Tsang v. Tsang

• Court: Superior Court of Guam
• Decided: December 9, 2025
• Docket: CV0897-15
• Status: Unknown

Opinion

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IN THE SUPERIOR COURT OF GUAM

PING CHUNG TSANG CIVIL CIVILCASE CASENO. NO.CV0897-15 CV0897-15

Plaintiff, vs.

WING ON WING ON TSANG, KAMKAM WING WING TAM, TAM, WING CHI WING CHI TSANG, TSANG, TSANG BROTHERS CORPORATION, CORPORATION, HARMON TRUCKING HARMON TRUCKING & & SCRAP METAL, METAL, INC., and EVERGREEN and EVERGREEN LLC, INVESTMENT, LLC, DECISION DECISION AND ORDER Defendants. Defendants. RE MOTIONS MOTIONS TO DISMISS

wlnG ON WING ON TSANG, KAM KAM VENG TA M (a/k/a KAM WING TAM), and WING WING CHI TSANG,

Counterclaimants, ounte c vs.

PING PING CHUNG CHUNG TSANG TSANG and and CHRISTINA L.H. AU (a/k/a AULAI (a/k/a AU LAIHING), HING),

CCounterclaim ounte DDefendants. e fe nda nts .

This matter came before This before the the Honorable Honorable Dana DanaA. A. Gutierrez Gutierrez on onfour fourMotions Motions to to Dismiss Dismiss filed tiled

by Defendants Tsang Brothers Defendants Tsang BrothersCorporation Corporation("TBC"), ("TBC"), Harmon Trucldng & Harmon Trucking & Scrap Scrap Metal, Metal, Inc.

("HTSM"), ("HTSM"),Evergreen EvergreenInvestment InvestmentLLC LLC("Evergreen"), and ("Evergreen"), andCounterclaim CounterclaimDefendant DefendantChristina Christina Au. I

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-l 5, Tsang Tsang v. v. Tsang, Tsang, el et aL al.

Court held a motion hearing on these motions The Court motions on on June June 17, 17, 2025. 2025. Present Present at the hearing were

behalf of Attorney Geri Diaz for Defendants TBC and HTSM, Attorney Georgette Concepcion on behalf

Defendant Evergreen, Evergreen, Attorney Attorney Ignacio Counterclaimants Wing Ignacio Aguigui for Counterclaixnants Wing On Tsang, Wing Wing

Veng Tam, and Vang and Wing Wing Chi Chi Tsang, Tsang, and and Attorney Attorney William William Gavras Gavras for for Counterclaim Counterclaim Defendant Defendant

Au.I1 Upon review of Christina Au. of the moving documents, documents, arguments, arguments, and and applicable applicable law, the Court

issues its issues its ruling ruling as as set setforth forthbelow. below.

BACKGROUND

Plaintiff Ping Ping Chung Chung "Larry" Tsang ("Larry") ("Larry") tiled filed his Verified Verified Complaint on September

15, 15, 2015. 2015. The Complaint alleges that Larry,2 Larry,2 aa Guam Guam resident and minority shareholder, brings

suit against against his his brothers brothers Wing Wing On On "Norman" Tsang ("Norman") and and Wing Wing Chi Chi Tsang Tsang ("Wing ("Wing

Chi"), his brother-in-law Kam Wing "Kevin" Tam Tam ("Kevin"),3 ("Kevin"),3 and related family-owned family-owned business

entities-TBC,HTSM, entities-TBC, HTSM, and and Evergreen-arising Evergreen-arisingfrom froma along-running long-runningdispute disputeover overthe the operation operation

and control of ofthese these shared family family businesses in Guam. businesses in Guam. See Comal.,r,r SeeComp!. W1-2.4, 1-2.4,2.5-2.8. 2.5-2.8. Larry Larry alleges

that he holds holds a20% 20% interest interest in TBC, while Norman and Kevin Norman and Kevin each each hold hold 20%, and Wing Chi holds

35%, with business operations commingled commingled across entities entities and conducted under common control.

,r,r 5,5, 11. See id. W I I. He He also also alleges alleges a 47.5% ownership interest in in HTSM, HTSM, equal equal to to Norman's Norman's share,

and a 25% interest in Evergreen, Evergreen, where wherehe hewas wasdesignated designatedGeneral GeneralManager. Manager.See Seeidid. ,r,r 15. The 111112,

Complaint alleges that corporate formalities Complaint formalities were were disregarded, disregarded, assets assets and and books books were were commingled, commingled,

meetings were improperly noticed or not held, held, and he he was was ultimately ultimately removed removed from from management

without process. See without lawful process. See id. ,r,r 9,9, 11, id. 'W 11, 14, 14, 16-18. 16-18. Larry Land further alleges that, after terminating his

|1 Attorney Attorney Curtis Curtis Van Van dh de Veld, counsel counsel for Plaintiff PlaintiffPing PingChung Chung"Larry" "Lany"Tsang, Tsang,was wasnot notpresent present at at the hearing. hearing. z Because 2 Becausethis thiscase caseinvolves involves parties parties that that are are related, the Court addresses related, the theparties addresses the partieson onaafirst-name first-name basis basisto to avoid confusion. confusion. 3 3 Kam Wing Tam Kam Wing Tam is also known as Kam Veng VangTam. Tam.

2 i l

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsang, et al. Tsang v. Tsang,

salary salary and excluding excluding him from from decision-making, decision-making, the the individual individual defendants defendants continued continued drawing

compensation while while freezing freezing him him out outas asaashareholder, shareholder,director, director, officer, officer, and andmanager. manager.See ,i,i See idid.111

18-21, 23-26.

Lan'y asserts Larry asserts four four causes causes of faction actionarising arisingfrom fromwhat whathe hecharacterizes characterizes as as aa wrongful wrongful fieeze- freeze-

out by his brothers and brother-in-law from TBC, TBC, HTSM, HTSM, and and Evergreen. Evergreen. First, he brings a claim

for breach of of fiduciary fiduciary duty, alleging that Norman, Kevin, Wing Wing Chi, Chi, and and the the corporate corporate entities entities

deprived him of of aa corporate corporate office, office, salary, voting rights, salary, voting rights, and his pro-rata share of income and

Compo. ,i,i control. See Comp!. W22-28. 22-28. Second, Second, he asserts a shareholder shareholder derivative claim seeking to separate

commingled assets, assets, restore restore proper governance, governance, and enforce enforce compliance compliance with the companies' companies'

founding documents. documents.See See id. ,i,i 29-31. Third, id. 111129-31. Third,heheseeks seeksan anaccounting, accounting, partition, partition, and and dissolution dissolution of

TBC, HTSM, and and Evergreen, Evergreen, alleging alleging that their continued operation is untenable under current

conditions. See id. conditions. See id W,i,i 32-35. 32-35. Fourth, Fourth, he he seeks seeks preliminary preliminary and and permanent permanent injunctive injunctive relief relief to

prevent other shareholders from holding corporate or limited liability liability company company ("LLC") ("LLC") meetings

in his absence, absence, asserting asserting that that such suchactions actionswould wouldcause causeirreparable irreparableharm. harm.See SeeCompo. ,i,i 36-40. Comp!.111]36-40.

On December December 9, 2015, TBC, HTSM, HTSM, and and Evergreen Evergreen each moved moved to to dismiss the Complaint.

See Mot. to Dismiss Con pl. Against Comp!. Against Dens. Tsang Bros. Corp. & Harmon Trucking & Scrap Metal, Defs. Tsang

Inc. at 1 ("TBC's ("TBc's Mot."), Mot."); Evergreen Evergreen Inv. LLC's LLC's Mot. Mot. to to Dismiss Dismiss at at 1 ("Evergreen's ("Evergreen's Mot."). Before

responding to responding to these Motions to Dismiss, Larry filed an Ex Parte Parte Application Application for Issuance of a

Temporary Temporary Restraining RestrainingOrder Orderand and Order Orderfor for Preliminary PreliminaryHearing Hearingon onDecember December21 21, 2015. Presiding

Judge Lamorena denied both both Larry's Larry's request for a temporary restraining restraining order order and and aa pendente pendent lite lite

injunction to to stop stop shareholders' meetings at TBC and HTSM in in a Decision and Order issued on

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' DECISION AND ORDER ORDER RE MOTIONS TO DISMISS Tsangv. Tsang, CV0897-15, Tsang Tsang, eta/. al.

December 4 Decision and Order on PL's Ex Parte Appl. December 282 2015.4 28, 2015. Decision and Order on Pl.'s Ex Parte Appl. for Issuance of a TRO and Order

for Prelim. Prelim. Hr'g at at 55 (Dec. (Dec. 28, 28, 2015) 2015) ("P.J. ("P.J. Lamorena's Lamorena's Decision"). Decision"). Thereafter, Thereafter, Larry Larry filed filed an

omnibus opposition omnibus opposition on on January 7, 2016, January 7, 2016, contesting contesting all all three motions and and seeking leave to amend.

Opp'n Opp'nto to Mots. Mots. to Dismiss by TBC and HTSM and and Mot. Mot. to to Dismiss Dismiss by by Evergreen Evergreen("PL ("PL's Opp'n"). 's Opp'n").

On January 20, 2015, TBC and HTSM HTSM filed filed their reply. On On January 21, 21, 2015, 2015, Evergreen Evergreen filed filed its

reply.

On December December 9, 9, 2015, 2015, Defendants Norman and Kevin Defendants Norman Kevin also also filed filed their their Answer and and

Counterclaims, and Defendant Counterclaims, and Defendant Wing Wing Chi Chi filed filed his his on January January 11, 11, 2016. 2016. The Answer Answer and and

Counterclaixns of Norman/Kevin Counterclaims of Norman/Kevin and Wing Chi Chi are identical identical in stating their seven counterclaims,

which c h ccan a n be be summa l ows 5 5 Norma ri z e d a sasfolfollows summarized n, Ke Norman, vi n, a and Kevin, nd WWing i ng C hi Chi(c ol l e c t i ve l y, (collectively,

"Counterclaimants") allege breach of of fiduciary duty duty by by Larry Larryas asaashareholder shareholder and and manager manager in a

closely held corporation and as as a member member of Evergreen (First and Third Claims), see see Answer and

C ount e rc l a i msby Counterclaims by Norman Norma n and a nd Kevin Ke vi n ("C ount e r's. ") W ("Countercls.") 11 443-52, 3~ 662-70; 2 -7 , CChristina hri na Au's Au's

("Christina")66 participation participation in in and and aiding aiding and and abetting abetting Larry's Larry's breaches of of fiduciary duty (Second

and Fourth Fourth Claims), Claims), see seeid. 11 53-61, 71-79, id W 71-79; fraud fraud and and fraudulent fraudulent nondisclosure by Larry nondisclosure by Lan'y in

concealing his his self-dealing self-dealing and and diversion diversionofoffunds funds(Fifth (Fifthand andSixth SixthClaims), Claims),see seeid.id.111] 80-88, 89- 1180-88, 89-

96, 96; and conspiracy by both Larry and Christina to defraud the counterclaimants and other owners

of TBC and ofTBC and Evergreen Evergreen (Seventh Claim), see id. 1197-102. see id. W 97-102.

4 This 4 This matter was initially matter was assigned to initially assigned to Presiding Presiding Judge Judge Alberto AlbertoC,C.Lamorena LamorenaIII, III,who whohandled handledthe the proceedings proceedings through the stay stay period. period. Presiding Presiding Judge Lamorena entered enteredhis his disqualification disqualification ininthis thismatter matteron onMarch March26,26,2021, 2021, and and the the case was reassigned to to this this Court on March 30, 2021. 2021. See SeeNotice Notice of Judge Assignment Assignment (March (March 30, 2021). l). 5 Because the Counterclaims are identical, the Court will cite only to 5 Because the Counterclaims are identical, the Court will cite only to Wing Chi's Chi's Answer Answerand and Counterclaims, Counterclaims, Christina's Christina's Motion Motionto to Dismiss DismissWing WingChi's Chi'sCounterclaims, Counterclaims,and andWing WingChi's Chi'sOpposition Oppositiontotothat that Motion, Motion,unless unless otherwise specified. 6 Christina 6 Christina Au Au isis Larry's Larry's wife.

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DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-15, Tsang Tsangv. Tsang, Tsang, eta/. al.

Christina moved to dismiss the the Norman/Kevin Norman/Kevin counterclaims counterclaims on on January January 19, 19, 2016, 2016, and

dismiss the moved to dismiss the Wing Wing Chi Chi counterclaims counterclaims on on April April 26, 26, 2016. 2016. Counterclaimants Norman and

Kevin filed their Opposition Opposition to Christina's Christina's Motion Motion to to Dismiss Dismisson onMay May16, 16, 2016 2016 and and Wing Chi filed

his on May 24, 2016. Christina did not reply. reply.

The matter was was effec effectively ssuspended pended for for sseveral eral years ears due due to to a sstay tay first entered entered on

February February 25, 25, 2016, 2016, when whenthe the parties parties stipulated stipulated to to pause pause proceedings proceedings to pursue settlement, and then

reimposed reimposed on on June June 20, 20, 2016, pending resolution of ofa Motion to Enforce Settlement Settlement and a Motion

to Strike Appearance and Dismiss Dismiss that that Lan'y Larry and and Christina Christina filed filed on on May May 23, 23, 2016. 2016. See Decision

and Order Granting Mot. to Set Aside Entry of of Default at 2-3 (Sept. (Sept. 9, 9, 2024). 2024). During this time,

the action was stayed except for limited discovery on the issues raised in the Motion to Enforce

Settlement. See Order Clarifying Stay (Mar. 30,2017). 2017). The The stay stay was was not lifted until until November November 19, 19,

2021, 2021, when the parties parties stipulated to Larry and Christina stipulated to Christina withdrawing their Motion to Enforce Enforce

Settlement, resolving resolving "all "allissues issues causing the matter to be stayed." stayed." See SeeDecision Decision and and Order Order Granting Granting

Mot. to Set Aside Entry of Mot. of Default at 3. No substantive substantive filings filings followed the withdrawal of of the

Motion to Enforce Settlement until TBC and HTSM filed an Application for Entry of of Default on

November November 6, 6, 2023, 2023, which which resulted resulted in in the the Clerk Clerk entering entering default default against against Lan'y Larry and and Christina. Christina. See

id. at at 3. 3. The The Court Court set set aside aside the default on September 9, 2024. See See id. id On On December December 23, 23, 2024, 2024, the

Court granted the parties' proposed Order Order re re Pending Pending Motions, Motions, which which notes notes that that "a "a significant significant

amount amount of of time ha[d] passed since the initial initial briefing briefing in in connection connection with with [the [the Motions Motions to to Dismiss]." Dismiss].77

In light of of this, the Court permitted the die parties parties to to file file supplemental supplemental briefs, if any, any, addressing "any

new legal legal audiority" arising after authority" arising after the the Motions Motions to to Dismiss were were filed filed and and that that supported supported the the

positions positions taken taken in those those Motions. Motions. Order Order re re Pending Pending Motions Motions at at 2 (Dec. 23, 2024). 2024). No No supplemental supplemental

briefing was filed. filed.

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i 'r DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-l Tsang v. Tsang, Tsang, et aL al.

On June 17, 2025, the the Court held hel a motion moti hearing on the pending pendi Motions ons to Di smi ss. Dismiss.

