• FILED
SUPERIOR COURT
OF GUAM
1 2022 JAN — PH 3: 14 CLERK OF COURT/
2
3 4 IN THE SUPERIOR COURT OF GUAM
U.LG., NC., a Guam corporation, et al., Civil Case No. CV0776-20 6 Plaintiffs,
7 vs.
$ DECISION AND ORDER MARY S.N. LEON GUERRERO, et al., 9 Defendants.
10
11 INTRODUCTION 12 This matter came before the Honorable Arthur R. Barcinas upon the Amended Motion 13 to Dismiss filed by Defendants Mary S.N. Leon Guerrero and Collin Leon Guerrero. The
14 Plaintiffs in this matter — U.L.G., a Guam corporation, Peter U. Leon Guerrero, Rita LG. 15 Toves, and the Estate of Bernadette L.G. Vandergrift’ — are represented by Attorney David 16 Lu] an. Defendants Mary S.N. Leon Guerrero and Collin Leon Guerrero (“Mary” and “Collin”)
17 are represented by Attorney Joseph B. McDonald. Defendant Columbus Development 18 Corporation (“Columbus”) is represented by Attorney Anita Arriola. Defendants Phillip 19 Schrage and Alex D.B. Lim (“Phillip” and “Alex”) are represented by Attorneys Richard L. 20 Johnson and Martin Deinhart. Attorney Bill R. Mann represents Defendant and Cross-claimant 21 Lourdes P. San Nicolas (“Lourdes”) and Defendant, Cross-claimant and Counterclaimant 22 Pacific American Title Insurance and Escrow Company (“PATICO”). Defendants Pamela L.G. 23
24 On April 2, 2021, the Court issued an order to substitute the late Bernadette L.G. Vandergrift with the Estate of Bernadette L.G. Vandergrift, following her death on December 22, 2021.
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1 Sahagun and Anthony I. Leon Guerrero (“Pamela” and “Anthony”) are represented by 2 Attorney Georgette Bello Concepcion. 3 Having considered the arguments, pleadings and applicable law, the Court hereby 4 GRANTS the dismissal of all claims in this matter against Defendants Pamela L.G. Sahagun 5 and Anthony J. Leon Guerrero, with prejudice. The Court further DENIES the Amended 6 Motion to Dismiss with respect to all other Defendants. 7 FACTUAL AND PROCEDURAL BACKGROUND 8 This case arises out of the alleged unlawful selling of corporate assets for personal gain 9 by Defendant Mary S.N. Leon Guerrero with the aid of all other Defendants. Mary is the 10 widow of the late Gregory Leon Guerrero (“Gregory”), and together Mary and Gregory had a 11 son named Collin Leon Guerrero. Compi. fi 2 1-22 (Oct. 19, 2020). Gregory had three siblings, 12 to include Plaintiffs Peter, Rita, and Bernadette. Id. ¶ 23. Bernadette is deceased, and her Estate 13 has been substituted in her place as Plaintiff. Gregory’s father, Pedro Leon Guerrero (“Pedro”), 14 owned a one-third interest in three real properties located in Tumon Bay (the “Properties”), 15 which are subject to a 90-year lease. Id. ¶ 24. Plaintiffs allege that Pedro and his wife, Vicenta 16 Leon Guerrero (“Vicenta”), intended that all four children would share the income generated 17 by the Properties. Id. ¶ 25. 1$ One year before his parents passed away, Gregory formed U.L.G., and title to the 19 Properties was assigned to U.L.G. Id. ¶ 26. Ownership of the Properties was transferred to 20 U.L.G. on February 2, 1993, via quitclaim deed. Id. ¶ 30. Gregory was issued 1,498 of 21 U.L.G.’s 1,500 authorized shares, while his first cousins Pamela and Anthony were issued one 22 share each. Id. ¶ 27. Gregory, Pamela, and Anthony were appointed as its first Directors and 23 Gregory was elected President. Id. ¶ 29. After his parents’ death, Gregory, through U.L.G., 24 retained the rental income from the Properties from 1994 until his death in 2014. Id. ¶ 31.
