FtLE:O 1
4 IN THE SUPERIOR COURT OF GUAM 5
6 TSANG BROTHERS CORPORATION, Civil Case No. CV1218-17
7 Plaintiff,
8 vs.
9 MAN LING AU, PING CHUNG TSANG, DECISION AND ORDER (Motion to Dismiss and/or Strike Third-Party LAI HING AU, and FIRST Claims) 10 COMMERCIAL BANK,
11 Defendants. 1~----------------------------~ MAN LING AU and PING CHUNG 12 TSANG,
13 Counterclaim-Plaintiffs,
14 vs.
15 TSANG BROTHERS CORPORATION,
16 Counterclaim-Defendant. 17 MAN LING AU and PING CHUNG TSANG, 18 Third-Party Plaintiffs, 19 vs. 20 WING ON TSANG and KAM VENG TAM, 21 Third-Party Defendants. 22
231~----------------------------~
CV1218-17 Decision and Order (Motion to Dismiss and/or Strike Third-Party Cl~imsQ R GIN AL J Page 1 of6 1 INTRODUCTION 2 This matter came before the Honorable Anita A. Sukola on Wing On Tsang ("Norman")
3 and Kim Veng Tam's ("Kam Veng") Motion to Dismiss and/or Strike Third-Party Claims.
4 Attorney Ignacio C. Aguigui represents Norman and Kam Veng. Attorney William L. Gavras
5 represents Defendant/Third-Party Plaintiff Lai Hing Au ("Christina"). Attorney Curtis
6 Vandeveld represents Defendant/Third-Party Plaintiffs Man Ling Au ("Man Ling") and Ping
7 Chung Tsang ("Larry"). Attorney Geri E. Diaz represents Plaintiff-Counterclaim Defendant
8 Tsang Brothers Corporation ("TBC").
9 BACKGROUND 10 Norman is the President of TBC. Larry is a shareholder of TBC. Larry was previously the
11 General Manager of Operations for TBC until February 17, 2014, when he was terminated for
12 misconduct. Larry is married to Christina. Christina was previously the Office Manager for TBC
13 and handled the company's finances until her termination on February 17, 2014.
14 TBC held a credit line account at First Commercial Bank secured by three Time
15 Certificate of Deposit Accounts ("CDs") which contained funds allegedly belonging to TBC but
16 held in Man Ling's name. TBC alleges that Man Ling holds these funds in trust and for the sole
17 benefit of TBC. On October 13, 2017, First Commercial Bank notified Norman that on October
18 12, 2017, Man Ling revoked a power of attorney which allowed TBC to use funds in the CDs.
19 The CDs could therefore no longer be used to secure TBC's line of credit with First Commercial
20 Bank, disrupting TBC's operations.
21 In response, on December 1, 2017, TCB filed its Verified Complaint which contains a
22 claim for Conversion of $752,000.00 against Man Ling, as well as a claim of Participating in
CVI218-17 Page 2 of6 Decision (lnd Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 and/or Aiding and Abetting against Larry, Christina (collectively with Man Ling, "Individual
2 Defendants"), and First Commercial Bank.
3 On September 5, 2019, Individual Defendants filed their Answer, Counterclaims, and
4 Third-Party Claims. In the first third-party claim, Man Ling alleges TBC, Norman, and Kam
5 Veng intentionally interfered with the contractual relationship between Man Ling -and First
6 Commercial Bank by filing the Verified Complaint ("the Contractual Interference Claim").
7 Additionally, all three Individual Defendants allege that Norman and Kam Veng falsely claimed
8 that Individual Defendants have wrongly misappropriated funds belonging to TBC ("the
9 Defamation Claim").
10 On September 30, 2019, Norman and Kam Veng filed the instant Motion to Dismiss
11 and/or Strike Third-Party Claims on the grounds that the third-party claims are improper under
