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4 BY:--~-~·~-- 5 IN THE SUPERIOR COURT OF GUAM 6 ) 7 THE ASSOCIATION OF APARTMENT ) CIVIL CASE NO. CV0097-16 OWNERS OF GUAM YAMANOI ) 8 CONDOMINIUM, ) Plaintiff. ) 9 ) vs. ) DECISION & ORDER RE. ) PLAINTIFF'S VERIFIED MOTION ) 11 GUAM YAMANOI INC., ) 12 ) ) 13 ) Defendant. 14
15 This matter came before the Honorable Alberto E. Tolentino on June 29, 2023, upon
16 three motions filed by Plaintiff the Association of Apartment Owners of Guam Yamanoi 17 Condominium ("Association"), and three motions filed by Defendant Guam Yamanoi Inc. 18 ("GYI"). At the hearing, Attorney Thomas M. Tarpley, Jr. appeared on behalf of the 19 Association, and Attorney Georgette Bello Concepcion appeared on behalf of GYI. Having duly 20
21 considered the parties' briefing, oral arguments, and the applicable law, the court now issues the
22 following Decision and Order on the six pending motions. 23 BACKGROUND 24 1. Case History and Arbitration 25
26 The early history of this case is set forth in the Guam Supreme Court's opinion in Ass 'n
27 of Apartment Owners of Guam Yamanoi Condo. v. Guam Yamanoi Inc., 2019 Guam 14 28 (hereafter, "Supreme Court Opinion"). In this case, there were disputes between the parties over
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page I of24 the management of a property they share in Tumon. Id ,r 2. The shared property includes a 2 building with hotel space managed by GYI, and condominium space managed by the 3 Association. Id. The relationship between the parties and the spaces they manage on the 4
5 property is governed by a Horizontal Property Regime ("HPR"). Id.
6 ,. _ In 2016, the Association filed suit, alleging GYI had violated the terms of the HPR by
7 converting some of the hotel space into additional, unlicensed condominium units. Ass 'n of 8 Apartment Owners of Guam Yamanoi Condo, 2019 ,r 4. GYI moved to dismiss based on section 9 11.E of the HPR, 1 which provides that "[ a]ny controversy which shall arise between the parties 10
11 regarding the rights, duties, or liabilities hereunder of either party shall be settled by binding
12 arbitration." Id. ,r,r 3, 5. The judge previously assigned to this case 2 granted summary judgment 13 in favor of the Association without referring the matter to arbitration. Id ,r 7. GYI appealed and 14 won. The Supreme Court found that the Superior Court erred by granting summary judgment 15 instead of dismissing the Complaint or staying it pending arbitration, because the HPR's 16
17 arbitration agreement was valid and applicable to the dispute. Id ,r,r 10-24.
18 Following remand from the Supreme Court, this case laid dormant while the parties 19 arbitrated their initial dispute. The Arbitration Panel ("Panel") issued a Final Arbitration Award 20 on August 11, 2022. Memo. in Supp. (Oct. 17, 2022). ("Final Arbitration Award"). Thereafter, 21 the parties filed motions, six of which are addressed in this Decision. 22
23 \\ 24 \\ 25
26 1 At prior stages of the case, including in the Supreme Court Opinion, this provision was typically cited as "Section 27 2.05.05" of the HPR. However, the Association points out that this citation is to a draft version of the HPR, not the final version. Reply Mot. supp. at 8 (Apr. 6, 2023). Although the Association concedes that citations to the draft 28 version are "immaterial errors," the Court will nonetheless cite to the Final HPR. Id. 2 The Guam Supreme Court issued an Order terminating Magistrate Judge Benjamin C. Sison Jr.'s appointment as Judge Pro Tempore and assigned the case to this court. Order (Sept. 13, 2021).
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 2 of24 2. The Six Pending Motions 2 A. GYI's Motion to Confirm and the Association's Motion to Vacate or Sever 3 GYI filed a Memorandum of Points and Authorities in support of its motion with the 4
5 court to confirm the Final Arbitration Award. Memo. in Supp. (Oct. 17, 2022). In response to
6 GYI's motion, the Association filed its own motion, requesting the Court to either vacate the 7 Final Arbitration Award entirely or sever one portion of it. Pl. 's Mot. Vacate (Nov. 7, 2022). 8 The Association argued that the Panel exceeded its authority by issuing a "tribunal directive" 9 for the parties to negotiate compacts regarding further development of the property spaces. Id. at 10
11 2.
12 B. GYl's Motion for Temporary Restraining Order RE: Utilities 13 The building on the property houses both the hotel and the condominium units with a 14 single "master meter" for power and another for water. Memo. in Supp. (Nov. 17, 2022). 15 Although the parties are jointly responsible for paying the building's utility bill, they dispute 16
17 about precisely how this should work. On November 17, 2022, GYI filed a motion with court
18 for a temporary restraining order, enjoining the Association from attempting to and 19 disconnecting power and water to the hotel. Id. at 8. In this motion, GYI claims that the 20 Association failed to provide GYI with certain worksheets showing the payments owed, which 21 led to GYI being past due on utility payments. Id. at 6-8. 22
23 C. The Association's Motion to File Supplemental Pleadings and GYl's Motion for Order Granting Sanctions 24
25 On March 3, 2023, the Association sought leave from the court under Guam Rule of
26 Civil Procedure ("GRCP") l5(d) to file a Supplemental Verified Complaint, bringing new 27 claims for declaratory judgment, breach of contract, and tortious interference with contractual 28 relations. Pl. 's Mot. supp. (Mar. 3, 2023). The proposed claims also plead several new
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 3 of24 defendants in addition to GYI: the Guam Power Authority ("GPA"), the Guam Waterworks 2 Authority ("GWA"), individual defendant Makoto Yamanoi, and two Doe defendants. Id. On 3 March 31, 2023, GYI filed an Opposition to the Association's Motion to File Supplemental 4
5 Pleadings characterizing the Association's proposed claims as "beyond weak or unpersuasive
6 and instead are sanctionably frivolous." Opp'n to Ass'n's Mot. (Mar. 31, 2023).