Following this hearing, the Court issued an Order Order for for Further Further Briefing Briefing regarding regarding what what effect, effect, if

any, TBC and HTSM's HTSM's opting opting into into the Guam Guam Business Business Corporation Corporation Act has on the motions to

dismiss. dismiss. Order Order for for FLu'ther Briefing at Further Briefing at 11 (Jun. (Jun. 25, 25, 2025). 2025).TBC TBC and and HTSM HTSM submitted submitted supplemental

briefing on July 25, 2025; 2025, Larry filed filed supplemental supplemental opposition on August August 18, 18, 2025, 2025; and TBC and

HTSM replied on September September 2, 2025. On September September 9, 9, 2025, the Court took under advisement advisement the

following motions: (1) the December 9, 2015 2015 Motion to to Dismiss filed by TBC and HTSM; (2) (2)

Evergreen's December 9, 9, 2015 Motion to Dismiss, Dismiss; (3) (3) Christina's Christina's January January 19, 19, 2016 2016 Motion to

Dismiss counterclaims asserted by counterclaims asserted by Norman Norman and Kevin; and (4) (4) her her April April 26, 26, 2016 2016 Motion Motion to

Dismiss Dismiss counterclaims counterclaims asserted by Wing asserted by Wing Chi. See Under Under Advisement Advisement Notice Notice at at 22 (Sept. (Sept. 9, 2025).

DISCUSSION

Given the extensive briefing submitted, submitted, for clarity's sake, the Court proceeds as follows.

First,t , the Court ssets forth tthe llegal e sstandard d a rd governing o v e rn i n g motionss too dismiss.s . Thee Court tthen

addresses, in tum: tum: (1) (1) TBC's TBC's and HTSM's HTSM's Motion to Dismiss; Dismiss, (2) Evergreen's Evergreen's Motion to Dismiss; Dismiss,

and (3) Christina's two Motions to Dismiss. Christina's Christina's motions motions are are considered considered together together because,

as noted above, the counterclaims filed by Norman Norman and and Kevin Kevin are are identical identical to those filed by Wing

Chi, and Christina's Christina's challenges challenges to those those counterclaims counterclaims are are likewise likewise identical. identical.

I. 1. Legal Legal Standard Standard in in Deciding Deciding a Motion Motion to to Dismiss Dismiss

"In "In ruling ruling on on aa motion motion to to dismiss dismiss under under Rule Rule I2(b)(6), 12(b)(6), aa court court must must accept accept all all the the well-

pleaded facts as as true, true, 'construe 'constablethe thepleading pleadingininthe thelight lightmost mostfavorable favorable toto the thenon-moving non-moving party,

and resolve resolve all all doubts doubts inin the thenon-moving non-moving party's party's favor."' favor."' Guam Police Police Dap Dep't v. Guam Civ. Serv.

Comm 'n (Charfauros), ~ 88 (quoting (Cnarfauros), 2020 Guam 12 1] (quoting FFirst i rs t Hawaiian an Bank ank v. v. Manley, 2007 2007 Guam

2 119). "Dismissal for ~ 9). "Dismissal for failure failure to to state state aa claim claim isis appropriate appropriate only only 'if it appears beyond doubt doubt drat that

6 \

DECISION DECISION AND AND ORDER ORDER RE MOTIONS MOTIONS TO DISMISS CV0897-15, Tsang Tsang v. Tsang, et al. Tsang, et al.

the [non-moving party] can prove no set set of of facts in support support of of his claim claim which would would entitle entitle him

to relief."' relief." Cruz v. ,r 1010((citingTailano v. Cruz,2023 Guam 20 1] citing Taitano v. v. Calvo Calvo Fin. Fin. Corp., Corp.,2009 Guam 9 ,r 2009 Guam

in original) 6) (alteration in original).

II. II. Motion to Dismiss by TBC and HTSM

TBC and TBC and HTSM HTSMmoved movedto todismiss dismissLarry's Larry'sclaims claimson onseveral severalgrounds. grounds. First, First,they they argue argue the

Complaint fails fails to to state state aa claim claim for for breach breach of offiduciary fiduciaryduty dutybecause because aa corporation corporation does does not owe

fiduciary duties fiduciary duties to to its its shareholders. shareholders. TBC's TBC's Mot. at 3-4. 3-4. Second, Second, they they contend contend that that the the derivative derivative

must be claim must dismissed because be dismissed becauseLarry Lan'ydid did not not comply comply with with Guam Guam Rules Rules of Civil Procedure of Civil Procedure

("GRCP") Rule ("GRCP") 23.. l's Rule 23 1 'sdemand demandrequirement, requirement,which which requires requires aa shareholder shareholder to to first first request request corporate

action before filing suit. suit. id. Id at at 4-5. 4--5. Third, Third, they they seek seek dismissal dismissal of ofthe the dissolution, dissolution, accounting, accounting, and

partition claims: (1) because not all all necessary necessary parties were joined, including minority shareholder

7 Richard Laid, Richard ; (2) because an accounting accounting claim belongs to to the the corporation, corporation, not not an an individual individual

shareholder; (3) because Larry shareholder, lacks standing to partition corporate assets he does not personally Land lacks

own, own; and and (4) (4) because involuntary dissolution is an extreme remedy unsupported by allegations allegations of of

insolvency or failure 6-10. Finally, failure of purpose. See id. atat 6-10. Finally, they they argue argue the the injunctive injunctive relief relief claim

because the fails because harm has the alleged harm has passed passed and corporate meetings and corporate meetings need need not not be to be delayed to

accommodate a shareholder's travel schedule. schedule. See See id. at 10. id at 10.

A. Lark LarryFailed FailedtotoState StateaaClaim Claimfor forBreach BreachofofFiduciarv FiduciaryDutv DutyBecause Because TBC TBC and and HTSM HTSM Do Do Not Not OweHim HimaaFiduciary Fiducial Dutv Duty

"It "Itis is only onlylogical logicalthat thatininorder orderfor forthere theretotobe beaabreach breach of of fiduciary fiduciary duty, duty, there there must must first be

a definite fiduciary duty duty in in existence." existence." Lucan Lujan v. JETH JL.H Tr., 2016 Guam 24 ii,r 20. Tr., 2016 20. Generally, Generally, a

77 At At the motion hearing on June 17, 2025, 2025, Defendants DefendantsTBCTBC and and HTSM HTSM withdrew the argument on failure to join argument on join an indispensable party because indispensable party RichardLai because Richard Lai transferred transferred his his shares sharesback backtoto TBC TBC and and Evergreen Evergreen and and resigned resigned from from both companies companies inin 2016. 2016. Min. Min. Entry at at 10:29:25-10:30:15 (Jun. 17, 10:29:25-10:30:15 (Jun. 2025). The Court 17, 2025). Court therefore therefore will will not not address address this this argument in this Decision and and Order. Order.

7 i

. 1 a

DECISION ANDANDORDER ORDERRE REMOTIONS MOTIONSTO TODISMISS mslvnss CV0897-15, Tsang v. Tsang, CV0897-15, Tsang, et al.

fiduciary duty duty exists exists between between directors directors and and shareholders, shareholders, see Yokeno Yoke rov.v. Lai, I& 112 Guam 18 Lai, 2014 Guam ii 12

(noting that "[one's] (noting that legal duties "[one's] legal officer and as officer duties as and director director are are owed owed to to the the shareholders shareholders of of the the

corporation"), or between directors and corporation"), or and corporations, corporations, see e D ai I Dai-/chi Hotel Overseas as D Dev. CCo. vv.

No. &0-0203A, Price, Civ. No. 1982 WL 33171, at *7 (D. 80-0203A, 1982 (D. Guam Guam App. Div. Nov. Nov. 15, 15, 1982) 1982) ("As a

general rule, directors of a corporation general corporation have a duty duty to act in good faith and unselfishly toward the

corporation."). In corporation."). general, such In general, such fiduciary duty does not exist fiduciary duty exist between between a corporation corporation and its its

shareholders. See e.g. , Pea eock v. Herald Square Peacock S quare Loft Corp., , 889 889NN.Y.S.2d 22, 23 .Y.S.2d 22, 23 (N.Y. (N.Y. App. Div.

("[D]efendants correctly point out that 'a 2009) ("[D]efendants 'a corporation corporation does does not owe fiduciary duties to its

members or members or shareholders."'); shareholders.'"), In In re re Stillwater Cap. Inc. Litig., Cap. Partners Inc. 2d 556, 573 Litig., 851 F. Supp. ad 573

(S.D.N.Y. 2012) (S.D.N.Y. 2012) ("A ("Acorporation corporation does does not not owe a fiduciary duty duty to to its shareholders, shareholders; for this reason,

plaintiffs' plaintiffs' breach breach of fiduciary fiduciary duty against Gerova duty claims against Gerova are dismissed for failure failure to state a

claim."), claim."); Friedli Friedliv.v. Silver Silver Star Star Props. REIT,Inc., Inc., 2024 2024 WL 1406329, 1406329, at *3 (D. Md. Md. Feb. Feb. 15, 15, 2024)

("[A] ("[A] corporation corporation does does not not owe fiduciary duties duties to to its shareholders."). 8 If Larry fails to its shareholders.").8 to prove the

existence of a fiduciary duty that TBC or HTSM owe him, his claim claim of of breach of fiduciary duty

must be dismissed as to these Defendants. See In re See In re Stillwater Stillwater Cap. Cap. Partners Inc. Inc. Litig., 851 851 F. F.

Supp. ad at Supp. 2d at 573; 573; Friedli Friedliv.v. Silver Silver Star Star Props. REIT, Inc., Inc., 2024 WL 1406329 at *3. 1406329 at *3.

Here, Here, Larry Larry claims claims damages under 20 damages under 20 GCA GCA §§ 2120 2120 for for the the alleged alleged breach breachof of fiduciary fiduciary duty duty

by TBC by TBC and and HTSM. HTSM. See See Comal. Comp!. 1] 127. Because §§ 2120 27. Because 2120 awards awards damages damages only only for for breaches breaches "not "not

arising from from contract," the the breach breach of of fiduciary fiduciary duty duty Larry alleges alleges must must arise arise either either from from statute statute or

from from case law. Nonetheless, the sole Nonetheless, the sole case case law that Larry Lady points points to in the Complaint is Southern

s8 Neither this Court, nor Plaintiff, Plaintiff,can canpoint pointtotoaaGuam Guamcase case or orstatute holds a corporation statute that holds corporation owes owes aa fiduciary fiduciary duty duty its shareholders. to its "Since no shareholders. "Since no statute statute addresses thematter addresses the Guam,this onGuam, matteron this[C]ourt [C]ourtmust mustrely relyon onother otherjurisdictions jurisdictions for guidance."See guidance." SeeGov't Gov'tofGuam of v.v. FHP, FHP, Inc., Inc., Civ. Civ.No. No.90-00014A, 90-00014A, 1991 1991 WL WL275584, 275584, atat *6 *6 (D. (D. Guam App. Div. July 10, 10, 1991). 1991).

8 'I . *

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsangv. Tsang, ef v. Tsang, eta/. al.

Pacu'ic Bogert which purportedly Pacific Company v. Bogart purportedly supports supports the the proposition proposition that the the "majority

shareholders owe owe a fiduciary duty to fiduciary duty to minority minorityshareholders shareholdersto toprotect protectthe thecorporate corporateassets assets and to

pro-rata equally with share pro-rata with the the minority." minority." See Comp!. 1]23 See Compo. 123 (citing Southern Pacy'ic Pacific Company v. v.

Bogert, Bogert,250 U.S. 483,492 483, 492 (1919)). Larry's reliance on thiscase (19I9)). Lanky's case is misplaced misplaced as as the issue is whether whether

HTSM owe TBC and HTSM owe Larry Larry aafiduciary fiduciary duty, duty, not not whether whether the the rnaiority majority shareholders shareholders of of those

corporations do. do.

Larry'sOpposition Land's Oppositiontotothe theMotion Motionto to Dismiss Dismissby byTBC TBC and and HTSM HTSM cites cites a greater number of of

cases butfares cases but faresno nobetter. better.Most Mostnotably, notably, Larry Larry devoteshalf halfaa page to quotingThompson Thompson v. v. Central

Ohio Cellular, "It is Cellular, beginning with "It is axiomatic axiomatic that that corporations corporations and and their their officers and and directors directors

occupy a fiduciary relationship with corporate fiduciary relationship corporate shareholders." shareholders." Pl.'s PL's Opp'n Opp'n at at 2 (citing Thompson v.

Cent. Ohio Cellular, Cent. Ohio Cellular, Inc., Inc., 93 Ohio App. App. ad 3d 530, 530, 540, 540, 639 639 N.E.2d 462, 468 (1994)). This single 462,468

sentence forms the entire basis of Larry's contention contention that TBC and HTSM owed him him aa fiduciary fiduciary

duty. This This sentence falls short of sentence falls of establishing a fiduciary fiduciary duty on on the part of of these corporations.

A look look at at more more recent interpretations of of Ohio law clarifies clarifies that that "[c]orporati0ns "[ c]orporations as as entities

do not owe fiduciary duties duties to their shareholders employees."See shareholders or employees." Foreman v. See Forsman v. Silverstein, Silverstein, 2025

WL 240920, at *12 n.2 n.2 (S.D. Ohio Jan. Jan. 17, 2025) 2025) (citation omitted); omitted), Steele Steele v.v. Mara El'lfs., Ents., Inc.,

2009-Ohio-5716, 1122 2009-0hio-5716, 22 ("The ("The majority majority shareholder, shareholder, not not the the corporation, corporation, bears the the fiduciary fiduciary

obligations."), obligations."); Maas v. v..ITS JTMProvisions Provisions Co., Inc., Inc., 2025 WL 823671, at *15 823671, at *l5 (S.D. (S.D. Ohio Mar. 13, 13,

2025) ("Joe's claim 2025) ("Joe's claim against JTM is not against JIM not cognizable cognizable because '[t]here is because '[t]here is not, not, and and could could not not

conceptually be any conceptually be any authority authority that that aa corporation corporationasas an an entity entity has has aa fiduciary fiduciary duty duty to its its

shareholders."'). shareholders. ' ") .

Larry Larry also cites to O'Reilly 'Reilly v. Transworld TransworldHealthcare, Healthcare, Inc. Inc.,, aa case from from Delaware, to argue

that "[a] that "[a] corporation corporation may owe aa fiduciary duty duty to to others." others." Pl.'s Pl.'s Opp'n Opp'natat2.2. Lan'y Larrymisconstrues misconstrues

9 a'

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang v. Tsang, Tsangv. et al Tsang, eta!.