12 Rule 14 and fail to state a claim upon which relief may be granted.
13 DISCUSSION
14 A. Permissible third-party claims under Rule 14.
15 Third-party claims and complaints are governed by the provisions of Rule 14 of the
16 Guam Rules of Civil Procedure. Rule 14 is entitled "Third-Party Practice" and is analogous to
17 and modeled after Rule 14 of the Federal Rules of Civil Procedure. Rule 14(a) provides, in
18 relevant part:
19 At any time after the commencement of the action a defending party, as a third- party plaintiff, may cause a summons and complaint to be served upon a person 20 not a party to the action, who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff. 21 GRCP 14(a) (emphasis added). 22
CV1218-17 Page 3 of6 Decisio'l and Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 "[A] third-party claim may be asserted only when the third party's liability is in some
2 way dependent on the outcome of the main claim and the third party's liability is secondary or
3 derivative. It is not sufficient that the third-party claim is a related claim; the claim must be
4 derivatively based on the original plaintiff's claim." United States v. One 1977 Mercedes Benz,
5 708 F.2d 444, 452 (9th Cir. 1983). A "crucial characteristic" of a Rule 14 action is "that [a]
6 defendant is attempting to transfer to the third-party defendant the liability asserted against [the
7 defendant] by the original plaintiff." Stewart v. Am. Int'l Oil & Gas Co., 845 F.2d 196, 200 (9th
8 Cir. 1988). "Third-party practice or impleader is permitted under [Rule] 14 only where defendant
9 can show that if he is found liable to the plaintiff, then the third party will be liable to [the
10 defendant]." Index Fund, Inc. v. Hagopian, 417 F. Supp. 738, 743 (S.D.N.Y. 1976). "In most
11 such cases it has been held that for impleader to be available the third party defendant must be
12 liable secondarily to the original defendant in the event that the latter is held liable to the
13 plaintiff." !d. (internal quotations omitted). "[I]t is not enough that the Third Party Defendant
14 may be liable to the Plaintiff. The Rule clearly provides that the Third Party Defendant must be
15 one who is or may be liable to the Third Party Plaintiff for all or part of Plaintiff's claim against
16 him." Rose v. Chicago, R.I. & P.R. Co., 308 F. Supp. 1357, 1359 (W.D. Okla. 1970).
17 1. The Contractual Interference Claim.
18 The Contractual Interference Claim, brought only by Man Ling, alleges that TBC,
19 Norman, and Kam Veng purportedly "interfere[d] with the contractual relationship between
20 [Man] Ling and First Commercial Bank" by "claiming ownership of the funds." Third-Party
21 Compl. at 5, <][ GG (Sept. 5, 2019). In its own claims as Plaintiff, TBC's success depends on a
22 finding that Man Ling is not the rightful owner of the funds in the CD accounts. If the Court
23 ultimately finds that Man Ling is the rightful owner of the funds in the CD accounts, it follows
CV1218-17 Page 4 of6 Deci_sion und Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 that Man Ling would succeed in the Contractual Interference Claim because Norman and Kam
2 Veng therefore would have interfered with Man Ling's contractual relationship with First
3 Commercial Bank.
4 However, Man Ling misunderstands the purpose of Rule 14, which allows third-party
5 claims in situations where a defendant seeks indemnification in the event it is held liable to the
6 plaintiff.
Free access — add to your briefcase to read the full text and ask questions with AI
FtLE:O 1
4 IN THE SUPERIOR COURT OF GUAM 5
6 TSANG BROTHERS CORPORATION, Civil Case No. CV1218-17
7 Plaintiff,
8 vs.
9 MAN LING AU, PING CHUNG TSANG, DECISION AND ORDER (Motion to Dismiss and/or Strike Third-Party LAI HING AU, and FIRST Claims) 10 COMMERCIAL BANK,
11 Defendants. 1~----------------------------~ MAN LING AU and PING CHUNG 12 TSANG,
13 Counterclaim-Plaintiffs,
14 vs.
15 TSANG BROTHERS CORPORATION,
16 Counterclaim-Defendant. 17 MAN LING AU and PING CHUNG TSANG, 18 Third-Party Plaintiffs, 19 vs. 20 WING ON TSANG and KAM VENG TAM, 21 Third-Party Defendants. 22
231~----------------------------~
CV1218-17 Decision and Order (Motion to Dismiss and/or Strike Third-Party Cl~imsQ R GIN AL J Page 1 of6 1 INTRODUCTION 2 This matter came before the Honorable Anita A. Sukola on Wing On Tsang ("Norman")
3 and Kim Veng Tam's ("Kam Veng") Motion to Dismiss and/or Strike Third-Party Claims.