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1 After Gregory’s death, Mary allegedly desired to “make things right” with Peter, Rita, 2 and Bernadette by including them in the affairs of U.LG. Id. ¶ 32. In October 2018, Peter, 3 Rita, Bernadette, Mary, Collin, Pamela, and Anthony executed a series of documents, 4 including assignments of shares of capital stock, which resulted in U.L.G.’s 1,500 shares being 5 owned 25% each by Peter, Rita, Bernadette, and Mary. Id. ¶ 33. Peter, Rita, Bernadette, and 6 Mary were each appointed as Director, with Peter being elected as President and Treasurer, and 7 Mary elected as Secretary. Id. The stock transfers were effectuated through the following $ documents, which were effective on October 15, 2018:
9 a) an Assignment by Anthony of his one share of U.LG. stock to Mary and Collin;
b) an Assignment by Pamela of her one share of U.LG. stock to Mary and Collin;
10 c) an Assignment by Collin of his 750 shares of U.LG. stock to Mary;
d) an Assignment by Mary of 75% of her 1,500 shares of U.L.G. stock, 25% each to Peter, 11 Rita, and Bernadette, or 375 shares each;
e) Resolutions of the Stockholders of U.L.G., by Consent to Action Without Meeting, 12 consenting to the foregoing Assignments of U.L.G.’s shares; electing Peter, Rita, Bernadette, and Mary as U.LG. directors; and approving U.L.G.’s First Amended 13 Articles of Incorporation and First Amended Bylaws; and t’) Resolutions of the U.L.G. Directors, by Consent to Action Without Meeting, 14 consenting to the Assignments of U.L.G.’s shares; electing Peter as U.L.G.’s President and Treasurer and Mary as its Secretary; and approving U.LG.’s First Amended 15 Articles of Incorporation and first Amended Bylaws.
16 Id. ¶ 34. U.L.G. filed its 2018 Annual Report with the Department of Revenue and Taxation 17 (“DRT”) on October 31, 2018, indicating that Peter, Mary, Rita, and Bernadette each own 375 18 ULG. shares. Id. ¶ 39. The First Amended Articles of Incorporation and first Amended 19 Bylaws were also filed with DRT on October 18, 201$. Id. ¶ 35. The First Amended Articles of 20 Incorporation state that the Guam Business Corporation Act applies to U.L.G. Id. 91 7. 21 On November 29, 2019, Mary signed and filed the 2019 Annual Report, which stated 22 that U.L.G.’s shares are owned 749 each by Mary and Collin, and one each by Pamela and 23 Anthony. Id. ¶ 39. The 2019 Annual Report also stated that Mary was U.L.G.’ s President and 24 Treasurer, and Collin its Secretary. Id. Peter, Rita, and Bernadette did not consent to their Page3ofl4 1 shares of U.LG. stock being transferred to Mary, Collin, Pamela, and Anthony, nor did they 2 elect Mary as U.L.G.’s President and Treasurer or Collin as its Secretary. Id. ¶ 40. 3 On December 13, 2019, Mary executed a Warranty Deed purporting to transfer title to 4 U.LG.’s interest in the Properties to Defendant Columbus Development Corporation. Id. ¶ 41. 5 Peter, Rita, and Bernadette did not approve or consent to the transfer. Id. ¶ 43. Columbus paid 6 approximately $2 million for U.L.G.’s one-third interest, and Mary kept the proceeds for 7 herself. Id. ¶J1 47-48. The Complaint alleges that Phillip and Alex executed the Warranty Deed 8 as the “Duly Authorized Representatives” of Columbus, although they knew that Mary did not 9 have authority to execute the warranty deed. Id. ¶1[ 42, 45. Plaintiffs also claim Columbus 10 failed to conduct a proper inquiry into the ownership of U.LG. Id. ¶ 44. PATICO, acting 11 through its representative Lourdes and Doe Insurance Company, is alleged to have also known 12 that Mary did not have authority to transfer the Properties, but to have assisted and conspired 13 with her to transfer the Properties in breach of her fiduciary duties. Id. ¶9[ 46, 67. 14 On October 19, 2020, Plaintiffs filed a Complaint with the Superior Court of Guam 15 alleging five counts: (1) Rescission of the Transfer of the Properties and Restitution to U.L.G. 16 (U.L.G. against Mary and Columbus); (2) Breach of Fiduciary Duty (U.L.G. against Mary); (3) 17 Aiding and Abetting Breach of Fiduciary Duty (U.L.G. against all Defendants except Mary); 18 (4) Civil Conspiracy (U.L.G. against all Defendants); and (5) Declaration of Rights (Plaintiffs 19 against Mary, Pamela, and Anthony). 