7 In line with its Opposition, GYI filed a Memorandum of Points and Authorities m 8 support of a motion for order granting sanctions on April 5, 2023. GYI argues that the 9 Association's motion 1s sanctionable under GRCP Rule 11 for two reasons. First, the 10
11 Association should be sanctioned, because the proposed new causes of action are plainly within
12 the scope of Section 11.E of the HPR and therefore must be arbitrated. Memo. in Support (Apr. 13 5, 2023). Second, GYI argues that the Association's proposed claim for tortious interference 14 with contractual relations, could be to harass the individual defendants, some of which GYI 15 suspects are its own attorneys Id. at 8. In the Association's Reply to GYI's motion, it admitted 16
17 that this was true. Ass'n's Reply at 7 (Apr. 6, 2023).
18 D. The Association's Motion to Determine Arbitrability 19 On May 12, 2023, the Association filed a Verified Motion for this court to Determine 20 the "Arbitrability" of a GYI Arbitration Demand ("Verified Motion"). The Association asserts 21 that on May 5, 2023, GYI served on the Association a Demand for Arbitration of three claims 22
23 purportedly arising under the HPR. Verified Mot. (May 12, 2023). The Association argues that
24 none of GYI's claims are arbitrable, and that the court-not the arbitrators themselves-must 25 make the threshold determination as to whether this is so. Id. GYI filed its opposition to the 26 motion, arguing that the Supreme Court Opinion, as well as other Guam law, hold that the 27
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 4 of24 arbitrators can and should determine the question of arbitrability. Opp 'n Verified Mot. (June 19, 2 2023). 3 E. The Motion Hearings 4
5 On June 15, 2023, the court held a motion hearing to discuss the pending motions with
6 the parties who agreed that all pending motions except for the Association's Motion to
7 Determine Arbitrability were fully briefed and ready for hearing. Mot. Hr'g Mins. (June 15, 8 2023). At the Association's request, the court continued the motion hearing to June 29, 2023. Id. 9 On June 29, 2023, the hearing largely involved untangling the pending motions where
11 the issues raised in one motion bear on the issues raised in another. Mot. Hr'g Mins. (June 29,
12 2023). The court noted that all civil motions are automatically taken under advisement without 13 oral argument 120 days after the motion is filed pursuant to Local Rule of the Superior Court of 14 Guam, Civil Rule 7. l(e)(6)(F). Id. Under this rule, GYI's Motion to Confirm, the Association's 15 Motion to Sever or Vacate, and GYI's Motion for TRO were already under advisement before 16
17 the hearing began; and the other three motions were likely to reach that limit before the first
18 three motions were decided. Without opposition from the parties, the court took all six motions 19 under advisement simultaneously. 20 DISCUSSION 21
1. The Arbitration Award is Confirmed. 22
23 As mentioned above, GYI requested the court to confirm the Final Arbitration Award
24 under 7 GCA § 42A 702. The statute provides, in relevant part: 25 If the parties, in their agreement, have agreed that a judgment of the court shall 26 be entered upon the award made pursuant to the arbitration, and shall specify 27 the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the 28 award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in Sections 42A606 and 42A 701.
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc .. CV0097-16 Page 5 of24 7 GCA § 42A702(b) (emphasis added). "Unless there are grounds for vacating an arbitration 2 award, such an award must be confirmed upon motion by the courts of Guam." Antonio B. Won 3 Pat Int'! Airport Auth. v. DFS Guam L.P., 2023 Guam 7122 (quoting Guam YTK Corp. v. Port 4
5 Auth. of Guam, 2019 Guam 12 1 30) (emphasis added). Therefore, the court starts its analysis
6 from the presumption that the Final Arbitration Award should be confirmed; and the
7 Association bears a "heavy burden" in arguing the contrary. Oxford Health Plans LLC v. Sutter, 8 569 U.S. 564,569 (2013). 9 The Association challenges the Final Arbitration Award's tribunal directive by ordering 10
II the parties to negotiate and finalize certain compacts regarding the development and
12 administration of the property. Pl.'s Mot. Vacate at 2 (Nov. 7, 2022). The Association concedes 13 that Section 11 of the HPR "authorize[s] and empower[ s ]" the parties to enter into such 14 compacts, but asserts that the language of the HPR does not require the parties to do so. Id. The 15 Association's reasons for conceding are: (1) the directive is impossible to perform; and (2) the 16
17 arbitrators exceeded their limited authority in requiring the parties to enter into compacts. Id.
18 As a general rule, ''judicial review of an arbitration award is extraordinarily narrow." 19 Gov 't of Guam v. PacifiCare, 2004 Guam 17 1 16 (quoting Brook v. Peak Int 'l, Ltd., 294 F .3d 20 668, 672 (5th Cir. 2002)). It is true, as the Association suggests, that an arbitral award may be 21 vacated or modified where the arbitrators have exceeded their powers. 7 GCA § 42A70l(b)(4). 22
23 However, a court should refrain from doing so "as long as the arbitrator is even arguably
24 construing or applying the contract and acting within the scope of his authority." PacifiCare, 25 2004 Guam 17 1 54. In other words, an arbitrator would exceed their powers "only if the 26 arbitrator must have based his award on his own personal notions of right and wrong." Asia 27