0 'Reilly. The Delaware Court of O'Reilly. of Chancery in O'Reilly itself owes O'Reilly did not hold that a corporation itself owes

fiduciary fiduciary duties duties to to shareholders or third parties. Rather, the court merely found that that the plaintiff plaintiff

had adequately alleged that a corporation called Transworld, Transworld, as as a controlling controlling stockholder, owed e

ary duties to the minority fiduciary minority shareholders shareholders of of another another corporation. See O'Reilly v. See O'Reilly v. Transworld

Healthcare, Inc., 745 A.2d 902, 912-13 (Del. Ch. 1999). Healthcare, Inc., 1999). The The opinion is therefore consistent with

the principle under Delaware law that fiduciary fiduciary duty duty runs runs from from those who control the corporation,

not from from the the corporation corporation itself. See, e.g., Buttonwood See, e.g., Buttonwood Tree Value Partners, L.P. v. R.L Polk Polk & Co. Co.,

No. CIV.A. 9250-VCG, 9250-VCG, 2014 2014 WL WL 3954987, 3954987, at at *4 (Del. Ch. Aug. 7, 2014) 2014) ("[A] ("[A] corporation does

not not owe owe fiduciary fiduciary duties duties to its stockholders."); stockholders."), Aug. v. Glade Prop. Owners Ass 'n, Inc., Ass 'n, Inc., No. No. 2020-

0834-BWD, 0834-BWD,2023 2023 WL WL3359466, 3359466,atat*4 *4(Del. (Del.Ch. Ch.May May11, 11,2023) 2023)("Fiduciary ("Fiduciaryduties dutiesare are owed owed to, not

by, the corporation."). orporati on."). Therefore, T herefore, because bec aus eTBC T BCand andHTSM HT SM do do not owe Larry aa fifiduciary duc duty duty,

Larry's Larry's claim claim of ofbreach breach of offiduciary fiduciary duty duty is insufficiently pled.

In the alternative, alterative, Lan'y Larry has has also also "move[d] "move[d] for for leave leave to amend." Pl.'s Opp'n Opp'n at at 4. "[E]ven

where where amendment amendment is is not not a matter of of right, right, the the court court should should grant leave to amend 'when 'when justice justice so so

requires."' Cruz v. Cruz, Cruz v. Cruz, 2023 Guam 20 20 1] 17(citing 'I[ 17 (citing Guam Guam R. R. Civ. Civ. P. P. 15(a)). l5(a)). On a motion motion for leave leave

to amend, a court consider factors such as "undue "undue delay, delay, bad bad faith or dilatory motive on the part

of of the movant, movant, repeated repeated failure to cure deficiencies deficiencies by amendments previously allowed, undue

prejudice to prejudice to the the opposing opposing party party by virtue virtue of of allowance allowance of of the the amendment, amendment, [and] [and] iiitility futility of of

amendment." amendment." See Arashi & Co. See Arashi Co. v. v. Nakashima Nakashima Enters., ,r 16 2005 Guam 21 1] Enters., Inc., 2005 16 (citing (citing Foman Foman v. v.

Da v i s , 371 U.S. 178, 182 (1962)).

Here, Here, amendment would be futile futile because even if Larry were permitted permitted to amend the

Complaint Complaint to to add add further further factual factual allegations, allegations, such allegations could could not not overcome overcome the fundamental fundamental

legal barrier that legal barrier that fiduciary fiduciary duties dutiesrun run from from directors, directors, officers, officers,or or controlling controllingshareholders-not shareholders-not

10 10 DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsang v. v. Tsang, et al.

from the corporate entities themselves. Accordingly, amendment would would be be futile. futile. Thus, Thus, Lanky's Larry's

Motion to to Amend is DENIED and Larry's claim claim of of breach breach of offiduciary fiduciary duty against TBC and

HTSM is DISMISSED.

B. Larry LarryFailed Failedto to State State aa Derivative Derivative Claim Claimto to Separate Separate thethe Assets of of TBC TBC andd HHTSM T S M B Because e c a u s e HHe e FFailed ail tto o CComply o m p l v wwith i t t the h e DDemand emand Req u em en of GRCP Requirement G RCP Ru le 23.1 Rule

Larry's derivative The threshold issue in Larry's derivative action action to separate the assets assets of TBC and HTSM

Larry's Complaint is whether Larry's Complaintsatisfies satisfies the the demand demand requirement requirement of ofRule Rule 23.1, 23.1, which which states states that that in

a derivative action,

The complaint complaint shall shall also also allege allege with particularity the efforts, if any, made by the made the plaintiff plaintiff to to obtain obtain the action action he desires desires from from thethe directors or directors comparable authority, or comparable and, if necessary, authority, and, necessary, from from thethe shareholders or members, and the reasons shareholders reasons for the the plaintiffs plaintiffs failure to obtain the action action or or for for not not making making the the effort. effort

"The derivative "The derivative demand requirement requirement is is a mandatory precondition precondition to to bringing bringing aa derivative derivative

action." ti on." See Friesen v.v.Hawley See Miesen Hawley Troxell Ennis && HHawley a w l e LLP, 2022 2022 WL WL 1422942, 1422942, at at *25 (D. Idaho

2022); In re Cray Inc., May 5, 2022), 431 F. Supp. 2d Inc., 431 2d 1114, 1114, 1119 1119 (W.D. Wash. 2006) ("Rule 23.1 23.1 is

related related to to the the substantive substantive requirement requirement that that plaintiffs plaintiffs in in shareholder shareholder derivative derivativesuits suitsmust must first list

corporation take demand that the corporation take the action that the plaintiffs seek to enforce through through the suit."). 9 the suit.").9

For corporations For corporat i ons like l i k e TBC HTSM, whi TB C and HTSM which were i ncorporat ch were incorporated ed under Guam's General er Guam's General

Corporation Corporation Law Lawas as opposed opposed to the more recent Guam Business recent Guam Business Corporation Corporation Act, Act, only Rule 23.1 .I

requirement. See governs the demand requirement. See Young v. Nguyen, Young v. Super. Ct. Nguyen, Super. Ct. Guam Guam CV0901-15 (Dec. (Dec. &

Order at 10, Nov. 1, 10, Nov. I, 2016). 2016).

99 "(B]ecause "[B]ecause the the Guam Guam Rules Rules ofof Civil Civil Procedure Procedure are generally derived from, although not identical are generally identical to, to, the the Federal Federal Rules of Civil CivilProcedure Procedure ..., ...federal , federaldecisions decisionsthat thatconstrue construethe thefederal federalcounterparts counterparts to to the the [GRCP] [GRCP] are are persuasive persuasive authority." Portie authority." Portis Int'L Int'/, LLC LLCv.v. Marquardt, Marquardt,20 l8 Guam 2018 Guam22 n.l(citing 22 n,l (citingGov 'r of Gov't ofGuam Guam v. v. O'Keefe, 2018 lb Guam 4119). ~

11 11 I I

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsangv. Tsang, Tsang, eta!. al

23.1, if a plaintiff Under Rule 23.1, plaintiff in a derivative derivative action action does does not allege allege that that he has made

demand on the corporation, he must allege why making such such demand demand would would be be futile, futile; otherwise,

the derivative derivative action must must be dismissed. See See id. ("The Court id ("The Court finds finds itit would would be be futile futile for for Plaintiff Plaintiff to

have to request action be taken by the director ... Accordingly, the Court will not dismiss the , . Accordingly,

complaint complaint on this ground."); ground."), see.also also Vanderbilt Vanderbilt v. v. Geo-Energy Geo-Energy Ltd., Ltd 590 F. Supp. 999, 1001 1001 (E.D. (E.D.

Pa. 1984) ("While failure failure to to comply 23.1 is comply with Rule 23.1 is grounds for dismissal of of the complaint, the

demand requirement itself may may be be excused excused where where plaintiff's complaint alleges plaintiffs complaint alleges some facts which

show that that a demand demand would would be be futile.") futile.") (citation (citation omitted). Whether plaintiff has met the demand

requirement is judged on the face of the complaint. complaint. See Brooks v.v. Land See Brooks Land Drilling Drilling Co., 564 F. Supp.

1518, 1522 (D. Colo. 1522 (D. Colo. 1983) 1983) ("Where ("Where it is is obvious obvious from the face of of the complaint complaint that the requisite

demand upon shareholders shareholders was was not not made made and and no no explanation explanationfor for the the lack lack of of demand demand is is offered, an

action by the shareholder shareholder will will not lie.").

Here, the Complaint neither alleges any effort to make a demand on either TBC or HTSM

nor states why making making such such aa demand demand would would be be futile. futile. Instead, the Complaint merely alleges what

wants. See Larry wants. Comal. ,r,r See Comp!. W 30-31 30-31 ("Plaintiff ("Plaintiff... ... seeks seeks to to have have the the court court declare declarewhich whichassets assets... ...

belong to each respective legal entity and the relationship between such entities entities as it determines

legally and to legally exist and to conform to the mandates mandates of the Articles Articles of Incorporation and Bylaws of of the

respective corporate respective corporateDefendant[s] Defendant[s].... ...."). "). Since SinceLarry Larryneither neither shows shows he he has has made made aa demand demand nor

the futility futility of of doing doing so, so, Larry Land has not met the demand requirement requirement under under Rule 23.1.

Larry also moves, in the alterative, alternative, for for leave leave to to amend amend the the Complaint Complaint ifif the the Court Court finds

that his derivative action action is is not sufficiently sufficiently pied. pled. Because Because an an amendment amendment to to the Complaint might

show compliance compliance with with Rule Rule 23.1, 23.1, the Court GRANTS Larry's Larry's Motion Motion for for Leave Leave to Amend Amend in the

alternative and DENIES the dismissal as to this claim. See King v. Terwilliger, 2013 WL 708495,

12 12 i

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsangv. Tsang, Tsang, eta!. al.

(S.D. Tex. Feb. 26, 2013) at *7 (S.D. 2013) ("[T]he ("[T]he plaintiff plaintiff is is given given LEAVE LEAVE TO AMEND his his complaint complaint

within within 30 days date of days of the date of this order to comply comply with with Rule Rule 23,l(b)'s 23.l(b)'s pleading pleading standards standards to

demonstrate tratedemand demandfutility futi l i ty.... ....").

cC. Larry arrv FFailed ailed toto State State aaClaim Claimfofor Accounting r Acco Because u n tin g Becau Accounting of se Acco Corporate Assets Corporate Assets Is Is aa Derivative Derivative Action Action that Requires Compliance Compliance with with GRCP R C P RRule u l e 23.11 $35 "A "Aderi v ati v e ac derivative ti on iis action s brought brought by by aa sshareholder harehol to 'enforce a right of of aa ccorporation."' orporati on.

Dumaliang Silan, 2000 Guam 24 'I[1]7 (citing Guam R. Civ. P. Dumaliangv. Sivan, P. 23.1). Without aa derivative action, 23.l). Without

a sharehol der "do[es] shareholder "do[es] not have standi ng to pursue personal standing cl ai ms for injuries the corporation personal claims

suffered." suffered." Arnold rn o l d v. Melwani,, 20133 WL 2205430, 0 at *20 (D. GGuam u Jan. Jan. 9, 2013). The question

before the Court then is whether accounting accounting is a derivative action such that Larry Lan'y must comply

with the demand demand requirement requirement under underRule 23 .1. Rule 23.1

"It has been "It been held held that [a claim for an accounting] may be pursued pursued as [a] [a] derivative action[],

not as [a] [a] direct action[]." See direct action[]." See 19 19 Am. Jur. a2d Corporati Am. Jut. ons §§ 1946, Corporations 1946, Westlaw (database database updated

Nov. Nov. 2025). 2025). Since Since aa derivative derivative action action "enforce[s] aa right right of ofaa corporation," corporation," see see Dumaliang, um 2000

Guam 24 'li 'I[ 7,7, accounting accounting isisaaderivative derivativeaction action"when "when brought brought in in connection connection with with a corporation corporation's

right right to recover corporate funds." funds." See Oliver & See Oliver & Co. v. Zamber, 2025 WL 1580288, v. Zamber, 1580288, at *8 *8 (E.D. (E.D. Mo. Mo.

June 4, 2025) June 4, 2025) (citing Daws on v . Daws on, 645 S.W.2d 120, Dawson 120, 126 (Mo. (Mo. Ct. Ct. App. App. 1982)) 1982)) (emphasi (emphasiss

in original). Generally, aa shareholder original). Generally, shareholder does does not have an interest in his or her contributions to the

capital of the corporation. See Matter 0f See Matter of Guardianshq1 Guardianship z2fMoylan, ofMoylan, 2017 Guam 28 1]6 '1[ (contrasting

shareholder's loan, shareholder's which is loan, which an asset is an asset ofofthe theshareholder, shareholder, with with a ashareholder's shareholder's "additional "additional

contributions contributions to capital," which whichare are not). not). Therefore, Therefore, aa shareholder shareholder seeking accounting of corporate

assets alone must assets alone must bring bring aa derivative derivative action. See Dooley v. See Dooley v. O'Brien, 'Brien, 226 Ariz. Ariz. 149, 155, 149,155,244 P.3d

586, 592 (Ct. App. 2010) 586,592 2010) ("Generally, ("Generally,shareholders shareholders have have no no right, right, title title or or interest interest in in the corporate

13 13 I

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-I 5, Tsang Tsang v. v. Tsang, al, Tsang, et al.

property and may not property not maintain maintain aa direct direct action action for for an an accounting?) accounting.") (citations (citations and and quotations quotations

omitted); see also omitted), also Fisher Fisher v.v. Big Big Squeeze Squeeze(N.Y), 2d 483, (NY), Inc., 349 F. Supp. ad 483,488 (E.D.N.Y. (E.D.N.Y. 2004) 2004)

action for a corporate ("An action corporate accounting brought by by aa shareholder shareholder in in the the shareholder's shareholder's individual individual

capacity fails fails to to state state aa claim claim under under New New York York law."); law."), Neese v. Richer, 428 N.E.2d 36, 37 (Ind. Ct.

1981) ("[The App. 1981) ("[The plaintiff] plaintiff] brought a shareholder shareholder derivative derivative action action for accounting and for an accounting

damages?) damages.") (emphasis (emphasis added), added); Sinibaldi v. Sinibaldi ex rel. Get Get Strong, Strong, Inc., Inc., 100 100 So. ad 3d 72, 72, 73 73

(Fla. Dist. Ct. Ct. App. App. 2011) 2011) (Under (Under Florida Florida law, law, an an accounting accounting action action "could "could only only be be brought brought by a

shareholder on shareholder on behalf corporation."). Accounting behalf of a corporation."). Accounting of of corporate corporate assets assets makes makes sense sense as as a

where the assets belong derivative action also because where belong to to the corporation, the right to recover such

assets or seek assets seek transparency transparency over them them should should also also belong belong to to the the corporation. corporation. See 18 C.J.S. See 18 C.J.S.

Corporati ons §§ 477 Corporations 477 ("[Deri v ati e ac ("[Derivative action] is a claim that that a corporation could bring because the

corporation's corporation's assets are affected."), assets are affected."), Westlaw Westlaw (database (database updated updated May May 2025).

Here, Larry is seeking an accounting of corporate assets. Specifically, Larry is requesting

that TBC and HTSM account to him "for all activities of of said entities

.. and ... andfor forthe thepresent presentassets assetsofofthe thecorporate corporateDefendants DefendantsTBC TBCand andHTSM." Comp!.1]133; HTSM."Comal. 33; see see

Oppo. at at 77 ("seek ("seek to to separate separate assets assets of ofthe the business business entities"). entities"). Therefore, Therefore, the Court Court finds finds that that

Larry's Larry's accounting accounting claim claim is is aa derivative derivative action such that Plaintiff must must comply with the demand

requirement of requirement .I before bringing the action. of Rule 23.1

Similar to to Larry's Larry's derivative derivative action action to to separate the assets separate the assetsofofTBC T BC and and HTSM, HT SM, the Court

GRANTS his Motion for Leave to Amend the the accounting accounting claim because an amendment might

show compliance compliance with Rule 23.1 23.1 and DENIES TBC and HTSM's HTSM's Motion Motion to to Dismiss Dismiss as as to to the the

accounting claim.