20 On February 23, 2021, PATICO and Lourdes filed an Answer to the Complaint and 21 Crossclaim against Defendants Mary and Collin for indemnity and attorney’s fees and 22 expenses, and PATICO also filed a Counterclaim against U.LG., Inc. to indemnify PATICO 23 against reasonable attorney’s fees. That same day, Defendants Columbus, Phillip and Alex 24 filed an Answer and Cross-claim for indemnity against Defendants Mary and Collin. Plaintiff Page4ofl4 1 U.L.G., Inc. filed a Reply to PATICO’s Counterclaim on March 8, 2021. On April 30, 2021, 2 Defendant Columbus filed an Amended Answer to the Complaint, as did Defendants Phillip 3 and Alex.2 Defendants Phillip and Alex filed a Dismissal of Cross-claim against Mary and 4 Collin Without Prejudice on April 30, 2021. Defendants Mary and Collin filed the Answer to 5 Cross-Claim on May 17, 2021. 6 On April 30, 2021, Defendants Mary and Collin filed a Motion to Dismiss Counts I, II, 7 and III of the Complaint and Memorandum in Support of the Motion to Dismiss. They then 2 filed the Amended Motion to Dismiss Counts I, II, III, IV and V of the Complaint and 9 supporting memorandum on May 28, 2021. Defendants PATICO and Lourdes filed a Response 10 to the Motion to Dismiss on June 25, 2021, arguing that if the Court agrees that the assignment 11 of stock to Plaintiffs was not supported by consideration and invalid, then the action must be 12 dismissed against all other Defendants, including PATICO and Lourdes. Plaintiffs filed an 13 Opposition to Amended Motion to Dismiss on July 12, 2021. A motion hearing was held on 14 July 20, 2021, however because the Parties had agreed to extend deadlines, no oral argument 15 was heard. Defendants Mary and Collin filed a Reply to Plaintiffs’ Opposition on July 26, 16 2021. 17 A hearing on the Amended Motion to Dismiss was held on September 9, 2021, wherein 18 counsels requested for further briefing due to new arguments raised at the hearing. The Court 19 granted additional time for further briefing. Mary and Collin filed the Supplemental 20 Memorandum in Support of Motion to Dismiss on September 20, 2021, and Plaintiffs filed the 21 Opposition to Supplemental Memorandum in Support of Motion to Dismiss on October 11, 22 2021. The matter was taken under advisement on October 12, 2021.
23 2 On April 29, 2021, the Parties filed a Stipulation permitting Phillip Schrage and Alex D.B. Lim to file an 24 Amended Answer to Plaintiffs’ Complaint, as well as a Stipulation permitting Columbus Development Corporation to file an Amended Answer to Plaintiffs’ Complaint.
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1 DISCUSSION 2 I. RULE 12(B)(6) PLEADING STANDARD. 3 Guam Rule of Civil Procedure 12(b)(6) allows a court to dismiss a complaint for failure 4 to state a claim upon which relief can be granted. Guam R. Civ. P. 12(b)(6). A court may 5 dismiss a claim “based on the lack of a cognizable legal theory or the absence of sufficient facts 6 alleged under a cognizable legal theory.” Balistreri v. Pacafica Police Dep’t, 901 F.2d 696, 699 7 (9th Cir. 198$) (citing Robertson v. Dean Witter Reynolds, Inc., 749 F.2d 530, 533—34 (9th Cir. $ 1984). A complaint should not be dismissed under Rule l2(b)(6) unless it appears beyond doubt 9 that the plaintiffs can prove no set of facts in support of their claims that would entitle them to 10 relief. Guam Police Dep’t v. Guam Civ. Serv. Comm’n, 2020 Guam 12 ¶ 8. “[A] court must 11 accept all the well-pleaded facts as true, ‘construe the pleading in the light most favorable to the 12 non-moving party, and resolve all doubts in the non-moving partys favor.” Id. (quoting First 13 Hawaiian Bank, 2007 Guam 2 ¶ 9 (citations omitted)). A court generally may not consider 14 material outside the pleadings in ruling on a Rule 12(b)(6) motion, and “a Rule 12(b)(6) motion 15 to dismiss must be converted into a Rule 56 motion for summary judgment whenever ‘matters 16 outside the pleadings’ are presented to and considered by the court.” Core Tech Int’l Corp. v. 17 Hanil Eng’g & Const. Co., 2010 Guam 13 ¶ 29.