28 Pac. Hotel Guam, Inc. v. Dongbu Ins. Co., 2015 Guam 3 ,i 40 (citation omitted).
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-l 6 Page 6 of24 Here, the Panel found that the parties have been operating since 2003 under an unwritten 2 agreement that "amounts to a de facto compact." Memo. in Supp. at 12 (Oct. 17, 2022). Section 3 11 of the HPR provides that "[ a]ny compact between the Association and the Hotel must [] be 4
5 in writing[.]" Thus, the tribunal directive is effectively a directive to reduce their agreement to
6 writing, which is what the HPR contemplates. And the directive is not based on the Panel's 7 personal notions, because it does not compel any particular result from the negotiations; it only 8 directs the parties to negotiate. Accordingly, the court finds that the Panel was at least arguably 9 construing or applying the HPR when it rendered this directive, so the Panel's decision will not 10
II be disturbed. GYI's Motion to Confirm is therefore GRANTED, and the Association's Motion
12 to Sever or Vacate is DENIED. 13 2. GYl's Motion for TRO RE: Utilities is Denied. 14 GYI seeks a temporary restraining order to prevent the Association from attempting to 15 and disconnecting power and water to the Hotel. Memo. in Support at 8 (Nov. 17, 2022). GYI 16
17 asserts that certain utility invoices prepared by the Association state: "[e]ffective immediately!
18 DISCONNECTION without notice after 60 days of non-payment from date of invoice." Id 19 Although GYI admits that "the Association has represented that the disconnection notice 20 included in its invoices to the Hotel do not apply to the Hotel," GYI still asserts that the Hotel 21
22 does not trust the Association after their past dealings together. Id GYI also seeks attorney's
23 fees incurred in connection with the temporary restraining order. Id. at 8-9. 24 "A TRO is simply a highly accelerated and temporary form of preliminary injunctive 25 relief." Greer's Ranch Cafe v. Guzman, 540 F.Supp.3d 638, 644-45 (N.D. Tex. 2021). Despite 26 the accelerated nature of TROs, GYI did not file an application to shorten time along with its 27
28 motion requesting a TRO until December 29, 2022. At this time, GYI filed the application to
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 7 of24 shorten time along with its Reply brief. CVR 7.1 Fonn 4 (Dec. 29, 2022). Because this court 2 was indisposed at that time, the Honorable Dana A. Gutierrez heard the application on January 3 17, 2023, denying it based on the following finding: 4
Based on the representations of Plaintiff and its counsel, the Court finds no 5 immediate threat of Plaintiff shutting off the power and water. The Court 6 notes that almost two months have passed since Defendant first requested a 7 TRO and the power and water have not been shut off, which demonstrates that Plaintiff will adhere to its representation. Defendant presents no evidence that 8 there is an imminent threat of Plaintiff shutting of the power and water. 9 Likewise, Plaintiff and its counsel maintain that Plaintiff will not shut off the power and water. Consequently, the Court finds no sufficient justification for shortening time on this TRO. II Order at 4 (Jan. 17, 2023). This finding was based on the fact that the Association had not turned 12
13 off the hotel's utilities, or attempted to, as of January 2023. And the parties represented to the
14 Court that this remained the status quo at the hearing on June 29, 2023. 15 On a preliminary injunction, "the moving party must show both irreparable injury and 16 likelihood of success on the merits." Sule v. Guam Bd. of Examiners, 2011 Guam 5 1 9. To 17
18 demonstrate irreparable injury, the movant must ''demonstrate that irreparable injury is likely in
19 the absence of an injunction." Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 22 (2008). "Issuing a preliminary injunction based only on a possibility of irreparable harm is 21 inconsistent with our characterization of injunctive relief as an extraordinary remedy that may 22
23 only be awarded upon a clear showing that the [movant] is entitled to such relief." Id.
24 Here, GYI has not been able to show irreparable injury, and it does not appear that any
25 such injury is forthcoming. As support, the Association set forth a declaration from Matt 26 Johnson, one of the Directors of the Association, averring that the disconnection language in the 27 invoices is "standard boilerplate" and that "[w]e understand that shutting off the power and 28
water is [] hugely disruptive and we DON'T want to do it." Deel. Johnson at 3 (Dec. 15, 2022);
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 8 of24 see also Deel. Bullock at 1 (Dec. 15, 2022). Presently, the court has not received further 2 evidence that the Association was likely to shut off the hotel's utilities. 3 The Court finds that it is 3 not likely that GYI will suffer irreparable harm unless the Temporary Restraining Order is 4
granted. Therefore, GYI's Motion for TRO RE: Utilities is DENIED, as is GYI's request for 5
6 attorney's fees.
7 3. The Association's Motion for Leave to Supplement and GYl's Motion for 8 Sanctions are Denied.
9 Under GRCP Rule 15(d), the Association seeks leave of court to supplement its
Complaint with five new claims: (1) Declaratory Judgment; (2) Breach of Contract (Power and II Water); (3) Breach of Contract (Mailboxes); (4) Breach of Contract (Association Office); and 12
(5) Tortious Interference with Hawthorne-Caterpillar Contractual Relations. Pl. 's Mot. supp. 13
14 (Mar. 3, 2023). The first two proposed claims seek to plead new defendants GPA and GWA;
15 and the fifth proposed claim seeks to plead new defendants Makoto Yamanoi and Jane Doe 1 & 16 2. Id. at 2. 17 The court may allow a party to file a "supplemental pleading setting forth transactions or 18
19 occurrences or events which have happened since the date of the pleading sought to be
20 supplemented." Guam Rules Civ. Pro. 15(d). Because this rule is directly derived from Federal
21 Rules of Civil Procedure 15(d), interpretations of the federal equivalent are persuasive 22 authority. Lujan v. Calvo Fisher & Jacob LLP, 2018 Guam 27 ,r 11. 23
25 3 26 The court recognizes that Fernando De Leon's Declaration avers that on January 4, 2023, Matt Johnson ordered him to shut off the power to certain hallway lights in the hotel and to the hotel's parking area. Deel. De Leon (Apr. 27 11, 2023). However, due to the interrelated nature of the property's utility structure, any effort to shut off the power to these spaces would also necessarily shut off the power to the Association's own hallway lights and parking area. 28 Id. at 2. Thus, the court finds it unlikely that the Association will tum off the hotel's power, since this would also be harmful to the Association's share of the property.
