Judge grants summary judgment in ¥2B loan lawsuit

Superior Court Associate Judge Ramona Manglona has granted a plaintiff’s request for summary judgment and dismissed the defendant’s counterclaims in a lawsuit involving the non-payment of a ¥2 billion loan.

In the case that Japanese firm Aplus Co. Ltd. brought against Niizeki International Saipan (NIS) Co., Manglona said Aplus has established evidence proving that it granted NIS three loans back in 1989, 1990, and 1993.

Aplus filed the suit versus NIS when it reportedly refused to pay the loan by June 1991.

Records showed that Aplus, formerly known as Daishinpan Co. Ltd., signed a “continuing guaranty” in which NIS guaranteed to the creditor or its successor, upon demand, the payment of all indebtedness of its parent company, amounting up to ¥2 billion.

The guaranty also provided that NIS would pay a “reasonable” attorney’s fee and all other costs and expenses that may be incurred in the enforcement of the guaranty. The guaranty was signed on May 29, 1989.

On May 30, 1989, Aplus contracted with Niizeki Japan to lend it ¥2 billion, on Dec. 28, 1990 with ¥450 million, and on Feb. 26, 1993, ¥9.9 million.

Monies loaned by Aplus to Niizeki Japan were reportedly transferred to NIS to secure and maintain various leasehold interests in real properties. In July 1997, the court said that Niizeki Japan delivered a confirmation to Aplus, reaffirming the money it owes the company under the three original loans, totaling ¥2.2 billion.

Aplus asserted that the debt “has not been paid in whole or in part, and NIS has not contested this assertion.”

In her ruling, Manglona dismissed all the counterclaims or affirmative defenses by the defendant, saying that “no genuine issue of material fact remains to support any [of NIS’ affirmative defenses].”

“The court finds that NIS is liable to Aplus under the continuing guaranty in the amount of ¥2 billion; that no genuine issue of material fact remains to support any of defendant NIS’ affirmative defenses or counterclaims; and that therefore, no genuine issue of material fact remains to be tied as to NIS liability under the continuing guaranty,” Manglona said.

“Accordingly, plaintiff Aplus’ motion for summary judgment is granted; each of defendant’s affirmative defenses are denied; and each of defendant’s counterclaims are also denied,” she ruled.

NIS cited nine “affirmative defenses” including the question on the statute of limitations under Japanese law, the failure of Aplus to comply with CNMI real estate mortgage law, laches, fraud, conspiracy, estoppel, unclean hands, breach of joint venture agreement executed between Aplus, Niizeki Japan, and a third company, and set-off for breach of JVA.

NIS also asserted as counterclaims an alleged breach of contract (JVA), specific performance of the JVA, fraud in “inducing Niizeki Japan to sign the guaranty and subsequent confirmation of obligation, fraud “in inducing NIS to sell its leasehold interest in Kingfisher Golf Links property in Talafofo, Saipan to a third party, Co-You Corp; fraud in “inducing NIS to sell certain mortgaged properties, conspiracy to “cause NIS’ financial demise…and to commit each of the breaches of contract, trust, illegal acts, and inequitable acts.”

In her ruling, Manglona said that the civil action started with the filing of Aplus’ complaint on Sept. 17, 1999, or less than four months after the date of the breach (refusal to pay).

This action, she said, was filed within the six-year period and is therefore not barred by the statute of limitation, and the court finds that no genuine issue of material fact remains to support the defense.

As to other points, Manglona said Aplus did not seek foreclosure of any properties but sought only a temporary restraining order, a constructive trust over real properties held by NIS. “It could hardly be said that a delay of less than four months is ‘unreasonable,’” she said.

She pointed out that NIS is not a third party beneficiary to the JVA and that it therefore lacks standing to seek enforcement of its terms; NIS’ defense of fraud fails, citing that even the NIS president testified that Aplus lacked the intent to defraud NIS when it “induced” to sign the guaranty; and nothing in the facts submitted by NIS demonstrated that a misrepresentation was made.