4 Attorney Ignacio C. Aguigui represents Norman and Kam Veng. Attorney William L. Gavras
5 represents Defendant/Third-Party Plaintiff Lai Hing Au ("Christina"). Attorney Curtis
6 Vandeveld represents Defendant/Third-Party Plaintiffs Man Ling Au ("Man Ling") and Ping
7 Chung Tsang ("Larry"). Attorney Geri E. Diaz represents Plaintiff-Counterclaim Defendant
8 Tsang Brothers Corporation ("TBC").
9 BACKGROUND 10 Norman is the President of TBC. Larry is a shareholder of TBC. Larry was previously the
11 General Manager of Operations for TBC until February 17, 2014, when he was terminated for
12 misconduct. Larry is married to Christina. Christina was previously the Office Manager for TBC
13 and handled the company's finances until her termination on February 17, 2014.
14 TBC held a credit line account at First Commercial Bank secured by three Time
15 Certificate of Deposit Accounts ("CDs") which contained funds allegedly belonging to TBC but
16 held in Man Ling's name. TBC alleges that Man Ling holds these funds in trust and for the sole
17 benefit of TBC. On October 13, 2017, First Commercial Bank notified Norman that on October
18 12, 2017, Man Ling revoked a power of attorney which allowed TBC to use funds in the CDs.
19 The CDs could therefore no longer be used to secure TBC's line of credit with First Commercial
20 Bank, disrupting TBC's operations.
21 In response, on December 1, 2017, TCB filed its Verified Complaint which contains a
22 claim for Conversion of $752,000.00 against Man Ling, as well as a claim of Participating in
CVI218-17 Page 2 of6 Decision (lnd Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 and/or Aiding and Abetting against Larry, Christina (collectively with Man Ling, "Individual
2 Defendants"), and First Commercial Bank.
3 On September 5, 2019, Individual Defendants filed their Answer, Counterclaims, and
4 Third-Party Claims. In the first third-party claim, Man Ling alleges TBC, Norman, and Kam
5 Veng intentionally interfered with the contractual relationship between Man Ling -and First
6 Commercial Bank by filing the Verified Complaint ("the Contractual Interference Claim").
7 Additionally, all three Individual Defendants allege that Norman and Kam Veng falsely claimed
8 that Individual Defendants have wrongly misappropriated funds belonging to TBC ("the
9 Defamation Claim").
10 On September 30, 2019, Norman and Kam Veng filed the instant Motion to Dismiss
11 and/or Strike Third-Party Claims on the grounds that the third-party claims are improper under
12 Rule 14 and fail to state a claim upon which relief may be granted.
13 DISCUSSION
14 A. Permissible third-party claims under Rule 14.
15 Third-party claims and complaints are governed by the provisions of Rule 14 of the
16 Guam Rules of Civil Procedure. Rule 14 is entitled "Third-Party Practice" and is analogous to
17 and modeled after Rule 14 of the Federal Rules of Civil Procedure. Rule 14(a) provides, in
18 relevant part:
19 At any time after the commencement of the action a defending party, as a third- party plaintiff, may cause a summons and complaint to be served upon a person 20 not a party to the action, who is or may be liable to the third-party plaintiff for all or part of the plaintiff's claim against the third-party plaintiff. 21 GRCP 14(a) (emphasis added). 22
CV1218-17 Page 3 of6 Decisio'l and Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 "[A] third-party claim may be asserted only when the third party's liability is in some
2 way dependent on the outcome of the main claim and the third party's liability is secondary or
3 derivative. It is not sufficient that the third-party claim is a related claim; the claim must be
4 derivatively based on the original plaintiff's claim." United States v. One 1977 Mercedes Benz,
5 708 F.2d 444, 452 (9th Cir. 1983). A "crucial characteristic" of a Rule 14 action is "that [a]
6 defendant is attempting to transfer to the third-party defendant the liability asserted against [the
7 defendant] by the original plaintiff." Stewart v. Am. Int'l Oil & Gas Co., 845 F.2d 196, 200 (9th
8 Cir. 1988). "Third-party practice or impleader is permitted under [Rule] 14 only where defendant
9 can show that if he is found liable to the plaintiff, then the third party will be liable to [the
10 defendant]." Index Fund, Inc. v. Hagopian, 417 F. Supp. 738, 743 (S.D.N.Y. 1976). "In most
11 such cases it has been held that for impleader to be available the third party defendant must be
12 liable secondarily to the original defendant in the event that the latter is held liable to the
13 plaintiff." !d. (internal quotations omitted). "[I]t is not enough that the Third Party Defendant
14 may be liable to the Plaintiff. The Rule clearly provides that the Third Party Defendant must be
15 one who is or may be liable to the Third Party Plaintiff for all or part of Plaintiff's claim against
16 him." Rose v. Chicago, R.I. & P.R. Co., 308 F. Supp. 1357, 1359 (W.D. Okla. 1970).