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 9 of24 As a general rule, motions for supplemental pleadings are generally favored where they 2 would serve as "a tool of judicial economy and convenience." Liifan, 2018 Guam 27 ,r 11 3 (quoting Keith v. Volpe, 858 F.2d 467, 473 (9th Cir. 1988)). A GRCP 15(d) motion should be 4
evaluated with an eye to the "Foman factors" promoted by the U.S. Supreme Court. Id. ,i 12 5
6 (citing Foman v. Davis, 371 U.S. 178 (1962)). The Foman factors are "undue delay, bad faith or
7 dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments 8 previously allowed, undue prejudice to the opposing party by virtue of allowance of the 9 amendment, [or] futility of amendment." Arashi & Co. v. Nakashima Enter., 2005 Guam 21 ,r 10
II 16 (quoting Foman, 371 U.S. at 182). If none of these factors are present, "leave [to file] should
12 be freely granted." Bautista v. Sholing, 2017 Guam 17 ,r 26. 13 "A motion to amend is futile when the complaint as amended would be subject to 14 dismissal." Lujan, 2018 Guam 27 i! 13. Generally, this analysis should proceed as follows: 15 When determining whether a proposed amendment should be denied as futile, 16 a court must analyze the proposed amendment as if it were before the court on 17 a motion to dismiss. In so doing, the court must accept as true all well-pleaded factual allegations, and view them in the light most favorable to the moving 18 party. The court must then look to the specific allegations in the complaint to 19 determine whether they plausibly support a legal claim for relief. 20 Id. (internal citations omitted). GYI opposes the Association's Motion to Supplement, and bases 21
22 its own Motion for Sanctions, on two counterarguments. First, GYI argues that the first four
23 proposed claims are within the scope of Section 11.E of the HPR and must be arbitrated, not
24 litigated. Opp 'n to Ass 'n's Mot. at 3-4 (Mar. 31, 2023). If these proposed claims are indeed 25 arbitrable, they would be futile, because they would be subject to dismissal. Adkins v. Labor 26 Ready Inc., 205 F.R.D. 460, 465 (S.D. W. Va. 2001); see also The Detroit Edison Co. v. 27
28 Burlington Northern and Santa Fe Ry. Co., 442 F.Supp.2d 387, 394 (E.D. Mich. 2006). This is
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-l 6 Page 10 of24 consistent with the Supreme Court Opinion, which suggested that claims falling within Section 2 11.E should be dismissed, or else stayed pending arbitration. Guam Yamanoi, Inc., 2019 Guam 3 14 ~ 24. 4
5 Second, GYI argues that Proposed Claim 5 is brought for an improper purpose, i.e. "to
6 harass and attack GYI's principal, Makoto Yamanoi, and GYI's female attorneys." Memo. in
7 Supp. at 6-7 (Apr. 5, 2023). GYI concludes that the Motion to Supplement is frivolous and 8 without legal basis. Id. at 8. 4 In GYI's view, these actions call for sanctions under GRCP 11 "in 9 the form of attorney's fees ... and an order that the Motion and its attached Supplemental
II Pleading be stricken from the record." Id. at 12.
12 A. Proposed Claim 1 (Declaratory Judgment) 13 For Proposed Claim 1, the Association argues that this claim is not arbitrable for two 14 reasons. For its first argument, the Association reasons that this claim is not arbitrable, because 15 it pleads GWA and GPA as new defendants, even though they are not parties to the HPR and not 16
17 bound by the arbitration agreement. Pl. 's Reply at 3 (Apr. 6, 2023).
18 The court agrees that the new parties are not subject to the HPR, but also notes that 19 "parties to an arbitration agreement may not evade arbitration through artful pleading." In re 20 Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 188 (Tex. 2007). Proposed Claim 1 only seeks a 21 declaration that the utility accounts from these companies should be held in the Association's 22
23 name. Pl.' s Mot. supp. at 6-7 (Mar. 3, 2023). There is no allegation that either GWA or GP A
25 4 GYI briefly argues that the Association's lack of citation to either the Supreme Court Opinion in this case, or to 26 Calvo Fisher & Jacob LLP is a violation of Guam Rule of Professional Conduct ("GRPC") 3.3(a)(l), which provides that "[a] lawyer shall not make a false statement of fact or law to a tribunal ...." Memo. in Supp. at 10 27 (Apr. 5, 2023). Because the court finds that neither case fully controls the outcome of this issue, failure to cite these cases does not rise to the level of a "false statement of law" demanding Rule 11 sanctions. See United States v. 28 Stringfellow, 911 F.2d 225, 226 (9th Cir. 1990) ("The failure to cite relevant authority, whether it be case law or stan1tory provisions, does not alone justify the imposition of sanctions.").