14 14 l

DECISION AND ORDER RE MOTIONS TO DISMISS Tsangv. Tsang, CV0897-15, Tsang Tsang, eta/. al.

D. D. Larrv LarryFailed Failedto to State State aa Claim Claim for forPartition PartitionBecause Because He He Failed Failed to to Plead What Pronertv Property HeHe Seeks Seeks to Partition Partition and and Whether Whether HeHe Owns Owns Such Such Property Propertv

that a party seeking partition identify both the property to be partitioned Guam law requires that

ownership interests and the ovmership interests of of all all parties claiming an interest interest in that property. In particular, "the

summons summons must must contain contain aa description description of of the the property property sought sought to to be be partitioned." partitioned." 77 GCA GCA §§ 24406. 24406.

complaint must The complaint also set forth "the interests of all must also all persons persons in the the property, property, whether whether such such persons persons

are known or are known or unknown." unknown." 77 GCA GCA §§ 24403. 24403. And And critically, critically,one one cannot cannot partition partition what what one one does does not not

own: own: only only "co-owners "co-owners of of [a] [a] personal personal property" property" may may seek seek partition partition under under 77 GCA GCA §§ 24402, 24402, and and

only only aa co-tenant co-tenant or or life life tenant tenant may may seek seek partition partition of ofreal real property property under under77GCA GCA§§24401.10 24401. 10

Here, Lan'y Larry has not not stated a viable partition claim because he neither identifies the specific

property he seeks to partition nor alleges alleges that that he he personally personally holds holds a co-ownership interest in such

property. The property. contain no description The summonses contain description of any real real or or personal personal property property subject subject to

partition, and while the the Complaint Complaint alleges alleges Larry's ownership of Larry's ownership ofshares shares in in TBC and and HTSM, it does

not identify identify "the "the interests interestsof all persons" fall persons" in in any any specific asset asset allegedly subject to division. Instead,

the Complaint the vaguely refers Complaint vaguely refers to to "the personal personal and and real real property property assets assets of of the the Plaintiff Plaintiff and and

describing what those Defendants" without describing those assets assets are. are. See Comp!. qt,i 33. That is insufficient See Comal. insufficient to

support a partition partition action under Guam law. law.

Moreover, Moreover, as as TBC TBC and and HTSM HTSM correctly correctlynote, note, Larry Larryseeks seeks to to partition partitioncorporate corporateassets assets that

the corporations-not are owned by the corporations-notbybythe theshareholders shareholdersindividually. individually. TBC's TBC's Mot. Mot. at at 8. 8. Larry Larry

himself himself clarifies that his partition action action is is "based "based on the inventory and real real property property assets of of each

corporation." Opp'n Opp'n at at 66 (emphasis added).Because "[a]n (emphasis added). "[a]n individual individualshareholder, shareholder, by virtue ofhis

10 The Court notes that while Land seeks "the 10The Court notes that while Larry seeks "the partition of of the the personal personal and real property and real property assets assetsof ofthe thePlaintiff Plaintiff and and Defendants," Larry only Defendants," Larry only invokes invokes 7 GCA §24402, 7 GCA § 24402, which whichapplies appliessolely solelytotothe the partition partitionof ofpersonal personal property. property.

15 15 I' i E

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-I 5, Tsang Tsang v. Tsang, et al. Tsang, et al.

of shares, ownership of shares, does does not not own the the corporation's assets," assets," Dole Dole Food Co. v. v. Pafrickson, 538 Patrickson, 538

U.S. 468, 475 475 (2003), (2003), no no amendment amendment could could transform transform the the corporate corporate assets assets into into Larry's Larry's assets for

the purposes of of this this partition partition action. action. For For that that reason, reason, Larry's Larry's Motion for Leave to Amend the the

partition claim is DENIED and the partition claim is DISMISSED.

E E. Larrv's Larry's Argument Argument Regarding Regarding the Veil-Piercing Doctrine Is Is Irrelevant Irrelevant as to the Court's Court's Analvsis Accounting Claim Analysis of the Accounting Claim and the Partition Partition Claim

also considered The Court has also considered Lanky's Larry's argument regarding the veil-piercing doctrine and

finds this argument irrelevant finds irrelevant to to the Court's analysis analysis of of the the accounting accounting claim claim and and the the partition partition

claim. Specifically, claim. Specifically, Larry Land argues argues that that "[w]hen "[w]hen other other shareholders shareholders combine combine for for the the purpose of of

exploiting the assets of of the various various entities entities without without regard regard for for their their separate separate existence, existence, remedy

lie in must lie in the the form form ofofaccounting accounting and andpartitioning partitioning those those assets assets toto establish establish their their separate separate

existence." P1.'s Pl.'s Opp'n at 7. He He then then devotes half half a page page to to reciting reciting factors factors courts courts consider when

determining whether to pierce the corporate veil.

It It is is unclear unclear how how the the veil-piercing veil-piercing doctrine doctrine advances advances Larry's claims claims for accounting accounting or

partition. partition. Veil piercing isis an Veil piercing an equitable equitable remedy remedy that allows courts, in narrow circumstances, allows courts, circumstances, to

disregard the disregard corporate form and the corporate and hold hold shareholders shareholders personally personally liable liable for for corporate corporate debts. debts. See See

Associated Ins. Ins. Underwriters, Underwriters, Inc. Inc. v. v. Guam Int'! ]nt'l Insurers, Insurers, Inc., Civ. No. No. 90-00059A, 90-00059A, 1991 1991 WL

336911, at *5 336911, at *5 (D. (D, Guam App. Div. June June 18, 1991) 1991) ("The purpose of the doctrine is not to protect

creditor, but every unsatisfied creditor, but rather rather to to afford afford him him protection protection where where some conduct amounting to

bad faith makes it inequitable for for the the owner owner of a corporation to hide behind its corporate veil.").

Larry isis not However, Land not attempting attempting to to impose impose personal personal liability liability on the shareholders of of TBC

HTSM, HTSM, or orEvergreen. Evergreen. Instead, Instead, he seeks an accounting and a partition partition of ofthe the companies' companies' assets assets as as

a shareholder and member of of the the corporate entities. It is therefore unclear to corporate entities. to the the Court how veil

16 • u

DECISION AND DECISION AND ORDER ORDERRE REMOTIONS MOTIONSTO TODISIVHSS DISMISS CV0897-15,Tsang CV0897-15, Tsangv.v. Tsang, Tsang eta!. al.

piercing, which applies to achieve equitable outcome for a creditor of of a corporation under limited

circumstances, hasany circumstances, has anyapplication applicationto to Larry's Lam"y'sclaims. claims.For Forthat thatreason, reason,the theCourt Courtfinds finds Larry's Larry's

argument argument with respect respect to to piercing the corporate veil inapposite to his claims.

F. Larrv Larry Failed Failed to to State State aaClaim Claimfor forDissolution Dissolution Because Because He He Does Does Not Have Have aa Legal Basis for for His His Action

11. The The Guam Business Corporation Act Business Corporation Act Does DoesNot NotApply Applvto toLarry's Larrv's Claim Claim for for Dissolution Dissolution

A threshold issue in in analyzing whether whether the Court Court should should dismiss dismiss Lanky's Larry's dissolution claim

is whether the General Corporation Corporation Law or its its successor the Guam Business Business Corporation Corporation Act Act

("GBCA") ("GBCA") should should govern govern Larry's Larry's dissolution dissolution claim. claim. Both TBC and HTSM HTSM were incorporated in

Guam before the GBCA was was passed. passed. At At the the onset onset of ofthis this lawsuit lawsuit in in 2015, 2015, both both entities entities had not

adopted the GBCA. See See TBC's Mot. at 9.

First, the GBCA does not apply to "a corporation organized under the General Corporation

Law of Law of Guam Guam prior prior to to the the effective effective date date of of [the] Act." 18 [the] Act." 18 GCA GCA §§ 281703. But the 281703. But the Act Act applies applies "if "if

[such corporation's] articles articles of of incorporation are amended, in accordance accordance with the the provisions of of

its articles articles of of incorporation, incorporation, bylaws, and law applicable to to such corporation, without regard to this

Act, to provide Act, to provide that that this Act shall this Act shall apply apply to to such corporation." 18 such corporation." GCA §28 18 GCA issue here The issue l702(b). The § 281702(b). here

is: Once a corporation adopts the Act, does does the Act apply retroactively to govern retroactively to govern the the Plaintiffs Plaintiffs

claim of of dissolution, which was filed before the adoption?

The The Guam Supreme Supreme Court Court has has held held that that "there "there isis aa'presumption 'presumptionagainst against retroactive retroactive

application application of ofnew laws laws to pendingcases." Jenkinsv.v.Montallana, cases." Jenkins ~ 13 Montallana,2007 Guam 121] 13(citing (citing Bank Bank

of ofGuam Guam v.v. Ready, Reidy, 2001I Guam Guam 14 ~ 16 14 11 16n.n.2). 2). "As "As a rule, aa statute statute is is presumed to have only presumed to

prospective effect unless prospective effect unless itit is made made expressly expressly retroactive retroactive or is is retroactive retroactive by 'necessary 'necessary

implication." implication."' In re re Request of Twenty-Fourth Request of Twenly-Fourth Guam Legislature Legislature of Declaratory Declaratory Judgment, Judgment, 1997 1997

17 17 DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang v. CV0897-15, v. Tsang, Tsang,Hz*al. et

15 ,r Guam 15 11515 (citing (citing Nelson v. Ada, 878 F.2d 277, 277, 280 280 (9th (9th Cir.1989)). Cir.1989)).lf"the If"the purpose of of statute

is abundantly clear" that it is intended to apply retroactively, the Court Id ,r 20. Court will so apply it. Id.

The GBCA GBCA is is clearly clearly not not made made expressly expressly retroactive-in retroactive-in fact, fact, itit isis made made expressly expressly

prospective. See 18 18 GCA GCA §§ 1101.1 1101.1 ("A ("A corporation corporation organized organized in in Guam Guam prior prior to to the the effective effective date date

of of the the Guam Guam Business Business Corporation Act shall shall not not be be subject subject to to the the Guam Guam Business Corporation

Act."). Therefore, Therefore, the the GBCA GBCA does not not govern govern Larry's Larry's claim claim of of dissolution.

With the GBCA inapplicable here, the Court Court further further finds finds that that the the Guam Guam Corporation Corporation Law

is silent on involuntary dissolution. Therefore, this Court looks to the common law in considering

Larry has whether Larry has stated aa claim claim for for dissolution dissolution of TBC and ofTBC and HTSM. HTSM.See See In re re People, 2024 Guam

17 1]22 17,r ("[W]here the 22 ("[W]here the code code is is silent, silent, the the common common law govems."). 0ovems.")..11

2. Larrv LarryFailed Failed to to State State aa Claim Claim for forDissolution Dissolution Under Under Common Common Law Law

"As "As aa general general rule, rule, aa minority minority stockholder stockholderor orgroup groupofofstocldmolders of a going stockholders of going and solvent

corporation corporation cannot cannot maintain maintain aa suit suit to have have itit dissolved dissolved or orto tohave haveits itsassets assets distributed." distributed." 19 19 Arm, Am.

Jar. ad Corporations Jur. 2d Corporations §§ 2350. 2350. At At common common law, law, aa court court lacks lacks "the "the ability ability to to grant grant petitions for petitions for

involuntary involuntary dissolution dissolution of ofaa corporation corporation without without express express authorization by statute." statute." See See Renbaum

v. v. Custom Holding Inc., 871 Custom Holding, 871 A.2d 554, 565 565 (Md. 2005), 2005); see also Peck see also Peck v. v. Jonathan Jonathan Michael

Builders, Inc., 2006 WL 3059981, Builders, Inc., 3059981, at *5 *5 (R.I. (R.1. Super. Super. Oct. Oct. 27, 27, 2006), aff'd, 940 940 A.2d 640 640 (R.I. (RI.

2008) ("[E]quity ("[EJquity courts courts lack lack inherent inherent power to dissolve a corporation."); corporation."), In re re Mai. Mut. Bldg. & Inv. Bldg. &

Co., 15 Ohio Law Abs. 218, 218, 219-20 219-20 (Ohio (Ohio Ct. Ct. App. App. 1933) 1933) ("It ("It is is aa well-settled well-settled rule rule that, in the

absence absence of of statutory statutory authorization, authorization, aa court court of of equity, equity, in the exercise of of its general jurisdiction, has

11 The Court 11 The Court notes notes that that no no party, party, including including TBC and l-ITSM, TBC and HTSM,disputes disputesthat thatthe the standards standards governing governing involuntary involuntary dissolution dissolution must must be drawn from the common common law. Defendants diernselvesconcede Defendants themselves concedeas asmuch. much.See SeeTBC's TBC's Mot. Mot. at at 9 9 ("Chapter ("Chapter 55 discusses discusses voluntary dissolution, dissolution, but not involuntary dissolution, meaning that the court must resort to but not involuntary dissolution, meaning that the court must resort common law to to determine standardsupon determine the standards uponwhich whichto toundertake undertakeananinvoluntary involuntarydissolution dissolutionof of aacorporation."). corporation.").

18 18 7 T 1

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15,Tsang v. Tsang, CV0897-15, Tsangv. Tsang, et al.

power to no power to dissolve dissolve or wind up the wind up the affairs of a corporation."); corporation."), Cardoz Cardozao v.. Millington, 297 P.2d Ml i ngt on, 297 P .2d

778, 783 (Cal. (Cad. Dist. Dist. Ct. Ct. App. App. 1956) 1956) (noting (noting that that Section Section 404 404 of the California Civil Code, Code, which

provided for provided involuntary dissolution for involuntary dissolutionof of aa corporation corporation by by a shareholder's shareholder's lawsuit, lawsuit, "was in "was in

of the common derogation of common law") law").

Under n d tthe ccommon o m m o n l alaw, w , t hthis i s CCourt o u rt l alacks c k s i ninherent h e re n aauthority ut tto oorder rd e r tthe h e i involuntary nvolunt

of a solvent, operating corporation dissolution of corporation absent absent explicit explicit statutory statutory authorization. authorization. Because Because the

Corporation Law General Corporation Law contains contains no no provision provision authorizing authorizing judicial judicial dissolution at the request of of a

minority minority shareholder, shareholder, this Court's Court's equitable equitable Powers powers cannot cannot supply supply what what the the statute statute omits. omits. See See

Renbaum, Md. at Renbaum, 386 Md. at 47 47 (holding (holding that that courts courts cannot order "dissolution of a corporation corporation without without

express authorization express authorization by by statute"). statute"). Larry Larry cites cites no no common law law doctrine doctrine that that would would permit permit

dissolution notwithstanding the absence of statutory absence of statutory authorization. authorization. Accordingly, Accordingly, even even assuming

all of his factual factual allegations are are true, true, he he has has not stated a legally cognizable claim for involuntary

dissolution under common common law. law. And And because because no no amendment amendment could could remedy remedy the the fundamental fundamental lack lack

of legal authority for the relief sought, of sought, Plaintiff Plaintiff Larry's Larry's Motion for Leave to Amend Amend is DENIED,

and his claim for dissolution ofTBC and HTSM is DISMISSED.