1$ II. MOVANTS ARE NOT ENTITLED TO DISMISSAL BASED ON THE ALLEGED LACK OF CONSIDERATION TO SUPPORT THE SHARE 19 ASSIGNMENTS.
20 Defendants Mary and Collin first argue that there was insufficient consideration for the 21 share transfers, and as such, the assignments cannot be enforced. For a contract to be enforced, 22 Guam law requires an offer, acceptance and consideration. Mobil Oil Guam, Inc. v. Tendido, 23 2004 Guam 7 ¶ 34 (citing 1$ GCA § 85102). Good consideration may include an “existing 24 legal obligation resting upon the promisor, or a moral obligation originating in some benefit Page6ofl4 1 conferred upon the promisor or prejudice suffered by the promisee. . . to an extent 2 corresponding with the extent of the obligation....” 1$ GCA § 85502. “Consideration is ‘any 3 benefit conferred, or agreed to be conferred, upon the promisor, by any other person, to which 4 the promisor is not lawfully entitled, or any prejudice suffered, or agreed to be suffered, by 5 such person, other than such as he is at the time of consent lawfully bound to suffer....” Town 6 House Dep’t Stores, Inc. v. Ahn, 2000 Guam 32, ¶ 26 (quoting 18 GCA § 85501). “When a
7 contract does not determine the amount of the consideration.. the consideration must be so .
8 much money as the object of the contract is reasonably worth.” 18 G.C.A. § 85507. 9 Plaintiffs, however, argue that consideration was not needed to effectuate the share 10 transfers as such transfers constituted a gift. 19 GCA § 41301 (“A gift is a transfer of personal 11 property, made voluntarily, and without consideration.”). Under Guam law, a gift, other than a 12 gift in view of death, cannot be revoked. 19 GCA § 41303. Courts have found that “[wJhether a 13 transaction is a gift is a question of fact to be determined from all the evidence.” In re Dyer, 322 14 F.3d 1178, 1188 (9th Cir. 2003) (citing Yamaha Corp. of Am. v. State Bd. of Equalization, 86 15 Cal. Rptr. 2d 362, 376 (1999)); see also Letizia v. facebook Inc., 267 F. Supp. 3d 1235, 1252 16 (N.D. Cal. 2017). 17 Based on the facts alleged, Mary agreed to transfer Peter, Rita and Bernadette shares of 18 U.LG. because she wanted to “make things right.” Compl. at ¶ 32. In order to accomplish this, 19 Collin, Pamela and Anthony transferred their shares to Mary, and the transfers to Peter, Rita and 20 Bernadette were then effectuated through the execution of various assignments and resolutions. 21 Id. fi 33—34. The end result was that Peter, Rita, and Bernadette each were transferred 25% of 22 U.LG.’s shares of stock. Id. ¶ 39. Mary and Collin argue there was no consideration alleged to 23 support these transfers and thus, the claims against them must be dismissed. However, the Court 24 agrees with the Plaintiffs that under Guam law, gifts are irrevocable. Further, whether the share Page 7 of 14
.
1 transfer constitutes a gift should be decided from all the evidence, and not on a motion to
2 dismiss when all of the well-pleaded facts are accepted as true, and the court resolves all doubt 3 in the favor of the non-moving party. Guam Police Dep ‘t, 2020 Guam 12 ¶ 8. For these reasons, 4 the motion to dismiss on this basis is denied.
5 III. MOVANTS ARE NOT ENTITLED TO DISMISSAL BECAUSE THE SHARE TRANSFER WAS NOT INVALID UNDER THE GUAM BUSINESS 6 CORPORATION ACT.
7 Mary and Collin further argue that the share transfer never occurred because it would 8 have required the transfer of stock certificates pursuant to the old General Corporation Law. 9 Under the old General Corporation Law, stock may be transferred by delivery of a certificate 10 endorsed by a person legally authorized to make the transfer. 1$ GCA § 3101. U.L.G. was 11 formed before the enactment of the new business code; thus the old General Corporation Law of 12 Guam originally applied to U.L.G. Mack v. Davis, 2013 Guam 13, ¶ 27 (citing 18 G.C.A. § 13 1101.1) (finding that the new business code only applies to corporations formed after the 14 effective date of the Guam Business Corporation Act in 2009). 15 However, U.LG. adopted the new Guam Business Corporation Act (the “Act”) through 16 its First Amended Articles of Incorporation filed with the Department of Revenue and Taxation 17 on October 18, 2018. Compl. ¶ 7; 18 GCA § 28 1702(b) (The Act shall apply to a corporation 18 incorporated prior to the effective date of the Act if its articles of incorporation are amended to 19 provide that the Act applies.). The Resolutions approving U.LG.’s First Amended Articles of 20 Incorporation were made effective on October 15, 2018, which is the same effective date of the 21 Assignments of Share of Capital Stock that transferred 25% of the shares of U.L.G. each to 22 Peter, Rita and Bernadette. Compl. ¶ 34. Because U.LG. adopted the Act through its amended 23 articles of incorporation, the share transfers in question are governed by the Act, rather than the 24 old General Corporation Law.