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-l6 Page 11 of24 GPA have an interest in the resolution of this question. Both GPA and OWA have taken no 2 position on the motion, and there is no apparent reason why these defendants would care whose 3 name is on the utility accounts. Deel. Tarpley at 1 (Apr. 6, 2023). The Association's pleading of 4
5 additional defendants is not a basis to allow the Association to avoid arbitration with GYI on
6 this claim. Moses H Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 20 (1983)
7 ("an arbitration agreement must be enforced notwithstanding the presence of other persons who 8 are parties to the underlying dispute but not to the arbitration agreement."). 9 The Association's second argument as to why this claim is not arbitrable is that the 10
II issues relating to power and water distribution are not a subject specifically addressed within
12 Section 11 of the HPR. PL 's Reply at 3-4 (Apr. 6, 2023). Because of this, disputes over the 13 payment of utilities are outside the scope of the arbitration provision. The court finds this 14 argument incompatible with the Supreme Court Opinion on this matter back in 2019. The 15 Supreme Court was not persuaded by the Association's prior arguments that its claims were 16
17 outside the scope of the arbitration agreement. Guam Yamanoi Inc., 2019 Guam 14 ,r 20 ("One
18 of those rights [in the HPR] is the right to have an arbitrator-rather than the courts-resolve 19 any dispute between the parties.") (emphasis added). Instead, the Supreme Court explained that 20 Section 11 of the HPR should be interpreted broadly, with all doubts as to arbitrability resolved 21
in favor of arbitration. Id. ,r 22. 22
23 Interpreted broadly, disputes over the property's utilities would fall within Section
24 11.B.i, which discusses the relationship between the parties over the management of the 25 building. As the parties have both stressed, there is one main power line to the building that 26 houses both the hotel and the condominiums. The parties' dispute over control of the account for 27
Decision & Order Re. Plaintifrs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 12 of24 this power line is considered a dispute over management of the building that falls within Section 2 11.B.i. 3 At minimum, the court cannot say "with positive assurance that the arbitration clause is 4 not susceptible" to this interpretation. Guam Yamanoi Inc., 2019 Guam 14 ,r 13 (quoting 5
6 GHURA, 2004 Guam 22 ,r 31 ). Since the claim is within the arbitration clause, it would be futile
7 to allow the Association to supplement their Complaint with this claim against GYI, since the 8 claim would immediately be dismissed or stayed upon GYI's motion. To the extent that there 9 could be a viable declaratory judgment claim against GPA and GWA independent of the 10
11 arbitration of this issue with GYI, the Association is not precluded from filing a separate action
12 to pursue declaratory judgment against the governmental defendants alone. Therefore, the court 13 DENIES the Association leave to supplement their Complaint with this Proposed Claim I for 14 Declaratory Judgment. 15 B. Proposed Claim 2 (Breach of Contract (Power and Water)) 16
17 Proposed Claim 2 is a breach of contract action, which appears to tum entirely on the
18 resolution of Proposed Claim 1. "Should this Court find for Plaintiff in its First Claim for Relief 19 herein, then Plaintiffs second claim for relief is for a judgment finding GYI has breached its 20 contract with Plaintiff . . . ." Pl. 's Mot. supp. at 7 (Mar. 3, 2023). Since the Court denied 21 Proposed Claim 1, it likewise finds against the Association on Proposed Claim 2, because it 22
23 would also be futile to allow leave to supplement the Complaint with Proposed Claim 2.
24 Therefore, the Court DENIES the Association leave to supplement their Complaint with this 25 Proposed Claim 2 for Breach of Contract. 26 \\ 27
28 \\
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi lnc., CV0097-16 Page 13 of24 C. Proposed Claims 3 (Breach of Contract (Mailboxes)) and 4 (Breach of Contract 2 (Association Office))
3 For Proposed Claims 3 and 4, the Association concedes that the claims are within the 4 scope of the arbitration provision. Although the Association argues that GYI has waived the 5 right to arbitrate these claims by "unreasonably delay[ing] in undertaking the procedure," the 6 Association appears to have abandoned this argument. Pl.'s Reply at 5 (Apr. 6, 2023) (quoting 7
8 Engalla v. Permanente Medical Group, Inc., 938 P.2d 903, 923 (Cal. 1997). In its Reply, the
9 Association states that it "is willing to arbitrate claims 3 & 4, and therefore has recently served IO its Demand for Arbitration on GYI in accordance with HPR article 11.E." Id. at 6. Based on this 11 representation, the court DENIES the Association leave to supplement its Complaint with 12 Proposed Claims 3 and 4 for Breach of Contract. 13
14 D. Proposed Claim 5 (Tortious Interference with Hawthorne-Caterpillar Contractual Relations) 15
16 Proposed Claim 5 is a claim for Tortious Interference with Contractual Relations
17 ("TICR"), which is proposed against GYI and the three individual defendants. The claim is
18 based on an alleged interference in the ongoing "customer service agreement" between the 19 Association and a firm called Hawthome-Catepillar ("HawthorneCAT") for the service of an 20 electrical generator. Pl. 's Mot. File Supp. Pldg. at 10 (Mar. 3, 2023). The Association alleges: 21
22 31. In January 2023 HawthomeCAT declined to renew its Customer Service Agreement with the Association on the stated grounds that GYI through its 23 attorney had contacted HawthomeCAT insisting that the Association has no authority to maintain the generator because it is "owned" by GYI when such 24 maintenance was granted by GYI to the Association since 1990 and, further, 25 by Defendant Y amanoi misquoting the Arbitration Award and its scope which did not address the generator or even mention it. 26 \\ 27 \\ 28 \\
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 14 of24 Id. In its opposition, GYI notes that a plaintiff claiming TICR must allege: 2 (1) the existence of a valid contract between the plaintiff and a third party. 3 (2) the defendant's knowledge of that contract, (3) an act by the defendant intended to induce a breach or disruption of the 4 contractual relationship 5 (4) an actual breach or disruption of the contract, and (5) resulting damages. 6 Opp'n to Ass'n's Mot. at 8 (Mar. 31, 2023) (quoting Lujan v. GirardilKeese, 2009 WL 5216906 7