G. Mo tio n to Motion to Dismiss iss by b y TBC T BC and an d HTSM HT Is Is Mo Moot o t as L arrv's Claim for as to Larry's Pendenten te Lite IInjunction n j u n c ti Be c Because e Presiding i d i n g Judge J u d g e Lamorena L r n a Ha Hass Alread v Den Already Denied ied th e In ju n ctio n

Previously, Presiding Judge Previously, Presiding Judge Lamorena Lamorena "denie[d] "denie[d] [Plaintiff's] [Plaintiffs] request for aa preliminary preliminary

because Plaintiff injunction" because Plaintiff"will not suffer irreparable injury," injury," which which Presiding Judge Judge Lamorena Lamorena

stressed was the "sine "sine qua qua non non of ofinjunctive injunctive relief." See See P.J. P.J. Lamorena's Lamorena's Decision at 4-5 (citing (citing

Siegel LePore, 234 Siegel v. LePore, 1163, 1175-77 234 F.3d 1163, 1175-77 (11th Cir. 2000)). (nth Cir. 2000)). InInparticular, particular, Presiding Presiding Judge Judge

found Plaintiff's Lamorena found Plaintiffs assertion assertion of of harm harm was was "too "too speculative speculative for for aa temporary temporary restraining restraining

order or preliminary preliminary injunction injunctiontotoissue." issue." Id Idatat5.5.Because Because Presiding Presiding Judge Judge Lamorena Lamorena has has already

19 19 1

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang v. CV0897-15, v. Tsang, Tsang, et al. al.

denied Plaintiffs request request for for preliminary preliminary injunction, injunction, the Court finds finds Defendants' Defendants' Motion MOOT

as to this request. request.

H. Prior Denial The Prior Denial of ofTemporary TemporaryRelief ReliefDoes Does Not Not Preclude Preclude Permanent Permanent Injunctive Injunctive Relief

Presiding Judge Lamorena denied After Presiding denied Larry's request request for for temporary temporary restraining restraining order order

and preliminary injunction, see P.J. P.J. Lamorena's Decision at Lamorena's Decision at 5, 5, TBC and HTSM HTSM asserted that "the

rejected Plaintiffs Court rejected PlaintifFs assertions assertions that that he suffer irreparable he would suffer irreparable injury injury if the the meetings meetings

proceeded." Reply Reply at at 7-8. '7-8. Because Becausethe theCourt Court"has "has... ... substantively addressed [Larry's] concerns

regarding the regarding the holding shareholder and director holding of shareholder director meetings," meetings," Larry's request request for for permanent permanent

injunction is injunction is moot. Id. atat 8.8. Lan'y Larry countered countered that that "[w]hile "[w]hile the the [C]ourt [C]ourt ruled ruled that that injunction injunction by

Temporary Restraining Temporary Restraining Order Order would would not not be be allowed, allowed, such such does does not not prevent on the full presentation prevent on

of the evidence at trial the [C]ourt from imposing future future relief relief against continuing freeze-out of of

Plaintiff." Opp'n Plaintiff." Opp'n at 10.

the argument. Larry has the better of the argument. The standard for a preliminary preliminary injunction differs from

the standard for a permanent permanent injunction, even even though though "both require a showing of of irreparable harm

which cannot be remedied through monetary monetary compensation." compensation." See See Gov Gov?'t of of Guam v. v. Gutierrez, Gutierrez,

2015 ,r 35 2015 Guam 8 ii 35 n.8. n.8. To obtain a preliminary injunction, injunction, "[a] "[a] plaintiff must must show that he will

suffer irreparable injury and that he otherwise lacks an adequate remedy at law." Mack v. Davis,

13 ,r (citingMarangiv. 2013 Guam 131112 v. Gov'to/Guam, 319 F.Supp.2d ofGuam, 319 F.Supp.2d 1179, 1179, 1186 (D. Guam2004)) 2004))

added). By contrast, a permanent injunction requires a showing that "[the plaintiff] has (emphasis added).

suffered an an irreparable irreparable injury." injury." See See Valencia v. v. Sap la, Super. Sapla, Ct. Guam Super. Ct. Guam CV0085-l CV0085-16 (Findings of 6 (Findings of

Fact and Conclusions of Law Law at at 9, 9, Jun. 2, 2017) Jun. 2, 2017) (citing (citing eBay Ire. v. eBay Inc. v. MercExchange, MercExchange, L.L.C., L.L.C., 547 547

U.S. 388,391 391 (2006)); (2006)), Farmerlv Farmer's Coop. Coop. Ass'n Ass'n of Guam v. a/Guam v. McDonald, McDonald, Super. Super. Ct. Ct. Guam Guam CV1125-

20 l

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang v. Tsang, Tsangv. el al Tsang, eta!.

14 (Dec. & Order Order atat 16, 16, Feb. 6, 2015) (same). (same). In In other other words, words, the the preliminary-iajunction preliminary-injunction inquiry

focuses on whether whether the the plaintiff plaintiff faces faces imminent harm before before the the case can be fully heard, whereas

injunction is evaluated only after the Court has considered a permanent injunction considered the full full presentation of of

evidence and determined whether the plaintiff has in fact suffered an injury warranting this relief.

This distinction distinctionundermines underminesTBC TBCand andHTSM's HTSM'sreliance relianceononPresiding PresidingJudge Lamorena's Judge Latrena's

of preliminary relief reflects Decision and Order. The denial of reflects only that Lan'y Larry did not satisfy the

requirements for requirements temporary injunction for a temporary injunction or preliminary preliminary injunction injunction at at that that early early stage stage of the the

litigation; it does litigation, does not not constitute constitute aa determination determination that dirt he cannot establish irreparable harm on a full

evidentiary record. record. Therefore, Therefore, Presiding Presiding Judge Judge Lamorena's Decision and Order does not foreclose Lamorena's Decision

the Court from granting granting permanent permanent injunctive injunctive relief relief should should the Court, after holding a full hearing

on the merits, determine that such relief is appropriate.

Accordingly, TBC and HTSM's HTSM's reliance reliance on on the the prior prior denial denial of of the the preliminary injunction

is misplaced, and the Court DENIES the Motion to Dismiss of of TBC TBC and and HTSM HTSM as as to to Lanky's Larry's

request for permanent permanent ire unction. injunction.

III. 111. Motion Motion to to Dismiss Dismiss by Evergreen

Evergreen moves to to dismiss dismiss all all claims asserted against against it on the grounds that Larry Land fails to

state any cognizable state any cognizable claim. claim. Evergreen's Evergreen's Mot. Mot. at at 1-2. Evergreen argues that that itit owed owed no no fiduciary

duty to Larry Lan'y as a matter matter oflaw, of law, and and that that Larry Larry alleges allegesonly only conclusory conclusory assertions assertions of fraud without

identifying any misrepresentation, identifying any misrepresentation, intent, intent, reliance, reliance,ororresulting resultingdamages. damages.Id. Id at 3-5. Evergreen Evergreen

further contends that Larry's Larry's second second and third causes causes of action are derivative in nature and must

be dismissed because Larry Larry did did not notmake makeaapre-suit pre-suitdemand demand ororplead pleadparticularized particularized reasons reasons for

failing to failing to do do so, as as required by by Rule 23.1. 23.1. /d. Id at at 5-6. 5-6. Finally, Finally, Evergreen Evergreen argues argues that that Plaintiff Plaintiff has

any facts not alleged any facts triggering triggering dissolution dissolution under the the Operating Operating Agreement Agreement or Guam law, and that

21 l' G

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang CV0897-15, Tsang v. v. Tsang, Tsang, et et al. al

his request to enjoin other members from conducting business business violates violates the Agreement and GRCP

Rule 65. Id. Rule 65. Id at 6-7.

A. Larrv Larry Failed Failed to to State State aa Claim Claim for for Breach Breach of of Fiduciarv Fiduciary Dutv Duty as as to to Evergreen Because EvergreenDoes Because Evergreen DoesNotNotOwe OweLarry Larrv aa Fiduciary Fiduciarv Duty Dutv

Generally, an LLC does not owe owe aa fiduciary fiduciary duty duty to to its its members. members. See, See, e.g., Cosmo Cosma v. v. Fir Fit

Kitchen, LLC, Kitchen, 7915, 2022 LLC, No. 22 CVS 7915, 2022 WL WL 2815117, 2815117, at at *2 *2 (N.C. (N.C. Super. Super. July July 18, 18, 2022) 2022) ("[A]H ("[A]n

LLC LLC does does not owe a fiduciary fiduciary duty to its its members."), members."); Yonkov Yonkov v. Holding Gap. v. Maximus Holding Grp. LLC, 2024

WL 2300967, at *4 (N.D. Ohio May 21, 2024) ("As an an LLC LLC is is an an entity, entity, like like a corporation, that

can only act through its agents or managers, it makes sense that the entity entity alone alone does does not owe a

duty to its members. Rather the fiduciary fiduciary duty duty rests rests on the member or manager manager that acts for the

LLC."), LLC."); see alsoHarris see also Harris v. TLSA/Igmt. TLS Mgmt. && Mktg. Mklg. Serve., LLC,2019 WL 7763990 at *4 (D.P.R. Mar. Servs., LLC, Mar.

18, 2019) ("It is settled law in many jurisdictions that a corporate entity does not have a fiduciary 18,

duty toward its members or or stockholders, stockholders; rather, that duty is held held by by the the corporation's corporation's officers and

directors.") directors.")..

Here, Evergreen, as an LLC, does not owe Larry, as a member, a fiduciary duty. Larry has

not identified any legal authority authority to to the contrary. contrary. Because a fiduciary fiduciary duty is a necessary element

of of a breach of of fiduciary fiduciary duty claim, Larry has not not sufficiently sufficiently pled pied this claim against Evergreen.

The Court Court also finds that since no amendment amendment of of the Complaint Complaint could could devise a duty that Evergreen

owes Lan'y, Larry, his Motion for Leave to Amend as to to this this claim claim is also DENIED. Accordingly, the

claim of of breach of of fiduciary is DISMISSED as to Evergreen.

22 I

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-15, Tsang v. Tsang, Tsangv. et al Tsang, eta!.

B. Larrv LarryFailed Failedtoto State State aa Claim ClaimtotoSeparate Separatethe theAssets Assets of Evergreen and for an Acco Becau se He Accounting Because He Has Has Not Sh Shown Co p lian Compliance with the Demand an Requirement Under GRCP RCP Ru le 23.1 Rule

A member member ofofan ao LLC, LLC,just justlike likea ashareholder shareholderofofaacorporation, corporation, may maysue sue derivatively. derivatively. See See

Bischojfv. Bischoffv. Boar Boar's Head Provisions Provisions Co.,, 436 F. Supp. Supp. 2d 2d 626, 626,631-32 631-32 (S.D.N.Y. (S.D.N.Y. 2006) ("[B]ecause

an ao LLC is is aa hybrid of of the corporate and aod limited partnership partnership forms, forms, its its members should have the

same rights as corporate shareholders and limited partners, including the right, right, under under common common law,

to bring bring derivative derivative claims."), claims."); Rose Rose Goodyear Props.,., LLC LLC vv. NEA NBA Enters Enters.. Ltd. Ps hz 235 Ariz. Pship,

344, 332P.3d 339,344,332 P.3d86, 91(Ct. 86, 91 (Ct.App. App.2014) 2014)(noting (notingthat that"a"amember memberofan an LLC LLC may may bring bring a derivative

action"); Condon v. action"), v. Kadakia, Kadakia,661 S.W.3d443, 443,453 (Tex. App. 2023) 2023) ("Under ("Under Delaware law, when when

ao injury a claimant seeks recovery for an injury to to aa limited limited liability liability company, that claim belongs to the

company and and can brought by a member cao be brought member only as a derivative derivative claim."). claim.").

In bringing bringing a derivative lawsuit, ao derivative lawsuit, an LLC LLC member member must also comply with with the the demand demand

requirement under Rule 23.1. See Wood v. v. Baum, 953 A.2d 136, 136, 140 (Del. 2008) 2008) (noting that a

derivative r i v a t i v e lawsuit l a w s u i t against a g a i n s tdirectors d i r e c t o r sofo fa a Delaware D e l a w a r eLLC L L C must s t comply m p l y with i t t the h e ddemand ema

requirement), Barone requirement); Barons v. Sowers, Sowers, 128 A.DJd A.D.3d 484, 484, 10 N.Y.S.3d N.Y.S.3d 22, 22, 23 23 (2015) (2015) ("The ("The demand

requirement requirement of of Business Business Corporation Corporation Law Law§ 626(c) also applies 626(c) also applies to to members members of of New New York York limited limited

liability liability companies."), companies."); Star v. v. TI Oldfield Dev., LLC, 962 F.3d 117, 128 (4th Cir. Cir. 2020) 2020) ("And ("And as as

to [the p1aintiff']s plaintiff]s eighth through seventeenth causes of ofaction, action, the the Special Special Master concluded that

although they although they were were not notduplicative duplicative of ofthe [LLC]Boards' the [LLC] Boards'claims, claims,they theyfailed failedtotomeet meetRule Rule2323.. 1I (b (b)'s )'

demand requirement because [the [ plaintiff] failed to plaintiff] failed to 'state with particularity' particularity' that he had made a

pre-suit demand of of the Boards.").

Because the Court has determined that Larry Lan'y has not adequately pied pled compliaoce compliance with the

demand requirement for the claim to separate assets and aod for the claim of of accounting against TBC

23 r

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsangv. Tsang, eta/. al.

Court likewise and HTSM, the Court likewise finds Larry has has failed failed to to sufficiently sufficiently plead compliance with the

demand requirement for the corresponding claims claims against Evergreen. However, However, since amendment

cure these may cure these deficiencies, deficiencies, the Court DENIES Evergreen's Motion Motion to Dismiss and GRANTS

Larry'sMotion Larry's Motionfor forLeave LeavetotoAmend Amendthese theseclaims claimsagainst against Evergreen.

cC. LarryFailed Lark FailedtotoState StateaaClaim Claimfor forPartition PartitionBecause Because Plaintiff Plaintiff Has Not Shown that He Owns the Shown that the Property Propertv He He Seeks toPartition. Seeks to Partition.

Guam law on partition does ou partition does not distinguish distinguish between between the assets of an assets of an LLC LLC and those those of of a

corporation, and corporation, and the the Court's Court's analysis analysis of of Larry's claims regarding Lam/'s claims regarding TBC and and HTSM HTSM applies applies with

equal force here. The Court notes that as with a shareholder and his or her corporation, a member

of an LLC does does not own the LLC's property, both under Evergreen's Evergreen's Operating Operating Agreement and

applicable case law. Article 5.8 5.8 of of the the Evergreen Evergreen Operating Operating Agreement Agreement provides that "the Manager

shall cause all all assets, assets,whether whetherreal realor orpersonal, personal, ... ... be be held held in in the the name of the Company." See Deal. See Deel.

of Camacho, of Camacho, Ex. at 14 14 (Dec. 9, 2015) 2015) ("Deel. ("Deal. of of Camacho"). Camacho"). This provision is consistent with the

principle that well-established principle that LLC LLC members members have no ownership interest interest in company assets. assets. See See

In re Brattain, 435 B.R. Brittain, 435 B.R. 318, 318, 322 322 (Bankr. (Bankr. D.S.C. D.S.C. 2010) 2010)("The ("The members members of of an an LLC LLC 'have no

property interest in property owned by [the LLC]."'); LLC]."'), Ecce Ecco Plains, Plains, LLC v. United States, States, 728 F.3d

1190, 1197 n.10 n.10 (10th (10th Cir. Cir. 2013) 2013) ("[LLCs] ("[LLCs] generally generally operate operate under an entity entity theory of property

this theory, a member rights. Under this member has no interest in the property owned by the LLC.").