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1 Under the Act, “[sJhares may but need not be represented by certificates.” 18 GCA §
2 28610(a). Pursuant tol$ GCA § 28611(a), the board of directors may also authorize the issue 3 of shares without certificates. Courts from other jurisdictions have also found that one may 4 own interest in a corporation, even without having received stock certificates. EMM Credit, 5 LLC v. Remington, 808 S.E.2d 96, 100—0 1 (Ga. Ct. App. 2017). “[S]hare certificates are neither 6 necessary for, nor absolutely determinative of, share ownership. Possession of a share 7 certificate is not essential to ownership of shares or to the exercise of shareholder’s rights.” 11 8 Fletcher Cyc. Corp. § 5094 (Westlaw updated through Sept. 2021) (footnotes omitted). 9 Here, Mary, Collin, Pamela, and Anthony effectuated the transfer of shares of U.L.G. 10 stock to Peter, Rita and Bernadette through various resolutions and assignments of shares of 11 capital stock. Even though Plaintiffs do not allege that stock certificates were exchanged, such 12 certificates are not necessary for a transfer of shares of stock under the new Guam Business 13 Corporation Act. Furthermore, assuming a lack of share certificates assumes facts outside of 14 the pleadings. Thus, when construing the pleadings in the light most favorable to the Plaintiffs, 15 Mary and Collin have failed to show that Plaintiffs can prove no set of facts entitling them to 16 relief, and the motion to dismiss on this basis is denied.
17 IV. MOVANTS ARE NOT ENTITLED TO DISMISSAL BECAUSE THE ASSIGNMENT OF STOCK WAS NOT UNILATERALLY REVOCABLE.
18 Mary and Collin next argue that the claims against them should be dismissed because 19 the assignments of shares of stock without consideration are revocable. In Guam, “[am 20 assignment occurs when ‘there is a transfer of some identifiable interest from the assignor to the 21 assignee.” Duenas v. George & Matilda Kallingal, P.C., 2012 Guam 4 ¶ 15 (quoting Brandon 22 Apparel Grp. v. Kirkland & Ellis, 887 N.E.2d 748, 756 (fll. App. Ct. 2008)). An assignment 23 must include a manifestation by the owner of his intent to transfer the right to another person or 24
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1 third person without further action. Duenas, 2012 Guam 4 ¶ 15. An assignment does not require 2 any particular form, and “any document which sufficiently evidences the intent of the assignor 3 to vest ownership of the subject matter of the assignment in the assignee is sufficient to effect 4 an assignment.” Id. (quoting Brandon Apparel Grp., 887 N.E.2d at 756). 5 Once an assignment is made, all rights belong to the assignee, and the rights of the 6 assignor are extinguished. Gietzen v. Covenant RE Mgrnt., Inc., 253 Cal. Rptr. 3d 97, 101 (Ct. 7 App. 2019), review denied (Jan. 2, 2020). An assignment is irrevocable if it is given for 8 consideration. In re Hazetwood, 43 B.R. 20$, 214 (Bankr. E.D. Va. 1984) (citing Murray on 9 Contracts, § 293 at 598 (rev. ed. 1974)). However, if value is not given in exchange for an 10 assignment, it is considered gratuitous and is generally revocable. Collier v. Greenbrier Devs., 11 LLC, 358 S.W.3d 195, 203 (Tenn. Ct. App. 2009) (citing E. Allan Farnsworth, Contrctcts § 11.6, 12 p. 723 and Restatement (Second) Contracts § 332(5) (1979)). 13 While a gratuitous assignment is ordinarily revocable, it may become irrevocable “if the 14 assignee reasonably relies on the assignment to his detriment and the assignor should have 15 reasonably expected that such reliance might be induced.” In re Hazetwood, 43 B.R. at 214. A 16 gratuitous assignment may also become irrevocable if: “(a) the assignment is in a writing either 17 signed or under seal that is delivered by the assignor; or (b) the assignment is accompanied by 18 delivery of a writing of a type customarily accepted as a symbol or as evidence of the right 19 assigned.” Collier, 358 S.W.3d at 203 (citing Restatement (Second) Contracts § 332 (1979)); 20 see also Cascades Dev. of Minnesota, LLC v. Nat’l Specialty Ins., 675 F.3d 1095, 1099 (8th Cir. 21 2012) (citing Restatement (Second) of Contracts § 332 (1981) (“[A] gratuitous 22 assignment is irrevocable if ‘the assignment is in a writing either signed or under seal that is 23 delivered by the assignor.”). 