8 *7 (D. Guam Dec. 29, 2009)). GYI argues that Proposed Claim 5 does not allege any valid
9 contract between the parties and the Association; only a contract for the maintenance of a IO generator, which HawthomeCAT decided not to renew. Id. GYI also argues that there are no 11 damages, because the Association incurred none. Id. In its Reply, the Association indicates that 12 GYI "misunderstands the law of this tort," because Proposed Claim 5 states a valid tort claim 13
14 under Restatement (Second) of Torts § 766B, "Intentional Interference with Prospective
15 Contractual Relation." Pl. 's Reply at 7 (Apr. 6, 2023). Under the Second Restatement: 16 One who intentionally and improperly interferes with another's prospective 17 contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, 18 whether the interference consists of (a) inducing or otherwise causing a third person not to enter 19 into or continue the prospective relation or 20 (b) preventing the other from acquiring or continuing the prospective relation. 21
22 Rest. 2d Torts § 766B (2024) (emphasis added). GRCP Rule 15(d) does not bar a party from
23 pleading new defendants who "participat[ed] in the[] new events" into an action. Griffin v. 24 County School Bd. of Prince Edward County, 377 U.S. 218, 227 (1964). However, GRCP Rule 25 15(d) cannot be used to introduce a "separate, distinct and new cause of action" into the 26 original complaint. Planned Parenthood of Southern Arizona v. Neely, 130 F.3d 400, 402 (9th 27
28 Cir. 1997). In other words, where a new cause of action "could be the subject of a separate
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-l6 Page 15 of24 action," a court is not required to grant leave to supplement. Id. (quoting Wright, Miller, & 2 Kane, Federal Practice and Procedure: Civil 2D § 1509 (1990)); In re Exxon Valdez, 318 3 Fed.Appx. 545, 547 (9th Cir. 2009). 4
5 The court notes that this claim as against GYI also appears to be within the scope of the
6 arbitration provision. Like Proposed Claim 1, this claim involves a power generator for the
7 building and appears to concern the "management of the building" under Section 11.B.i. 8 Therefore, Proposed Claim 5, as against G YI, must be arbitrated. Guam Yamanoi Inc., 2019 9 Guam 14 ,i 20 (recognizing the HPR confers the "right to have an arbitrator-rather than the 10
II courts-resolve any dispute between the parties."). On the other hand, this claim as against the
12 individual defendants appears legally sufficient to proceed if the court accepts the Association's 13 factual allegations as true. Because the individual defendants are not parties to the arbitration 14 agreement, the arbitration agreement does not render this action futile as against them. 15 Here, the allegations in Proposed Claim 5 as against the individual defendants are 16
17 entirely new from the specific allegations of the Complaint. The Complaint, which was made
18 more than seven years ago, sought determinations of the Association's right to repair, GYI's 19 liability for the costs of such repairs, and the Association's right to manage its particular share 20 of the property (certain floors of the main building). Verified Compl. (Feb. 19, 2016). Those 21 issues have now been fully resolved with the Final Arbitration Award. Proposed Claim 5, 22
23 however, seeks a determination of a wholly new issue, and since the issue against GYI must be
24 arbitrated, the court's action on that claim would proceed exclusively against new defendants. 25 For these reasons, the court exercises its discretion to deny the Association's motion to 26 supplement the complaint. This decision does not preclude the Association from filing its 27
28 claims against the proposed new defendants in separate actions if it chooses. Therefore, the
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 16 of24 court DENIES the Association leave to supplement its Complaint with Proposed Claims 5 for 2 Tortious Interference with Contractual Relations. 3 E. The Motion for Sanctions is Denied. 4
5 Under GRCP Rule 11, an attorney seeking sanctions must certify to the court that he or
6 she "has made a reasonable inquiry and that the allegations in the complaint or other pleadings
7 are well grounded in fact and 'are warranted by existing law." PC/ Communications Inc. v. GST 8 Pacwest Telecom Hawaii, Inc., 1999 Guam 17 if 13 (citations omitted). Consequently, sanctions 9 may be imposed upon an attorney for filing pleadings "that are made to harass, that are IO
II frivolous, or that have no evidentiary support." Gov 't of Guam v. Gutierrez ex rel. Torres, 2015
12 Guam 8 ,r 46. Ultimately, GRCP Rule 11 "is designed to vest trial courts with wide discretion in 13 sanction decision-making." DFS Guam L.P. v. A.B. Won Pat Int'! Airport Auth., 2014 Guam 12 14 ,r 29. As noted above, GYI moved for sanctions against the Association on two bases: 15 frivolousness and improper purpose. Memo. in Supp. (Apr. 5, 2023). 16
17 With regard to the basis of frivolousness, the court does not find the Association's
18 arguments so devoid of merit as to be frivolous, despite the court denying the Association's 19 motion to supplement its pleading. A claim is sanctionable as frivolous only when it is "both 20 baseless and made without a reasonable and competent inquiry." Nateroj v. Haruyama, 1992 21
WL 97207 *3 (D. Guam App. Div. Apr. 16, 1992); see also Trans Pac. Exp. Co. v. Oka Towers 22
23 Corp., 2000 Guam 3 ,r 38 ("If, judged by an objective standard, a reasonable basis for the
24 position exists in both law and in fact at the time that the position is adopted, then sanctions 25 should not be imposed."). Although the court finds the Association's position about the 26 comparative narrowness of Section 11.E to be contrary to the spirit of the Supreme Court 27
28 Opinion, it is not directly contrary to that opinion. The Supreme Court Opinion did not
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 17 of24 detennine precisely what subjects are within the scope of Section 11. While the court finds that 2 its conclusion on the motion to supplement is ultimately compelled by the Supreme Court 3 Opinion, "there is a significant difference between a weak or unpersuasive argument and one 4
5 that is sanctionably frivolous." DFS Guam L.P., 2014 Guam 12 ,r 31. The Association's
6 arguments belong to the fonner category.
