ON OWNERSHIP OF $290K DEPOSITED IN COURT INVOLVING JUDGE’S WIFE
A former owner of a security agency is asking the U.S. District Court for the NMI Bankruptcy Division to deny a motion to lift the automatic stay on his and his wife’s bankruptcy petition in order to allow Bank of Hawaii to proceed with its third-party claim against him in connection with his sister’s defamation lawsuit against the bank.
Joaquin V. Deleon Guerrero, through counsel Timothy H. Bellas, asserted that there is prejudice to both him and the estate of his late father, former governor Lorenzo Deleon Guerrero, in this defamation case by lifting the stay on his (Joaquin’s) bankruptcy case.
Bellas said Joaquin would be required to incur the additional expense of litigating a suit that involves an asset to which he does not have a personal interest in.
Joaquin is the brother of Frances DLG Naraja, who is suing BOH for allegedly refusing to honor the eight cashier’s checks in the total amount of $290,000 that she claimed to have purchased in 2016, but then telling all the other banks on Saipan that she had improperly secured the cashier’s checks.
Frances Naraja is the wife of Superior Court Presiding Judge Roberto C. Naraja.
Mrs. Naraja asked the Superior Court to order for the return of $290,000, represented by the cashier’s checks, with prejudgment interest from the date of their dishonor. She also sought damages.
She filed the lawsuit in the local court last July 13. But last Aug. 17, BOH, through counsel Sean Frink, sought to move the lawsuit to the district court.
BOH recently filed an answer to the complaint. The bank also filed a counterclaim against Mrs. Naraja and third-party claims against Gloria DLG. Sablan, Commonwealth Development Authority, and the Lorenzo Deleon Guerrero Family Trust.
Sablan is Mrs. Naraja’s sister.
Frink moved the court to require Mrs. Naraja and Mrs. Sablan to reimburse BOH for its costs in analyzing and defending itself against the lawsuit.
According to Frink in the counterclaims and third-party claims, BOH simply seeks to join all of the potentially interested parties in one action so that their respective rights and responsibilities as to the $290,000 can be determined.
Frink said because Mrs. Naraja’s brother, Joaquin, has declared bankruptcy, however, he cannot be joined as a third-party defendant in this action without the approval of the Bankruptcy Court.
Frink said BOH has filed a motion to lift the stay in the bankruptcy action so that it can sue Joaquin Deleon Guerrero in this action and intends to join him as an additional third-party defendant once it obtains the approval.
The lawyer said Mrs. Naraja has sued BOH, claiming the entire $290,000 that was at one time in the savings account at the BOH that she jointly held with her sister, Gloria Sablan, and her brother, Joaquin Deleon Guerrero, and that was used to pay for the cashier’s checks in question.
Frink said Joaquin and his wife declared bankruptcy, claiming that the true owner of the $290,000 is and was the Lorenzo I. Deleon Guerrero Family Trust.
In its lawsuit, CDA was pursuing his (Joaquin) assets in order to enforce a $400,000-plus judgment.
CDA successfully caused the Superior Court to issue writs that directed that the $290,000 be deposited with the Superior Court.
Frink said the $290,000 has been on deposit with the Superior Court since Jan. 12, 2017, where as best as BOH can tell, no one has since laid claim to it.
In BOH’s motion for relief filed last month before the Bankruptcy Division, Frink said first, although Joaquin will be named a party in the Mrs. Naraja lawsuit, there will be no impact to the bankruptcy estate resulting in that lawsuit for Joaquin’s creditors.
That is because, Frink said, the court in the Naraja lawsuit could ultimately find one of two ways as to Joaquin—either he had an interest in all or some of the $290,000, or he did not.
Frink said if he had an interest in those funds, that interest could benefit the bankruptcy estate and be used to pay some of Joaquin’s creditors.
Frink said if Joaquin did not have any interest in the $290,000, then there will be no adverse effect on the bankruptcy estate.
Frink added, among other things, that the Bankruptcy Court’s lifting of the automatic stay serves the interests of judicial economy.
In Joaquin’s response last week to BOH’s motion for automatic stay, Bellas said contrary to Joaquin’s position, the Lorenzo Deleon Guerrero estate, through the case trustee, has hired counsel to possibly take the position that it may have a claim to a portion of these funds because they do belong to Joaquin.
Therefore, Bellas said, the estate has an interest in defending and therefore will be prejudiced by incurring the additional expenses to litigate such an action.
Bellas said lifting the stay and allowing BOH to litigate the issue of Joaquin’s interest in the funds in question would interfere with the function of the case trustee who is also undertaking to determine what if any interest Joaquin has in these funds.