24 Page 10 of 14 1 Here, Mary, Collin, Anthony. and Pamela executed a series of share assignments that 2 resulted in their 1,500 shares of U.L.G. stock being owned 25% each by Peter, Rita, Bernadette 3 and Mary. Once the assignments were executed, Plaintiffs allege that they did not consent to 4 any further transfer of their shares to Mary, Collin, Anthony or Pamela. Even if there was no 5 consideration, the assignments were executed in written documents evidencing the rights 6 assigned. When resolving all doubt in favor of the non-moving parties, the Court is not 7 persuaded that the assignments were revocable or could be unilaterally revoked. 8 Mary and Collin also argue that because they believe Peter, Rita and Bernadette have no 9 ownership in U.L.G., they cannot sue on its behalf. However, the Court is not persuaded that the 10 assignments could be unilaterally revoked. On a Rule 12(b)(6) motion to dismiss, the Court 11 must also take the facts alleged in the Complaint as true. Here, Plaintiffs allege that Peter, Rita 12 and Bernadette own a 75% interest in U.L.G. Compi. ¶ 40. When taking this as true, the Court 13 is unpersuaded that this action may not be brought through U.L.G. Thus, the motion to dismiss 14 on this basis is denied.
15 V. MOVANTS ARE NOT ENTITLED TO DISMISSAL BECAUSE PLAINTIFFS ADEQUATELY STATED A CLAIM FOR CIVIL CONSPIRACY.
16 Mary and Collin next argue that Plaintiffs failed to state a claim for civil conspiracy 17 upon which relief can be granted. Mary and Collin argue that claims for civil conspiracy to 18 commit fraud are subject to a heightened pleading standard under Guam Rule of Civil 19 Procedure 9(b) (providing that “[un all averments of fraud or mistake, the circumstances 20 constituting fraud or mistake shall be stated with particularity.”). However, Plaintiffs contend 21 that the civil conspiracy claim stands alone as an independent tort, and alternatively is based on 22 the underlying tort of breach of fiduciary duty. As such, Plaintiffs argue that the heightened 23 pleading standard for fraud does not apply. Pleadings in Guam need only contain “a short and 24
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1 plaint statement of the claim showing that the pleader is entitled to relief.” Guam R. Civ. P. 2 8(a); Ukau u. Wang, 2016 Guam 26 ¶ 33 (wherein the Supreme Court of Guam rejected a 3 heightened plausibility standard and required only a liberal, notice pleading). 4 The Guam Supreme Court considered a claim of civil conspiracy in Chung v. Blair 5 Constr. Co., wherein the court noted that the legal doctrihe of civil conspiracy is a well-settled 6 cause of action in both federal and state law. Chung. Chung v. Blair Constr. Co., 2019 Guam 7 2$ ¶ 26. In that case, Blair Construction brought suit against Peter S. Chung seeking damages $ for breach of fiduciary duty, fraud and conspiracy. Id. fi 3-8. The Supreme Court found that 9 the following facts supported a claim for civil conspiracy: Chung conspired with Earth Road 10 and Earth Road’s 2007 annual report listed Chung as an officer or general manager of the 11 company; the complaint named an individual named Kwon Jung Do as a defendant because he 12 signed the sales agreement as a seller along with Chung. Id. ¶ 27. The Supreme Court found 13 that these facts were sufficient to support a claim of civil conspiracy as an independent tort. Id. 14 The court further found that these facts supported a claim of civil conspiracy as a form of 15 vicarious liability when coupled with the underlying torts of fraud and breach of fiduciary duty. 16 Id. 17 Here, Mary and Collin argue that Plaintiffs failed to state a claim for civil conspiracy 18 because they failed to allege facts sufficient to give the Defendants notice of: (1) their corrupt 19 agreement with other defendants, (2) the overt act in furtherance of that corrupt agreement, (3) 20 their intentional participation in furtherance of a plan or purpose and (4) resulting damages. 