7 With regard to improper purpose, the court finds that the evidence is insufficient to 8 conclude that Proposed Claim 5 was brought solely for the purpose of harassing the individual 9 defendants. As discussed above, Proposed Claim 5 appears to state a legally viable tort claim
11 against the individual defendants. Because the court must accept the factual allegations as true,
12 Proposed Claim 5 against the individual defendants cannot be deemed frivolous, because it may 13 have legal merit. Therefore, the court cannot presently conclude that the only purpose of the 14 claim was to harass the proposed individual defendants. 15 Even assuming the Association had dual (proper and improper) motives for Proposed 16
17 Claim 5, this is not sufficient to support Rule 11 sanctions. In re Kunst/er, 914 F.2d 505, 518
18 (4th Cir. 1990) ("if a complaint is filed to vindicate rights in court, and also for some 19 other purpose, a court should not sanction counsel for an intention that the court does not 20 approve, so long as the added purpose is not undertaken in bad faith and is not so excessive as 21
22 to eliminate a proper purpose."). Therefore, the court DENIES GYI's Motion for Sanctions
23 against the Association.
24 \\ 25 \\ 26 \\ 27
Decision & Order Re. Plaintifrs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 18 of24 4. The Association's Demand for Arbitration is Arbitrable. 2 On May 5, 2023, GYI served a demand on the Association to arbitrate three claims, 3 which arose between the parties. Pl.' s Verified Mot. (May 12, 2023 ). 5 The Association now 4
5 asks the court, rather than the arbitration panel, to determine whether these claims are arbitrable,
6 and also provides substantive argument as to why it believes each claim is non-arbitrable. Id. In
7 response, GYI asserts that the arbitrators themselves have the power to determine their own 8 jurisdiction under 7 GCA § 42A401(a) and the Supreme Court Opinion as support; GYI also 9 substantively argues that the claims are indeed arbitrable. Opp'n to Ass'n's Verified Mot. (June 10
11 19, 2023). This Motion therefore presents two distinct questions: whether the claims are
12 arbitrable, and who decides that question. 13 A. The Court Will Decide Arbitrability. 14 On the question of whether certain claims are arbitrable, there is a strong presumption in 15 favor of arbitrability. "Any ambiguities regarding the question of 'whether a particular merits- 16
17 related dispute is arbitrable because it is within the scope of a valid arbitration agreement' are
18 construed in favor of arbitration." Guam Yamanoi Inc., 2019 Guam 14122 (quoting GHURA v. 19 Pac. Superior Enters. Corp., 2022 Guam 22 ~ 31)); see also Perez v. Monkeypod Enters., 2022 20 Guam 12 ~ 22 ("As prior cases explain, we construe arbitration agreements broadly in favor of 21 arbitrability."). But this same presumption does not apply to the question of who decides 22
23 whether a particular dispute is arbitrable. PacifiCare, 2004 Guam 17 ~ 27 ("The question of
24 whether a claim or dispute is arbitrable is generally considered one for the courts, and not the 25 arbitrators, unless the parties clearly and unmistakably reserved the question for the 26
5 28 Although GYI withdrew these claims on May 12, 2023, it has refiled these same claims as counterclaims in a separate arbitration initiated by the Association. Reply at 1-2 (May 17, 2023); see Deel. Concepcion, Ex. B (June 19, 2023). For simplicity, this Decision and Order will continue to use the term "claims."
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 19 of24 arbitrators."); see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 945 (1995). 2 Although there is a presumption that particular claims are arbitrable, there is a contrary 3 presumption that the question of arbitrability itself is not arbitrable. 4
5 Thus, the court must answer the "gateway question of who resolves the question of
6 arbitrability." Guam Yamanoi Inc., 2019 Guam 14 ,r 18. The court first notes that the Supreme
7 Court Opinion itself does not significantly treat this question, because neither party raised that 8 issue before the Supreme Court. Id. Therefore, the court applies the PacifiCare standard: 9 whether "the parties clearly and unmistakably reserved the question [of who decides 10
11 arbitrability] for the arbitrators." PacifiCare, 2004 Guam 17,J 27.
12 Section 11.E of the HPR provides that "[ a]ny controversy which shall arise between the 13 parties regarding the rights, duties, or liabilities hereunder of either party shall be settled by 14 binding arbitration." The phrase "any controversy" is broad, which indicates that the inquiry of 15 whether certain disputes are arbitrable should also be interpreted broadly. Perez, 2022 Guam 13 16
17 ,r 16. But there is nothing in the HPR that explicitly provides who determines arbitrability. And 18 unlike some cases, there are no contextual clues as to the parties' intention on that issue. Guam 19
20 YTK Corp. v. Port Auth. of Guam, 2014 Guam 7, 26 (an arbitration agreement providing that
questions of "enforcement" and "validity" must be arbitrated evinces the parties' intent that the 21 arbitrator should decide questions of arbitrability); see also DFS Guam, 2023 Guam 7 , 24 (an 22
23 arbitration agreement which explicitly incorporates the American Arbitration Association Rules
24 evinces an intent for arbitrators to decide arbitrability). Given the HPR's silence on the issue, the 25 court finds that the HPR does not clearly and unmistakably reserve the question of arbitrability 26 to the arbitrator. Therefore, the court must decide arbitrability. 27
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 20 of24 B. Arbitrability of the Claims 2 The court now applies the strong presumption that the particular claims are arbitrable. 3 Guam Yamanoi Inc., 2019 Guam 14122. The court does so notwithstanding the Association's 4
5 argument that the U.S. Supreme Court's decision in Morgan v. Sundance Inc., 596 U.S. 41 I
6 (2022) has "watered down" the policy favoring arbitration in the context of the Federal
7 Arbitration Act. While that may be true in the federal system, the Guam Supreme Court has not 8 yet addressed whether or how the Morgan case applies to the interpretation of the Guam 9 International Arbitration Chapter. Until the Guam Supreme Court changes positions, the court IO
II must continue to follow local precedent. People v. Palomo, 1998 Guam 12 1 7 ("trial courts rule
12 against precedent at their own peril. ... The court in no way encourages the practice of ignoring 13 precedent."); see also Duenas v. Brady, 2008 Guam 27 1 17 n.4 ("prior applicable precedent 14 usually must be followed even though the case, if considered anew, might be decided differently 15 .... "). 16
17 (1) Claim 1 is not arbitrable.