The Court further further observes that its consideration consideration of the Operating Operating Agreement does not

convert Evergreen's Motion Motion to 12 On a Rule 12(b)(6) to Dismiss Dismiss into a motion for summary judgment." summary judgment. On )(6)

motion, a court may consider "written instruments attached attached to the complaint as exhibits" as well

12 The re The Court further notes that that neither neitherLarry Larrynot Evergreen Evergreen has has arguedthat conversion isrequired. required.

24 24 i

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang v. Tsang, CV0897-15, Tsang, et al.

as "statements or documents incorporated incorporated in the complaint by reference." Core Techlnt'l Int'! Corp. Corp. v.

Hamil Eng'g & Constr. Hanil Eng IO Guam 13 ,r1]29. Co., 2010 Constr. Co., 29.

Here, the Complaint expressly refers refers twice twice to to aa "management "managementagreement." agreement."See SeeComal. ,r Comp!.11

15 (alleging that "control (alleging that "control of Defendant Evergreen has been removed from Plaintiff Plaintiff without any

amendment of of the the Articles Articles or or management management agreement"), ,r 30 agreement"); 11 30 (referring to "the Articles (referring to Articles and

Management Agreement of of Defendant Limited Liability Liability Company Evergreen"). The Court finds

that this this "management agreement" is the same document as Evergreen's agreement" is Evergreen's Operating Operating Agreement

because Article Article 1.1 1.1 of ofEvergreen' Evergreen's Articles of s Articles ofOrganization-attached Organization-attached to to the the Complaint Complaint as Exhibit

5-states states that that any any reference reference to to an an "Agreement" "Agreement" means "the "the Operating Operating Agreement of of Evergreen

Investments LLC, Investments LLC, as as originally originally executed executed and and as amended amended from from time time to to time." time." See See Con pl., Ex. 5 at Comp!.,

1. I. Thus, because the Complaint incorporates the Operating Agreement Agreement by reference, the Court may

properly properly consider in resolving consider it in resolving Evergreen's Evergreen's Motion to Dismiss without without converting converting the motion

into one for for summary summary judgment.

no amendment can Because no can transform transform property property held held in in Evergreen' Evergreen'ss name into into Plaintiffs Plaintiffs

personal property, amendment would would be futile. The Court therefore DENIES the Motion for Leave

to Amend and GRANTS Evergreen's Evergreen's Motion Motion to to Dismiss Dismiss as as to to the the partition partition claim.

D. Larrv LarryFailed FailedtotoState Stateaa Claim Claimfor forDissolution Dissolutionof ofEvergreen EvergreenBecause Because He Failed Failed to to Allege that Trigger Dissolution under Allege Facts that under Either Either Guam Law or the Operating Operating Agreement of of Evergreen

A limited liability company may be involuntarily dissolved by court liability company court decree decree in an action action

brought by the Attorney General when it is established brought established that the the company company was was formed through Haud, fraud,

acted ultra vires, virus, violated the law in aa manner manner resulting resulting in forfeiture forfeiture of ofits its charter, charter, engaged engaged in

persistently fraudulent or illegal conduct, or otherwise otherwise abused its powers Powers contrary to public policy.

18 GCA §§ 15127(a). 18 GCA In addition, 15127(a). In addition, the the Guam Guam Department Department of of Revenue Revenue and and Taxation Taxation may may dissolve dissolve an an

25 DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-l 5, Tsang Tsang v. v. Tsang, Tsang, et al.

LLC for failing to file annual reports or pay required required fees, fees, failing failing to maintain aa registered registered agent,

or failing to or failing to update registered agent update registered agentor oroffice officeinformation. information. 18 18 GCA GCA §§ 15127(b). 15l27(b). The The statute further statute further

preserves the right to to seek annulment or dissolution on any other grounds provided under Guam

llaw. 18 GCA §§ 15127(e). 18 GCA 15127(e).

Evergreen's Operating Agreement Agreement also also specifies specifies certain certain events events that trigger dissolution. dissolution.

Evergreen "shall be dissolved" upon upon the death, incapacity, bankruptcy, withdrawal, or dissolution

of member, the expiration ofEvergreen's of a member; of Evergreen's term of of existence, existence; unanimous unanimous written written agreement agreement of of the

members to to dissolve, dissolve; the sale or other disposition of substantially all all of of Evergreen' Evergreen's assets, assets; or the

entry of aa decree entry of decree of ofjudicial dissolution under 18 dissolution under 18 GCA GCA §§ 15127. Decl. of 15127. Deel. of Camacho, Ex. at Camacho, Ex. at 22-23. 22-23.

Here, Here, the the Court is presented with neither presented with neither an action action by the the Attorney Attorney General General nor an an

administrative dissolution by administrative dissolution by the Department of of Revenue Revenue and and Taxation. Taxation. Accordingly, Accordingly, Plaintiff Plaintiff

cannot rely cannot rely on on§ 15127 to dissolve 15127 to Evergreen. Furthermore, dissolve Evergreen. Furthermore, Larry has also Larry has not pled also not pied any any facts facts to to

trigger trigger dissolution under the dissolution under the Operating Agreement. For that reason, Operating Agreement. reason, Larry's dissolution dissolution claim claim

against Evergreen is insufficiently pied. pled.

Taken all the facts facts alleged alleged as as true, true, the the Court finds finds that none of of the provisions triggering triggering

dissolution applies here. dissolution applies here. However, However, because because an amendment amendment might might allege allege facts facts that that trigger trigger

dissolution dissolution under under either either §§ 15127 or the 15127 or the Operating Operating Agreement, Agreement, the the Court Court DENIES Evergreen's

Motion to Dismiss and GRANTS Larry's Larry's Motion Motion for for Leave Leave to to Amend Amend as as to to this claim.

E. The h CCourt o u r t DDismisses i s m i s e s Larry's L a r v Claim fo for PPreliminary r e l i m i n v IInjunction n j u n c ti fo for Lack a c k oflrreparable I r r e p a r a b l e Harm Ha r

Larry Larry requests requests preliminary injunction against preliminary injunction against Evergreen Evergreenon on the the same same ground ground that he

requested preliminary preliminary injunction injunction against against TBC and HTSM. HTSM.See See Comal. Comp!. at at 12-13. 12-13. Because Because Presiding

Judge Lamorena has already Land's request already found Larry's request for for preliminary preliminary injunction injunction against against TBC and

26 • 4

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, Tsangv. CV0897-15, Tsang, et al. v. Tsang,

HTSM as lacking irreparable harm, P.J. Lamorena's Decision P.J. Lamorena's Decision at at 5, 5, the the Court Court likewise likewise finds that that

Lanky's claim of Larry's claim of preliminary injunction deficient preliminary injunction deficientinin its its showing showing of irreparable harm and irreparable harm and

DISMISSES Larry's Larry's request request for for preliminary injunction.

F. Evergreen's Operating Agreement Evergreen's Operating DoesNot Agreement Does NotCategorically CategoricallvBar BarLarry's Larrv's Request for Permanent Request for Permanent Injunction Injunction

As the Court touched on previously, to obtain obtain a permanent permanent injunction, injunction, the plaintiff "must

establish: (1) (!) that it has suffered an irreparable injury; injury, (2) that remedies available at law, law, such as

monetary damages, are inadequate to compensate for that injury, injury; (3) that, considering the balance

of hardships between of between the the plaintiff plaintiffand and defendant, defendant, a remedy in in equity is is warranted, warranted; and and (4) that the

public interest interest would not not be be disserved disserved by aa permanent injunction." Valencia, permanent injunction." Valencia, Super. Super. Ct. Guam Guam

CV0085-I6 CV0085-16 (Findings (Findings of of Fact Fact and and Conclusions Conclusions of of Law Law at 9, Jun. at 9, Jun. 2, 2, 2017). 2017). Evergreen does not not

contend that Larry has failed failed to plead any of of these these elements, elements; instead, instead, Evergreen argues that that the

permanent injunction injunction that that Larry seeks would Lam seeks would violate violate Evergreen's Evergreen's Operating Operating Agreement, Agreement, which

"provides for for procedures procedures for for conducting conducting meetings, meetings, and in in most most cases, actions only cases, actions only require a

majority of the members to approve an action." See Evergreen's Mot. Mot. at 7.

The Court Court does does not not find findEvergreen's Evergreen'sargument argument persuasive. persuasive. The The Operating Operating Agreement Agreement

governs the internal procedures of Evergreen, but it does not insulate Evergreen's members from members from

judicial oversight judicial oversight when, when, as as here, here, such members allegedly allegedly exercise their powers Powers in a manner that

causes irreparable harm to another member. Moreover, irreparable harm Moreover, the Court's analysis analysis above above--see supra

Section II.H-applies II.H-applies ininthis thiscontext: context:although althoughthe theCourt Courtdeclined declined to to find find irreparable irreparable harm at at the

preliminary-injunction stage, preliminary-injunction stage, Larry Larry may may still still be be able able to to establish establish the the elements elements necessary necessary for a

permanent injunction after permanent injunction after aa full full hearing hearing on on the merits. merits. For that reason, reason, the Court Court DENIES

Evergreen'ss Motion Motion to to Dismiss Dismissas asto to Lanky's Larry's claim for a permanent injunction.

27 . ¢` r

DECISION AND ORDER ORDER RE RE MOTIONS MOTIONS TO TO DISNIISS DISMISS CV0897-15, Tsangv. CV0897-15, v. Tsang, Tsang, et al.

IV. v Motions to Motions to Dismiss Dismiss by Christina

Christina moves Christina moves to dismiss all seven counterclaims to dismiss counterclaims under under Rule 2(b)(!) and l2(b)(6), Rule l2(b)(1) l 2(b)( 6),

arguing they are derivative derivative corporate claims that Wing Chi, Chi, as as an an individual individual shareholder, shareholder, lacks lacks

standing to assert because the alleged standing alleged harms are injuries injuries to the corporation, corporation, with any personal personal

incidental. Christina's damages merely incidental. Christina's Mot. Mot. at 2-3. She further seeks dismissal of of the Seventh Seventh

Claim ("Conspiracy ("Conspiracy to to Defraud") Defraud")because because conspiracy conspiracy is is not not an an independent independent tort, she she owed no

fiduciary duty, duty, and the the claim claim fails fails Rule 9(b)'s 9(b)'s particularity requirement. Id at 3-5. requirement. Id. 3-5. Christina Christina also

argues the Second Claim ("Aiding and Abetting Breach of Fiduciary Fiduciary Duty") sounds in fraud and

must must meet meet Rule Rule 9(b), ), but but the the allegations-such allegations-such as as concealment concealment of records records and and wrongful wrongful

payments-areconclusory payments-are conclusoryand andlack lackthe therequired required specificity. specificity. See id at 5-6. See id.

A. The The Stipulation Stipulation and and Order OrderStaving Staying Action Action Issued Issued on February Februarv 25. 25, 2016 Did Did Not Not Strip Strip Christina Christina of ofHer HerRight Rightto to File File aa Motion Motionto to Dismiss Dismiss

merits of Christina's Motions to Dismiss, Before considering the merits Dismiss, the Court first addresses

Wing Chi's Chi's attack attack on the procedural propriety propriety ofChirstina's of Chirstina's Motion to Dismiss his counterclaims

before the Court. Wing Chi argues that her Motion was improperly filed filed because "the Stipulation

and and Order Order of February 22, 2016 February 22, 2016 only only permitted [Christina]Au permitted [Christina] Au toto file file an 'answer' 'answer' to the the

Counterclaims of Counterclaims ofWing Wing Chi Chi Tsang Tsangwithin withinaadefinitive definitive time time period, period, i.e., i.e., 20 days after the expiration

stay." Wing of the stay." Wing Chi's Opp'n Opp'n atat 2.2. The The Court Court disagrees disagrees with with Wing Wing Chi's Chi's reading reading of of the the

Stipulation and Order.

The Stipulation Stipulation and Order Order states that that "[t]he "[t]he parties parties stipulate stipulate to to stay this action in its entirety,

including all deadlines, motions, motions, and hearings in this action, until April 25, 25, 2016." 2016." Stip. Stir. and Order

at 2 (Feb. 25, 2016). ItIt goes 25, 2016). goes on on to to provide: provide: "Counsel "Counsel for Christina L.H. L.H. Au Au and Counsel for Wing

On Tsang, Kam Wing Wing Tam, Tam, and and Wing Wing Chi Chi Tsang Tsang stipulate stipulate that that the the deadlines deadlines for (i) Christina L.H.

28 28 a* 1

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang v. Tsang, CV0897-15, Tsang, et al.

Au's Au's answer answer to to the the Counterclaims Counterclaims of of Wing Wing Chi Chi Tsang, and (ii) (ii) Wing Wing On On Tsang's Tsang's and Kam Wing

Tam's Tam's Opposition Opposition to to Christina Christina Au's Au'sMotion MotiontotoDismiss Dismiss(filed (filedJanuary January 19, 19, 2016), 2016), shall shall be held in

abeyance during the abeyance during the stay, stay, and and that that the the answer answerand andopposition opposition shall shall not not be be due due until until twenty (20)

days after the expiration of the stay (including any extensions thereto), or twenty (20) days after

the date of the the Court's Court's written order lifting the stay, whichever comes first." as

The Stipulation and Order does not prohibit Christina from filing filing a motion motion to to dismiss, nor

does it contain language restricting her to to an answer answer alone. alone. ItIt merely merely deferred the deadline deadline for for an

answer, answer; itit did not extinguish her rights under GRCP Rule 12(b) 12(b) to file a responsive motion in in lieu lieu

of an answer. Nothing Nothing in in the Stipulation or the Court's Court's Order Order states states that that a Rule 12 motion is barred,

waived, or subject waived, to prior court subject to court approval. approval. Accordingly, under under the language language of the Stipulation

itself, Christina's motion motion remains properly before the Court.

B. Christina Onlv Only Has Has Standing Standing to to Move Move totoDismiss Dismiss Claims Claims Asserted Asserted Against Her Against Her

At the June 17, 2025 2025 motion motion hearing, hearing, Christina's Christina's counsel, Attorney Gavras, conceded conceded that

Christina lacks standing Christina lacks standing to to seek dismissal of of the the First, First, Third, Third, Fifth, Fifth, and and Sixth Sixth Counterclaims Counterclaims

because those claims are are asserted asserted only only against against Lan"y, her. Min. Larry, not against her. Min. Entry at 11:05:10- 11:05:10-

11:05:16 A.M. (Jun. 11 :05: 16 A.M. (Jun. 17, 17, 2025). 2025). The The Court Court agrees. agrees. A A defendant defendant has has no no standing standing to to move for

dismissal of of claims asserted asserted solely solely against against a different different party. See Trzpharma, Tripharma, LLC v. v. First Fruits

Bus. Ministry LLC, Bus. Ministry LLC, 2023 WL 2695476, at at *6 *6 (C.D. Cal. Feb. Feb. 15, 15, 2023) 2023) ("[A] ("[A] party party does does not have

standing standing to dismiss counterclaims counterclaims asserted against against [anodier [another defendant]."), defendant]."); seee also l s o Chabad Chadd

Lubavitch of of Litchfield Litchjield City., Cnty., Inc. Inc. v. v. Borough of ofLitchj'ield, Litchfield, 2010 WL 1882308, at *3 1882308, at *3 (D. Conn.