21 However, the based on the facts alleged in the Complaint, the Court disagrees. Plaintiffs allege 22 that they have a 75% ownership in U.L.G. Compl. ¶ 40. Despite this, Mary is alleged to have 23 signed and filed the 2019 Annual Report, wherein she claimed that she and Collin each owned 24 749 of ULG. shares, with Pamela and Anthony each owning one share. Id. ¶ 39. Mary further Page 12 of 14 1 claimed to be U.L.G’s President and Treasurer, and Collin its Secretary. Id. Mary allegedly 2 sold U.L.G.’s one-third interest in the Properties to Columbus for $2,000,000 and kept all the 3 money for herself. Id. ¶ 46. Peter, Rita and Bernadette did not consent to the transfer of the 4 Properties to Columbus, and Mary and Collin allegedly misappropriated U.L.G.’s corporate 5 funds for their own benefit. Id. ¶9f 43, 48. 6 Plaintiffs further allege that Columbus, Phillip and Alex (the “Columbus Defendants”) 7 did not properly inquire into the ownership records of U.LG. Compl. ¶ 44. Plaintiffs allege the 8 Columbus Defendants executed the warranty deed with knowledge that Mary did not have 9 authority to execute the deed, and that they conspired with her to obtain title of the Properties 10 for Columbus. Id. ¶9142, 45. Plaintiffs also claim the Columbus Defendants assisted and 11 encouraged Mary to breach her fiduciary duties. Id. ¶9145, 66. 12 Plaintiffs contend that Lourdes notarized the warranty deed with the signatures of 13 Mary, Phillip, and Alex, despite knowing that Mary did not have the authority to execute the 14 warranty deed on behalf of U.L.G. Id. ¶ 46. Plaintiffs claim that PATICO also knew Mary did 15 not have authority to execute the warranty deed. Id. Plaintiffs further allege that Lourdes and 16 PATICO (“PATICO Defendants”) conspired with Mary to transfer the Properties to Columbus. 17 Id. While Mary and Collin argue that the Complaint does not put the Defendants on notice of 18 any overt act in furtherance of the corrupt agreement, the Complaint clearly sets forth that the 19 Defendants allegedly assisted, encouraged and conspired with Mary to breach her fiduciary 20 duties by executing the warranty deed and working together to transfer the Properties to 21 Columbus. Id. ¶91 70, 72. When comparing these facts to those which supported a civil 22 conspiracy claim in Cluing, these facts appear to be sufficient to support a cause of action for 23 civil conspiracy as an independent, tort, or as a theory of vicarious liability when coupled with 24 the underlying tort of breach of fiduciary duty. Unlike fraud, a claim for breach of fiduciary Page 13 of 14 1 duty requires only general, notice-pleading. For these reasons, the motion to dismiss on this 2 basis is denied. 3 a. Claims against Anthony and Pamela are dismissed with prejudice. 4 On July 27, 2021, Plaintiffs dismissed Defendants Pamela and Anthony as defendants 5 with prejudice pursuant to Guam Rule of Civil Procedure 41(a)(1)(i) (A plaintiff may 6 voluntarily dismiss an action “by filing notice of dismissal at any time before service by the 7 adverse party of an answer....”). A second Notice of Dismissal was filed on December 14, $ 2021 after Anthony and Pamela filed an Answer on October 4, 2021. Based on the Notice of 9 Dismissal filed by Plaintiffs, all claims against Anthony and Pamela are hereby dismissed with 10 prejudice. 11 CONCLUSION 12 For the reasons stated above, the Court GRANTS the dismissal of all claims in this 13 matter against Defendants Pamela Sahagun and Anthony Leon Guerrero, with prejudice. The 14 Court further DENIES the Amended Motion to Dismiss with respect to all other Defendants.
15 IT IS SO ORDERED___________
HONORABLE ARTHUR R. BARCINAS 18 Judge, Superior Court of Guam
19 SERVICE VIA E-MAIL
20 I acknowledge that an electronic copy ofthe.pdginal was e-mailed to:
21 LA
22 Date:II_lime:_____ 23 Joseph Lamba, Jr.
D4y peorotGun
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