18 The Association first argues that GYI's Claim 1 is not arbitrable, because this issue was 19 already decided in the first arbitration. PL 's Verified Mot. 4 (May 12, 2023). GYI's Claim 1 20 provides: 21
22 B. GYI "Claim 1: Pursuant to 1 11 of the Final HPR, the Hotel is to maintain and operate the Pia Resort building and the property . . . subject to 23 contribution from the Association on the basis of the relative total square 24 footage of the Hotel and the Association, without interference from the Association ... " 25
26 Id. (emphasis added). The Association cites paragraphs 44 and 48 of the Final Arbitration
27 Award to argue that the Panel has already determined that the Association manages its share of 28 the building (the condominium units on floors 7 through 12); and the Hotel manages the rest,
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi lnc., CV0097-16 Page 21 of24 and that each party's management of their respective share is "separate and independent of the 2 other." Id. at 4. In response, GYI explains that Claim 1 only refers to the portions of the building 3 "commonly used by or shared" between the parties, such as the lobbies and elevators. Opp'n 4
Ass'n's Verified Mot. at 4-5 (June 19, 2023). 5
6 Under the Guam International Arbitration Chapter, when an arbitral decision ts
7 confirmed by the court, 8 (f) The judgment so entered shall have the same force and effect, in all 9 respects, as, and be subject to all the provisions of law relating to, a judgment in an action; and it may be enforced as if it had been rendered in an action in the court in which it is entered. II
12 7 GCA § 42A702(f). In other words, an issue finally decided in a prior arbitration and confirmed
13 by the court has the same preclusive effect as an issue that was finally decided by the court 14 directly. Greenblatt v. Drexel Burnham Lambert, Inc., 763 F.2d 1352, 1360 (11th Cir. 1985); see 15 also FleetBoston Financial Corp. v. Alt, 638 F.3d 70, 79 (1st Cir. 2011). Since the Final 16 Arbitration Award is confirmed by this Decision and Order, the preclusive effect applies. Here, 17
18 GYI's Claim I-even accepting GYI's representation that the scope of the claim is limited to
19 the "common areas" of the property-has been fully addressed by the Final Arbitration Award. 20 Accordingly, there is no need to redetermine whether GYI is to maintain the common spaces 21 with contribution from the Association; that issue is decided. Therefore, this claim is not 22 arbitrable. 23
24 (2) Claim 2 is arbitrable.
25 Next, the Association argues that GYI's Claim 2 is not arbitrable for two reasons. First, 26 Claim 2's is already before the court on the Motion to Supplement and involves third parties 27 who are not parties to the arbitration agreement. Pl. 's Verified Mot. at 2 (May 12, 2023). 28
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page 22 of24 Second, Section 11 of the HPR does not extend to claims raised by GYI. Id. at 3. GYI's Claim 2 2 provides: 3 Claim 2: Pursuant to § 11 of the Final HPR, the Hotel is to maintain and 4 manage the power and water master meter accounts owned by the Developer, 5 Guam Yamanoi, Inc., ... subject to contribution from the Association on the basis of consumption, without interference from the Association. 6 Id. at Attach. I (May 12, 2023). This is fundamentally the same claim the court decided in 7 Section 3(b)(i) above. Because the court previously found that this claim is arbitrable, the court 8
9 reaffirms that finding here.
(3) Claim 3 is arbitrable.
II Finally, the Association argues that GYI's Claim 3 is not arbitrable, because this issue is 12 already being arbitrated in another arbitration between the parties, which could lead to 13 inconsistent awards. Pl.'s Verified Mot. at 4 (May 12, 2023). While GYI admits that this issue is 14
15 indeed part of its counter-claim in another arbitration, it argues there is no danger of inconsistent
16 awards, because the same arbitration panel would address both arbitrations. Opp'n to Ass'n's 17 Verified Mot. at 7 (June 19, 2023). However, the Association appears to concede on this point in 18 its Reply Brief. Pl. 's Reply Br. at 6 (June 28, 2023). Therefore, the court finds Claim 3 to be 19 arbitrable due to the concession of both parties. 20
21 The court therefore GRANTS the Association's motion with respect to Claim 1, and
22 DENIES the Association's motion with respect to Claim 2 and 3. 23 \\ 24 \\ 25
26 \\
27 \\
Decision & Order Re. Plaintiffs Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi inc., CV0097-16 Page 23 of24 CONCLUSION 2 For the reasons set forth above, the court hereby: 3 • GRANTS GYI's Motion to Confirm; 4 • DENIES the Association's Motion to Vacate of Sever; 5
6 • DENIES GYI's Motion for TRO RE: Utilities;
7 • DENIES the Association's Motion to Supplement; 8 • DENIES GYI's Motion for Sanctions; and 9 • GRANTS IN PART and DENIES IN PART the Association's Motion to 10
11 Determine Arbitrability.
SO ORDERED this - -OCT 15 2024 13 -------- 14
17 HONORABLE ALBERTO E. TOLENTINO 18 Judge, Superior Court of Guam 19
Decision & Order Re. Plaintiff's Verified Motion Guam Yamanoi Condominium v. Guam Yamanoi Inc., CV0097-16 Page24 of24