May 10, 10, 2010) (institutional defendants lacked (institutional defendants lacked standing standing to to dismiss dismiss claims claims asserted only against

29 re 'i 1

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, 7-15, Tsang Tsang v. Tsang, Tsang, et al. al

individual defendants). lacks standing to challenge these four counterclaims, defendants). Because Christina lacks counterclaims,

the Court Court does not reach the merits of her motion as to to the the First, First, Third, Third, Fifth, Fifth, and and Sixth Sigh Claims.

c. C. Counterclaimants o r l a i m a n t s Have H a v e Stated S t a t e d aa Claim C a i m forr Aiding id aand AAbetting be a Breach Breach of Fiduciary ciarv Duty tv

11. Co Counterclaimants HaveHave Stated Stated En o Enough Facts to Support rt Each Elemen Elementt ooff a Claim for Aid in g and Abetting Aiding

Under Under Guam Guam case case law, law, "the "the elements elements of of the the common common law lawtort tort of ofaiding aiding and abetting breach

of of fiduciary fiduciary duty are: primary tortfeasor breaches are: (1) the primacy breaches a fiduciary fiduciary duty duty which which he owes to the

victim-plaintifi (2) the aider-abettor victim-plaintiff; defendant has aider-abettor defendant has actual knowledge of the actual knowledge the breach, breach, i.e., i.e., the the

specific primary wrong, wrong; (3) (3) the the aider-abettor aider-abettor defendant defendant lends the primary primacy tortfeasor tortfeasor substantial substantial

assistance assistance or or encouragement encouragement in in committing committing the the breach, breach; and and (4) the victim-plaintiff victim-plaintiff suffers suffers damages

proximately proximately caused caused by Me the breach." Lucan Lujan vv. Girardi/Keese, rardi /Kees 2009 WL L 2567302, 2567302, at * (D. at *6 (D, G Guam

Aug. 18, report and 18, 2009), report and recommendation recommendation adopted adopted sub nom. Lujan Lucan v.v. Girardi/Keese, Girardi/Keese, 22009 WL W

5216906 (D. Guam Guam Dec. 29, 2009).

Counterclaimants Counterclaimants allege allege that: (1) 1) as a shareholder in a closely held held corporation, corporation, Larry Lan'y owed

fiduciary ry dutiess of lloyalty, o d u e ccare, a re , c andor, n d o r, and a n d utmost t m o s t good o o d f a i thh d i re ctly t l y to t o tthem h e m aass cco- o-

shareholders in TBC, TBC; (2) Larry breached those duties by diverting corporate funds diverting corporate funds for his and and

Christina's personal benefit, Christina's personal benefit, secretly secretly causing causing corporate corporate payments payments toto be be made to to Christina Christina

(including purported "bonuses" (including purported "bonuses" and life-insurance life..,insurance premium payments), and by establishing establishing and and

operating operating a competing competing construction-materials construction-materials business business to to the the detriment detriment ofT BC, (3) Christina knew ofTBC; knew

of Larry of ' s breac Larry's hes and "was breaches "was aware aware of, of, rati fi ed, and/or ratified, ooperated with" and/or ccooperated wi them, and them, and "ac "actively

participated in designing, participated in designing, implementing, implementing, directing, directing,approving, approving,and/or ardor otherwise furthering" his his

wrongful wrongful conduct, conduct, including including by concealing concealing and and altering altering corporate corporate records, records, accepting accepting and and

benefiting from diverted corporate monies, and actively managing and assisting in the competing competing

30 L

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang CV0897-15, Tsang v. v. Tsang, Tsang, el et al.

business; and business, and (4) as a result, Counterclaimants suffered damages, including the loss of economic

benefits and distributions associated associated with with their their ownership ownership interests interests ininTBC. See Countercl. TBC. See ,i,i 13, Countercl. 'W 13,

20-28, 34, 52-60, 70-78. 20-28, 70-78. Taken Taken as true, true, these theseallegations allegationssatisfy satisfyeach eachelement ofof element a claim claim for for aiding

and abetting at the pleading stage.

contends that because Christina contends because Counterclaimants Counterclaimants are are merely merely TBC shareholders, shareholders, "they

have no standing." Christina's Mot. Mot. to Dismiss Dismiss at 2. However, this at 2. this is is not not true in the context of of a

close corporation, corporation, aa shareholder could could have standing to sue sueother other shareholders. shareholders. A A close closecorporation corporation

is characterized characterized by by "(1) "(l) aa small small number number of ofshareholders, shareholders; (2) (2) no ready ready market market for corporate stock, stock;

and (3) active and (3) active shareholder shareholder participation participation in inthe thebusiness." business." IA IA Fletcher Fletcher Cyc. Cyc. Corp. Corp. §§70.10, Westlaw Westlaw

(database updated updated Sep. Sep. 2025). 2025). TBC TBC fits fits this definition: itit was this definition: was founded founded and closely closely held by the

brothers. ItIt isis well-settled Tsang brothers. well-settled that that shareholders shareholders in in aa close close corporation corporation owe oweFiduciary fiduciary duties to

one another. See, See, e.g., Barth v. Barth, 659 N.E.2d 559,561 561 (Ind. 1995) 1995) ("[S]hareholders in a close

corporation stand in a fiduciary relationship to each other."); other."), Bodio Bodiedv.v. Ellis, Ellis, 401 401 Mass. 1, 1, 9, 513 513

N.E.2d 684, 688-89 (1987) ("The shareholders in a close corporation owe owe to each other duties of of

utmost loyalty, the utmost loyalty, trust, and and confidence."); confidence."), Kortum Kortum v. v. Johnson, Johnson, 2008 ND ND 154, ,i 28, 154,'U 28, 755 755 N.W.2d

432, 443 443 ("The fiduciary fiduciaryduty dutyowed owedby by close close corporation corporationshareholders shareholders to to one one another another also includes

loyalty."), see also 3 Fletcher a duty ofloyalty."); Cyc. Corp. Fletcher Cyc. Corp. §§ 844.20 844.20 ("Close ("Close corporation corporation shareholders, shareholders, as as

such, stand in such, stand in fiduciary relationship relationship to to each eachother."), other."),WWestlaw estlaw (database (database updated updated Sep. Sep. 2025). 2025).

Because close corporation Because TBC is a close corporation and Counterclaimants Counterclaimants have have alleged alleged personal personal harm harm arising arising from from

breaches of these duties, they have adequately stated breaches claim for aiding stated a claim aiding and abetting abetting breach of of

duty. fiduciary duty.

31 i 1

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-l 5, Tsang CV0897-15, Tsang v. v. Tsang, Tsang, et al.

2. Counterclaimants' Claim of Counterclaimants' Claim of Aiding and and Abetting Abetting Breach Breach of Fiducial Duty Does Not Sound Fiduciary Duty Does Not Sound in Fraud

Christina further argues Christina further argues that that the the claim claim against against her for aiding aiding and and abetting abetting breach of of

fiduciary duty duty "sounds "sounds 'm in fraud" and and therefore therefore isis subject subject to to the the heightened heightened pleading requirement

under GRCP Rule 9(b). The Court Court disagrees. disagrees.

"Rule "Rule 9(b) 9(b) applies applies when when (1) (I) aa complaint complaint specifically specifically alleges alleges fraud as an an essential element

of of aa claim, claim, (2) (2) when when the the claim claim 'sounds 'sounds inin fraud' fraud' bybyalleging alleging that that the the defendant defendant engaged engaged in in

liaudulent fraudulent conduct ... and conduct ... and(3) (3)totoany anyallegations allegationsofofraudulent fraudulentconduct, conduct, even even when when none of the the

claims in the complaint 'sound 'sound in fraud."' fraud." Arnold v. Melwani, Melwani, 2011 WL 1317066 1317066 at *3 (D. (D. Guam

Mar. Mar. 31, 2011) (citing 31, 2011) (citingDavis Davis v. ChaseBank v. Chase BankUS.A., USA.,NA., NA., 650 F.Supp.2d F.Supp.2d 1073, 1073, 1089-90 1089-90 (C.D. Cal.

2009)). A claim sounds in fraud when the plaintiff"allege[s] plaintiff"al1ege[s] a unified course of fraudulent conduct

and rely entirely on that course of conduct as the basis of of that claim." Kearns v. Ford Motor Co.,

567 F.3d 1120, 1125 1125 (9th (9th Cir. Cir. 2009). 13 "In other cases, however, [the] plaintiff may choose not to 2009).13 "In other cases, however, [the] plaintiff may

allege allege a unified course of fraudulent unified course fraudulent conduct conduct in in support of a claim, claim, but rather to allege some

llaudulent and some non-fraudulent fraudulent and conduct. In non-fraudulent conduct. In such cases, cases, only the the allegations allegations of fraud fraud are are

subject subject to Rule 9(b)'s 9(b)'s heightened heightened pleading pleading requirements." requirements." Vest Vess v. v. Ciba-Geigy Corp. Corp. USA, USA, 317 317

F.3d 1097, 1097, 1104 1104(9111 Cir. 2003). (9th Cir. 2003).

Counterclaimants' Second Claim Counterclaimants' Second Claim alleges alleges "some fraudulent fraudulent and and some some non-fraudulent non-fraudulent

conduct." See Vass Vess 317 F.3d at at 1104. 1104. Specifically, the Second Specifically, the Second Claim Claim isis pied pled as as a claim claim for

participation in and/or aiding and abetting abetting breach of fiduciary fiduciary duty against Christina, which does

not require fraud fraud as as an an essential essential element. element. See See Counterclaim 111]53-60. Counterclaim,, The gravamen 53-60. The gravamen of the cause

13 Because Rule 9(b) is "mirrors its Federal counterpart, Ninth 13 Because Rule 9(b) is "mirrors Federal counterpart, Ninth Circuit authority authority construing the federal construing the federal rule rule is persuasive wheninterpreting interpreting the Guam statutory rule." Kerrigan v. statutory rule." v. Gill, Gill, Civ. Civ. No. No.95-00072A, 95-00072A, 1996 1996 WL WL 104517, I 04517, at *3 (D. Guam App. Div. Div. Mar. Mar. 6, 6, 1996) persuasiveNinth 1996) (found persuasive Ninth Circuit Circuit case law on Rule 60(a) of of the the Federal FederalRules Rules of of Civil CivilProcedure). Procedure). 1

32 r Sr

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang CV0897-15, Tsang v.v. Tsang, Tsang et al. al.

ofaction of action is is that Christina Christina (1) knew that Larry owed fiduciary fiduciary duties duties to to Counterclaimants, Counterclaimants, (2) knew

that he was breaching those duties, duties, and and (3) "was aware o12 ratified, and/or of, ratified, and/or cooperated cooperated with" with" and and

"actively participated "actively participated in designing, implementing, in designing, implementing, directing, directing, approving, approving, and/or and/or otherwise otherwise

furthering" his fUrtlwring" his wrongful wrongful conduct, including including "the "the wrongful of tens of thousands of wrongful payment of of dollars

to her personal benefit" and accepting placement as beneficiary on life-insurance policies policies funded girded

1157-58. with corporate monies. Id. W 57-58.Those Thoseallegations allegations ofofparticipation participation in in aa fiduciary fiduciary breach are are

not necessarily necessarily fraudulent and and thus are not not governed governed by by Rule 9(b).

At the same time, the Second Claim also incorporates some some allegations allegations that are expressly

"fraudulent" in "fraudulent" in character, character, such such as the the assertion assertion that thatLarry Lan'y "fraudulently "fraudulently represented" the the purpose

and beneficiaries of life-insurance policies, and that Christina participated in or benefitted from of the life-insurance

that misrepresentation and from "concealment "concealment and and alteration alteration of See id. of corporate records." See 1 58; id 1] 58,

see also id. see also id W1124-25. 24-25.Under UnderVass, Vess, only onlythose those discrete discrete allegations of fraudulent allegations of fraudulent conduct-the conduct-the

misrepresentation misrepresentation and and concealment concealmentcomponents-must satisfy Rule components-must satisfy Rule 9(b)'s 9(b)' sheightened heightened standard, standard,

while the remainder of the remainder of the aiding-and-abetting aiding-and-abetting theory proceeds under the more liberal notice- theory proceeds

standard. See pleading standard. See Vass, 317 F.3d Vess, 317 F.3d at at 1104. 1104. The The Court Court therefore therefore examines examines whether whether the the

Counterclaim satisfies satisfies Rule Rule 9(b) as as to those allegations.

"Rule "Rule 9(b) 9(b) does plaintiff to does not require a plaintiff to prove prove aa claim claim of offraud fraud at at the pleading stage." stage." Ukase Ukau

v. Wang, v. 1 47 Wang, 2016 Guam 26 1] 47 (citation (citationomitted). omitted). "Rather, "Rather, what what is is required is that a plaintiff plaintiff set

sufficient detail to provide notice to forth his claim with sufficient to defendants as to to what what particular fraudulent

action is being alleged." alleged." Taitano Taitano v. v. Calve Calvo Fin. Fin. Corp., 2008 Guam Guam 12 1] 16, aff'd 12116, aff'd on red 'g, 2009 reh'g,

Guam 1 16. Guam 99 1] 16. "This "This standard standard has has been been described describedasas aa 'who, 'who, what, what, when, when, where, and how' where, and

requirement." requirement." Ukase Ukau v.v. Wang, Wang, 2016 Guam 26 1]47. 26147.

33 a* P v

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, Tsang Tsang v. Tsang, el al. Tsang, et

Counterclaim specifies The Counterclaim specifies who (Larry and Christina), who (Lan'y Christina), what (wrongful "bonus" and what (wrongful and

personal payments totaling totaling tens tens of thousands of of dollars, life-insurance life-insurance premiums premiums in the tens of of

thousands of dollars with thousands of with Christina Christina as beneficiary, and diversion of corporate funds from identified

entities), when (during the period of entities), of Lanky's Larry's management up to and including his termination in

February 2014, and continuing thereafter), thereafter), from where where (TBC (TBCand and Evergreen Evergreen bank bank accounts), accounts), and

for whose whose benefit benefit (Larry and Christina personally, including real-estate and and business business acquisitions).

See, ,r,r 24-25, See, e.g., W 24-25, 57-59. 57-59. These These allegations allegations provide the the "who, "who, what, when, where, and and how" of how" of

the alleged misconducts, see Ukase, Ukau, 2016 GGuam 26 1],r 47, uam 26 47, and and are are therefore therefore sufficient ent to gi give

Christina notice of Christina of the nature of of the claim and to to satisfy satisfy Rule Rule 9(b) 9(b) as as to to any any fraud-based fraud-based allegations.

sum, Counterclaimants' In sum, Counterclaimants' aiding~and~abetting aiding-and-abetting claim claim contains contains both both fraud fraud and non-fraud

elements. The non-fraud allegations allegations are properly pled pied under Rule 8(a), 8(a), and the fraud allegations

are pied pled with sufficient particularity under Rule 9(b). Accordingly, the Court DENIES Christina's

Motion Motiontoto Dismiss Dismiss as as to to the claim for aiding and abetting breach breach of of fiduciary fiduciary duty.

