The CNMI Supreme Court has affirmed the Superior Court’s dismissal of a lawsuit filed by the former owners of Victoria Hotel in Garapan against a Guam bank, where they borrowed $1.8 million to build the hotel but are now seeking to get out of that loan by accusing the bank of not having obtained a service license in the CNMI.
In the high court’s opinion last Saturday, the justices pointed out that the U.S. District Court for the NMI has already decided all three allegations in the lawsuit, which prevents relitigating the case in the Superior Court, unless an exception applies.
Associate Justice John A. Manglona penned the high court’s opinion. Chief Justice Alexandro C. Castro and Associate Justice Perry B. Inos concurred.
Superior Court Associate Judge Joseph N. Camacho had dismissed the lawsuit in June 2019, ruling that the case had already already decided by the District Court. The suit was filed by Edward L.G. Lizama as personal representative of the estate of Jesus T. Lizama, Victoria L.G. Lizama, and J & JEV Enterprises Inc., against ANZ Guam Inc.
Camacho dismissed the case based on the “issue of preclusion” because the plaintiffs’ claims against ANZ Guam Inc. are based on the same three issues that were litigated and decided in the District Court action.
ANZ Guam is formerly known as Citizens Security (Guam) Inc.
In affirming Camacho’s order, the justices no longer addressed the plaintiffs’ arguments about licensing after finding that Camacho found the issues to be “precluded.” The justices said the Lizamas fail to demonstrate any attempt to obtain consent from ANZ to amend the complaint or that they moved to amend the complaint before or after the motion to dismiss. Absent those actions, the justices said, Camacho cannot grant leave to amend and his failure to do so was not an abuse of discretion.
“It follows that we also cannot remand with instruction to grant leave to amend,” the justices said.
Camacho ruled that the District Court’s previous decision was final and on the merits. Camacho said the party against whom preclusion is sought in this lawsuit is the same as the party in the previous District Court proceeding.
According to court records, the plaintiffs sued ANZ Guam Inc. in the Superior Court in August 2018, alleging a violation of the Commonwealth Consumer Protection Act, wrongful foreclosure under the Commonwealth Debt Collection Act, and breach of contract.
In 1997, ANZ loaned the plaintiffs $1.8 million and took a mortgage over real property in the CNMI to secure the debt, up to 70% of which was guaranteed by the U.S. Department of Agriculture.
The plaintiffs defaulted on the loan. ANZ sued in June 2000 in the Superior Court for foreclosure. In January 2001, the Superior Court issued a default judgment against the plaintiffs in the amount of $2.2 million.
In February 2013, the Superior Court issued an order directing foreclosure sale of the mortgaged property in the outstanding amount of $2.1 million, which included principal, interest, and attorney’s fees. The Lizamas appealed the order, and the CNMI Supreme Court dismissed the appeal for lack of jurisdiction.
ANZ then scheduled a foreclosure sale of the property for March 21, 2016. Less than two weeks before the scheduled March 21, 2016, sale, the Lizamas sued ANZ in the District Court. ANZ then postponed the foreclosure sale until further notice.
In their Superior Court lawsuit, plaintiffs, through counsel Juan T. Lizama, alleged that ANZ and its predecessor, Citizens Security Bank (Guam), never obtained a full service banking license in the CNMI, that when it executed the mortgage and when it sought to foreclose on Jesus Lizama’s properties in 2000, ANZ knew that it was not a duly licensed full service bank in the CNMI.
In their District Court action, the Lizama couple and J&JEV Enterprises Inc. sued ANZ Guam Inc., and five unnamed co-defendants for violations of Racketeer Influenced and Corrupt Organizations Act, Commonwealth Consumer Protection Act, and Commonwealth Debt Collection Act-wrongful disclosure, among other claims.
In January 2017, U.S. District Court for the NMI Chief Judge Ramona V. Manglona dismissed the lawsuit.
The Lizamas then appealed to the U.S. Court of Appeals for the Ninth Circuit, asking the court to reverse the dismissal of the racketeering lawsuit.
During the pendency of the appeal, Jesus T. Lizama passed away and his personal representative Edward Lizama was substituted in his stead. In July 2018, the Ninth Circuit affirmed the District Court’s dismissal order.
After the Ninth Circuit’s affirming the dismissal, ANZ scheduled a foreclosure sale for July 20, 2018. The auction was held at the premises of the Victoria Hotel. However, ANZ did not accept any of the bids presented.
The following month, August, the Lizamas filed this lawsuit in the Superior Court. After Camacho dismissed the case, the Lizamas appealed, asking the Supreme Court to reverse the judge’s ruling. The Lizamas argued that Camacho erred in dismissing the case under the doctrine of issue preclusion, holding ANZ did not engage in banking business when it made the loan, dismissing the Consumer Protection Act and Commonwealth Debt Collection Act claims without leave to amend the complaint.