Suit by ex-owners of Victoria Hotel dismissed


Ruling that the case has already been decided by the federal court, Superior Court Associate Judge Joseph N. Camacho has dismissed the lawsuit filed by the former owners of Victoria Hotel in Garapan against a Guam bank, from whom they borrowed $1.8 million to build the hotel and they are now accusing of having never obtained a license to do banking business in the CNMI.

In a 23-page decision last Friday, Camacho dismissed the lawsuit 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., based on the issue of preclusion because the plaintiffs’ claims against ANZ Guam Inc. are based on the same three issues that were fully litigated and finally decided in the U.S. District Court for the NMI action.

ANZ Guam is formerly known as Citizens Security (Guam) Inc.

Camacho said the Lizamas have failed to state a claims for relief based on an alleged violation of the Consumer Protection Act, the Commonwealth Debt Collection Act, and breach of contract warranting dismissal.

Camacho said the District Court’s previous decision was final and on the merits.

According to court records, the plaintiffs sued ANZ Guam Inc. in the Superior Court last Aug. 22, alleging a violation of the Commonwealth Consumer Protection Act, wrongful foreclosure under the Commonwealth Debt Collection Act, and breach of contract.

In 1997, ANZ provided a $1.8-million loan to plaintiffs and took a mortgage over real property in the CNMI to secure the debt—up to 70 percent of which was guaranteed by the U.S. Department of Agriculture.

Plaintiffs defaulted on the loan. ANZ then sued the plaintiffs in June 2000 on a foreclosure proceeding in the Superior Court.

In January 2001, the Superior Court issued an amended 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 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.

ANZ then scheduled a foreclosure sale of the property for March 21, 2016.

Less than two weeks prior to the scheduled sale, the Lizamas filed a lawsuit against ANZ in the District Court. ANZ postponed the scheduled 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.

Plaintiffs alleged 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 licensed full-service bank in the CNMI.

Plaintiffs alleged that only full-service operating banks in the CNMI could mortgage and foreclose fee simple interest in lands situated in the CNMI.

Plaintiffs also alleged that after they defaulted on the loan, USDA, as guarantor, paid ANZ its 70 percent guaranteed obligation, which was not disclosed to them by ANZ or the USDA, and after which ANZ continued to seek payment of the debt from them.

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 as substituted in his place.

In July 2018, the Ninth Circuit affirmed the District Court’s dismissal.

After that, ANZ held a foreclosure sale on July 20, 2018, 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.

In his order last week, Camacho said the District Court first addressed the Lizamas’ allegations in their complaint—that ANZ was required to have a full-service banking license in the CNMI.

Camacho said that, contrary to the Lizamas’ allegation, Manglona found that, “ANZ did in fact have a banking license at the time it instituted foreclosure proceedings in the CNMI.”

Camacho noted that Manglona further found that “there is no requirement under CNMI banking laws that ANZ hold a banking license in the CNMI in order to make a secured loan in Guam or enter into a mortgage agreement over CNMI real property.”

Camacho said Manglona also ruled that “Article 12 does not mention or require a banking license in order to foreclose on a mortgage. Nevertheless, ANZ did hold a CNMI banking license at the time it instituted foreclosure proceedings in the CNMI on June 27, 2000.

Camacho said the District Court also determined that even if the U.S. Department of Agriculture had paid ANZ under its guaranteed obligation, the Lizamas were still liable to pay the outstanding debt balance to ANZ.

Camacho said the District Court’s decision is final because the Ninth Circuit affirmed the dismissal of the complaint, and the time to file with the U.S. Supreme Court has passed.

Ferdie De La Torre | Reporter
Ferdie Ponce de la Torre is a senior reporter of Saipan Tribune. He has a bachelor’s degree in journalism and has covered all news beats in the CNMI. He is a recipient of the CNMI Supreme Court Justice Award. Contact him at

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