D. Couuterclaimants Have Stated a Claim for Conspiracv Counterclaimants Have Defraud Conspiracy to Defraud

11. Co r l a i m a n ts Have Counterclaimants Ha v e Alleged e d Enough u g h Facts ts to to Support rt a Claim Claim fo for Civil Civil Co n sn iracv to Defraud Conspiracy Defrau

prima facie "A prima facie showing ofcivil showing of civil conspiracy conspiracy requires requires the the plaintiff plaintiff to to allege in his complaint

formation and operation '(1) the formation operation of of the conspiracy, conspiracy, (2) (2) the wrongful act or acts acts done pursuant

and (3) thereto, and (3) the damage damage resulting resulting from from such act act or or acts."' Moylan Moylan v.v. Citizens Citizens Sec. Sec. Bank, 2015 2015

Guam 36 ii,r 72 (citing Wasco Wasco Products Inc. v. v. Soufhwall Southwall Techs., Inc., 435 F.3d 989, 992 (9th Cir. Techs., Inc.,

2006)).

Counterclaimants Counterclaimants have alleged enough facts to support support the the Seventh Seventh Claim. Claim. Specifically, Specifically,

they they allege allege that Counterclaim Defendants Larry Counterclaim Defendants Larry and Christina formed and participated Christina formed in a participated in

34 (` Rx v

DECISION AND ORDER ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-15, Tsang v. Tsang, el al. Tsang, et al.

conspiracy to defraud conspiracy to defraud by by agreeing to and agreeing to acting in concert and acting to wrongfully divert concert to divert and and conceal conceal

corporate funds belonging belonging to TBC and Evergreen for their own personal benefit, including through through

unauthorized withdrawals, withdrawals, improper improper"bonus" "bonus"and andother otherpayments payments to to Christina, Christina,and and the the use of those use of

funds funds to to purchase real property purchase real property and and to to establish establish and and operate operate aa competing competing business. business. Countercl. Counters. W,i,i

24-25, 24-25, 27-30: 27-30, 58-59, 58-59, 98-101. 98-101. They They further further allege allege multiple multiple overt overt wrongful wrongful acts acts taken taken in

furtherance of ofthat agreement, asthe agreement, such as theconversion conversion of of over over $53,000 $53,000 from from TBC and over $77,000

from Evergreen, Evergreen, the the mischaracterization mischaracterization of approximately approximately $87,000 $87,000 in life-insurance life-insurance premium

payments, the manipulation and concealment concealment of of corporate corporate financial financial records, and the maintenance

of of delinquent delinquent insider insider charge charge accounts. accounts. Counters. Countercl. 111] 24(a)-(e), 25(a)-(d), ,i,i 24(a)-(e), 25(a)-(d), 58. 58. Finally, Finally,

Counterclaimants allege that Counterclaimants allege that as as a direct and proximate result of of these these concerted concerted actions, actions, they they

suffered damages, including the loss and dissipation of of corporate assets, diminution in the value

of their of ownership interests, their ownership interests, and and lost profits and lost profits and distributions. Counters. W distributions. Countercl. 60, 78, ,i,i60, 78, 101. Taken as 101. Taken as

true, true, these allegations allegations satisfy satisfy all all three three elements elements of a civil conspiracy and are sufficient to state a

prima facie claim at the pleading stage.

2. A Civil Civil Conspiracv Conspiracy Claim Does Does Not Require Require that that the the Co- Co- Conspirators Owe Owe aa Duty Dutv to to the the Injured Injured Party Partv

Christina argues that that Counterclaimants Counterclaimants have have not not stated stated aaclaim claim for for conspiracy conspiracy to to defraud

because they failed to allege that Christina owed the corporate entities a fiduciary fiduciary duty. duty. Christina

cites to Kidron v. v. Movie Movie Acquisition Corp., Corp., 40 Cal. Cal. App. App. 4th 4th 1571, 1571, 1597 1597 (Cal. Ct. App. 1995), 1995),

which states that "Conspiracy states that "Conspiracy is is not not an an independent independent tort; tort,ititcannot cannotcreate createa aduty duty... ... itit allows allows

recovery only only against against aa party who who already already owes owes a duty." The The question before before the Court is whether

owing a fiduciary duty duty to to the the corporation corporationisis an an element element of ofaa conspiracy to defraud claim.

35 N

T Q -

DECISION AND ORDER RE MOTIONS TO DISMISS Tsangv. Tsang, CV0897-15, Tsang Tsang, eta!. al.

When considering a claim of When considering of civil civilconspiracy, conspiracy, the the Guam Guam Supreme Supreme Court Court has has recognized

dirt that "[i]n other jurisdictions, jurisdictions, civil civilconspiracy conspiracyisiseither eitherananindependent independenttort tort... ... or a theory of of

vicarious liability" vicarious liability" and and that that "[i]n both circumstances, circumstances, the law law imposes imposes liability for damages liability for

stemming stemming from from the the actions of of two or more people working together to to cause harm." See Chung v.

Blair Blair Constr. Constr. Co., Co., 2019 2019 Guam ,r 26 Guam 28 1] 26 (citations omitted), omitted); see also id. 1127 see also ,I 27 ("These ("These facts alone

support support aa potential potential claim claim for for civil civil conspiracy conspiracyas asan anindependent independenttox*t."). This Court tort."). This Courl acknowledges

that courts elsewhere are split elsewhere are split on whether whether a co-conspirator must owe an co-conspirator must an independent independent duty, duty, cf et

Chance Chance World Trading E.C. v. v. Heritage Heritage Bank Bank of ofCom., Com., 2004 WL 2359857, at *3 2359857, at *3 (N.D. Cal. Oct. Oct.

15, 2004) 2004) ("Liability ("Liability under underaacivil civilconspiracy conspiracyrequires requiresthe theco-conspirator co-conspiratorhave havean an independent independent duty

to the plaintiff") plaintiff.") with with Javitch Javitch v.v. Capwill, Capwill, 2011 2011 WL WL 1002744, 1002744, at *3 (N.D. (N.D. Ohio Ohio Mar. Mar. 15, 15, 2011) 2011)

("Civil conspiracy does ("Civil conspiracy does not not require require the the existence existenceof of aa duty duty on on the part part of of the the alleged alleged co- co-

conspirator."). However, the conspirator."). However, the Guam Guam Supreme Supreme Court has neither adopted nor neither adopted nor endorsed such a endorsed such

requirement. requirement. If anything, its its discussion in Chung Chung suggests that the suggests that the existence existence of of a separate duty is separate duty

not a prerequisite to pleading a civil conspiracy conspiracy claim under Guam law. law. Accordingly, the Court

finds that Counterclaimants need not allege that Christina owes the finds the corporate corporate entities entities a fiduciary

duty to plead a claim claim for conspiracy to defraud.

3. Counterclaimants' Claim for Conspiracv Counterclaimants' Claim to Defraud Conspiracy to Defraud Has Has Met Met the Requirements of of GRCP GRCP Rule 9(b)

Lastly, Christina Lastly, Christina argues argues that that the Seventh Claim is is subject subject to to the the heightened heightened pleading pleading

requirement of of Rule 9(b).

The Court finds that Counterclaimants have satisfied the requirements requirements of Rule 9(b). The

Seventh Claim Claim expressly expressly incorporates incorporatesby byreference referenceall allpreceding precedingfactual factualallegations, allegations,Countercl. ,r Countercl.11

97, 97, which lay out out in in detail detail the the who, who, what, what, when, when, where, and how of where, and of the the alleged alleged fraud fraud and and

36 g u»

DECISION DECISION AND ORDER ORDER RE MOTIONS MOTIONS TO DISMISS CV0897-15, CV0897-J Tsang v. v. Tsang, Tsang, et et al. al.

conspiracy. The "who" conspiracy. The "who" is clearly identified identified as Larry Land and Cristina, Christina,who whoare arealleged alleged to to have have acted acted

conceal corporate together to divert and conceal corporate funds funds toto their theirpersonal personalbenefit. Countercl.1]'I[ 99. As to the benefit.Countercl.

when, where, what, when, where, and and how, how, the the Counterclaimants Counterclaimants rely rely on their allegations allegations set set out in in paragraphs paragraphs

25 of 24 and 25 ofthe the Counterclaims. Counterclaims.Min. Min.Entry Entryatat10:53:42-10:55:30 10:53 :42-10:55:30A.M. A.M.(Jun. (Jun.17, 2025). 14 The 17,2025>.14

consists of "what" consists of specific specific wrongful wrongful acts acts such such as converting converting over $53,000 $53,000 from from TBC and over

$77,000 from Evergreen $77,000 from Evergreen after after Lanky's termination, Countercl. Larry's termination, Counters. 1] 24(a), (b); 'I[ 24(a), (b), issuing issuing unauthorized unauthorized

"bonus" "bonus" payments paymentsofof$45,000 $45,000 and and other other personal personal payments paymentsofof$80,000 $80,000 to to Christina, Christina, Counters. Countercl.11'I[

24(c); causing approximately 24(c), approximately $87,000 $87,000 to to be paid to Christina under the guise guise of of life-insurance life-insurance

premiums while premiums while making makingChristina Christinathe thebeneficiary beneficiary ofofpolicies policiesinsuring insuringLarry, Countercl.1]'If 24(d), Larry,Countercl. d);

allowing Christina Christina to open open and and mismanage mismanage charge accountsand charge accounts andmaintain maintainher herown our delinquent delinquent

balance exceeding $30,000, balance exceeding $30,000, Countercl. Counters. ii 'If 25(b), 25(b ); and and using using those those diverted funds to diverted funds to purchase purchase real real

estate and capitalize a competing competing business. 'I[ 25(a). The Countercl. 1125(a). business. Countercl. The "when" "when" is alleged as the period

during which Larry controlled controlled TBC, TBC, HTSM, HTSM, and and Evergreen, Evergreen, up up to to his his termination termination in in February February

2014 continuing thereafter-"during 1 4 and continuing the time thereafter-"d uring the time period period that that Lan'y Larry Tsang Tsang controlled controlled the the

of the businesses and "for management and operations" of "for aa period period of of time time afterward," afterward," and "after

Counterclaim Defendants were Counterclaim Defendants wereterminated." terminated."l5 15 Counters. W 24-25. The "where" is identified as Countercl. 'l['I[ 24-25. The "where" is identified as

14 The 14 TheCourt Court notes notes that that although these allegations allegations are not expressly pleaded under Count Count Seven, Seven, they they are are nonedreless nonetheless sufficient sufficient totosustain sustain the theclaim. claim.SeeSee Ukase Wang, 2016 Guam 26 ,r,r Ukau v.v. Wang, W 44-48 (holding (holding that allegations describing the "circumstances surrounding "circumstances surrounding the the fraud," fraud," incorporated incorporated intointo a fraudulent fraudulent transfer transfer count, count, were were sufficiently sufficiently particular to satisfy satisfy Rule 9(b) of the Guam Rules Rules ofof Civil Civil Procedure). Procedure). 15 The Guam is Guam Supreme Supreme CourtCourt has has held held that that "[i]n "[i]n cases where the cases where exact timing the exact timing of specific events isis critical specific events critical for determining fraud, fraud, for for example statements expressing optimistic statements expressing optimistic corporate corporate performance performance in in securities securities fraud fraud cases, cases, lack of of precision precision in alieglulg alleging dates can be fatal to a pleading." Taitano, 2008 Guam 12 ,ri128 pleading." Tailano, 28 (citation omitted). Where Where thethe "the exact dates "the exact dates are are not not critical critical to the claim, their lack ofspecificity lack of specificityweighs weighs against against aa finding finding that that the the pleadings pleadings areare 9(b)." Id sufficient under Rule 9(b)." ld Here, Here, the the context context differs differs from from the the securities-fraud securities-fraud scenario contemplated in scenario contemplated in Taitano, Taitano, as as the Seventh Count for Conspiracy Seventh Count Conspiracy to Defraud Defraud doesdoes not hinge hinge onon pinpointing pinpointing thethe exact exact dates dates of thethe alleged alleged misconduct. instead, what misconduct. Instead, what matters mattersisisthetheallegation allegationthat thatLarry LarryandandChristina's Christina'sactions-such actions-such as as converting converting corporate corporate funds or issuing unwarranted bonuses-occurred issuing unwarranted bonuses-occurred while while Larry Larrycontrolled controlledand andmanaged managed the corporations. corporations. Thus, Thus, even even if if the Court finds the "when" inadequately inadequately pled, pied, that shortcoming merely against, but merely weighs against, but does does not not defeat, defeat, Rule Rule 9(b) sufficiency, given given that the other aspects aspects ofofthethepleading-"who," pleading-"who," "what," "what," "where," "where," and and"how"-are "how"-are well-pled. well-pied.

37 re s

DECISION AND ORDER RE MOTIONS TO DISMISS CV0897-15, CV0897-15, Tsangv. v. Tsang, Tsang, eta!. aL

the Guam the Guam businesses businesses themselves-TBC, themselves-TBC, HTSM, HTSM, and and Evergreen, Counters. W24-25. Evergreen, Countercl. ,r,r 24--25.Finally, Finally, the the

"how" "how" isisextensively extensively detailed: detailed: unauthorized unauthorized checks checks and andwithdrawals, withdrawals,Countercl. ,r 24(a), Countercl. 11 24(a), (b), (b);

disguised payments booked disguised payments booked as as insurance insurance premiums, premiums, Countercl. Counters. ii,r 24(d), 24(d); improper improper bonuses bonuses and and

personal payments personal payments to to Christina, Counters. W Christina, Countercl. ,r,r24(c), 24(c), 25(a), 25(a); creation creation and and use use of of delinquent delinquent charge charge

accounts, Countercl. ,r1[25(b), concealment and 25(b); concealment and removal removal of corporate books and computer records,

Countercl. ,r'U25( Countercl. 25(0), (d),and c ), (d); and the the establishment establishment and and operation operation of of aa competing competing business using using

misappropriated misappropriated funds, funds, Counters. Countercl.1125(a). ,r 25(a). The The Court Court finds findsthat thatthese these detailed detailed factual factual averments averments

adequately put Christina on notice of adequately put of the the fraudulent fraudulent conduct conduct alleged and therefore satisfy Rule

9(b). 9(b). Accordingly, the Court Accordingly, the Court DENIES Christina's Motions to Christina's Motions to Dismiss Dismiss as as to the the claim claim for for

conspiracy to defraud.

CONCLUSION

For the reasons set forth herein, the Court GRANTS IN PART and and DENIES IN PART

the Motions to Dismiss by Defendants TBC, HTSM, and and Evergreen, and DENIES Counterclaim

Defendant Christina Christina Au's Au's Motion Motion to Dismiss. Dismiss. Should Should Plaintiff Plaintiff Larry Tsang choose to amend his

Complaint, the Court further ORDERS that Plaintiff file file his his Amended Complaint within thirty

(30) days after the issuance of this Decision and Order. .- E ;- th SO 0 O R D E R E D this 9th day of day of December, December, 2025. .;~>:- ~_

HO BLE u1»xn GUTS z EZ Judd; Jud e,Sup§ri

38 38