " Arashi & Co., Inc. v. Nakashima Enterprises, Inc., 2 0 0 5 Gu am 2 1 ¶ 16 (quoting 17 F o ma n v. Da vi s, 371 U.S. 178, 182 (1962)). The Court finds that the above factors articulated 18 i n Arashi are absent in this case, and that Defendants' second counterclaim can be saved by

19 amendments with sufficient factual allegations as t o each element of fraud. Taitano, 2008 20 Guam 12 ¶ 9. Thus, the Court grants Defendants leave to amend the second counterclaim. 21

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CO NCLUSI O N

Based upon the foregoing, Plaintiffs' motion to dismiss the second counterclaim of fraud 4 is hereby DENIED at this time. Defendants are granted leave to amend the second counterclaim 5 and shall submit an amen ded pleading within fift een (1 5) days. Furthermore, based o n stipulation bet ween the parties, the Court hereby orders the Janu ary 12, 1992 St o ckho l der agreement and the March 12, 1992 be declared invalid and void.

This matter is set for further proceedings on May 7, 2014 at 9:00 a.m.

SO ORDERED this 6 TV n day of May, 2014.

16 HON. JAMES L. CANTO II

J udg e , S upe rio r Co urt o f Gua m 17

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