17 1. The Contractual Interference Claim.
18 The Contractual Interference Claim, brought only by Man Ling, alleges that TBC,
19 Norman, and Kam Veng purportedly "interfere[d] with the contractual relationship between
20 [Man] Ling and First Commercial Bank" by "claiming ownership of the funds." Third-Party
21 Compl. at 5, <][ GG (Sept. 5, 2019). In its own claims as Plaintiff, TBC's success depends on a
22 finding that Man Ling is not the rightful owner of the funds in the CD accounts. If the Court
23 ultimately finds that Man Ling is the rightful owner of the funds in the CD accounts, it follows
CV1218-17 Page 4 of6 Deci_sion und Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 that Man Ling would succeed in the Contractual Interference Claim because Norman and Kam
2 Veng therefore would have interfered with Man Ling's contractual relationship with First
3 Commercial Bank.
4 However, Man Ling misunderstands the purpose of Rule 14, which allows third-party
5 claims in situations where a defendant seeks indemnification in the event it is held liable to the
6 plaintiff. Rule 14 plainly states that a defendant may file a third-party claim if the third party
7 may be liable for "all or part of the plaintiff's claim against the [defendant]." GRCP 14
8 (emphasis added). Thus, Rule 14 would allow Man Ling to bring a third-party claim against
9 Norman and Kam Veng if Norman and Kam Veng may be liable for all or part of TBC's claim
10 against Man Ling. Put another way, a third-party claim would be permissible if it sought
11 indemnification in the event that Man Ling loses in her role as defendant against TBC. Man
12 Ling's Contractual Interference Claim therefore does not seek to transfer liability for TBC's
13 underlying claims, but instead seeks damages against Norman and Kam Veng in the event that
14 she succeeds in defending het claim against TBC. This is not permissible under Rule 14 and the
15 Court therefore dismisses this claim.
16 2. The Defamation Claim.
17 The Defamation Claim alleges that Norman and Kam Veng made statements accusing
18 Man Ling, Larry, and Christina of misappropriating funds, and that these statements were
19 intended to "embarrass and cause public scorn to [Man] Ling, Larry, and Christina." Third-Party
20 Compl. at 5, !][ KK.
21 As with the Contractual Interference Claim, the Defamation Claim fails to seek
22 indemnification from Norman and Kam Veng. Rule 14 would allow the Contractual Interference
23 claim only if Norman and Kam Veng were allegedly liable to Man Ling, Larry, and Christina for
CV1218-17 Page 5 of 6 Decision and Order (Motion to Dismiss and/or Strike Third-Party Claims) 1 all or part of TBC's claim against Man Ling, Larry, and Christina. While factually related, the
2 Defamation Claim is not alleging that Norman and Kam Veng are liable for the alleged
3 misappropriation of funds. The Court therefore dismisses this claim. 1
4 CONCLUSION
5 For the reasons stated herein, the Court hereby GRANTS Third-Party Defendants
6 Norman and Kam Veng's Motion to Dismiss and/or Strike the Third-Party Claims contained in
7 the Answer filed September 5, 2019.
9 /O.YJD tl.m. 10
12 SO ORDERED _ _z-JJ'---{,-1-/_z_(J_Z_O_·_ 13 I I 14
15 The Honorable Anita A. Sukola 16 Judge, Superior Court of Guam
18 SERVICE VIA COURT
19 !hal a copy original was placed in tl;e l:juji boll of: ,.
20 rrall!&vr.~~-ID (l,~=~~..vo ti.clWz.Ac, t..l-441' 0 . ...-t-'-z::::c.t~ 21 Dat~e:~
23 1 Because the Court is dismissing the third-party claims due to an improper use of Rule 14, the Court need not reach 24 Norman and Kam Veng's arguments for dismissal due to procedural defects or failure to state a claim.
CV1218-17 Page 6 of6 Decision a.nd Order (Motion to Dismiss and/or Strike Third-Party Claims)