Flores vs. First Hawaiian Bank and Union Bank of California
Filing
137
DECISION and ORDER Granting in Part and Denying in Part Defendant Union Bank's Motions For Partial Summary Judgment Re: Granting in Part and Denying in Part 80 Motion for Partial Summary Judgment; GRANTING 82 Motion for Partial Summary Judgment; GRANTING 122 Motion for Summary Judgment. Signed by Chief Judge Ramona V. Manglona on 04/06/2017. (BTC)
FILED
Clerk
District Court
1
APR 06 2017
2
for the Northern Mariana Islands
By________________________
(Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN MARIANA ISLANDS
3
4
5
6
7
8
DERRON GERARD FLORES, AS
ADMINISTRATOR OF THE ESTATE OF
DONALD G. FLORES,
Case No.: 11-cv-0022
DECISION AND ORDER GRANTING IN
PART AND DENYING IN PART
DEFENDANT UNION BANK’S MOTIONS
FOR PARTIAL SUMMARY JUDGMENT
Plaintiff,
9
10
vs.
11
MUFG UNION BANK N.A.,
12
Defendant.
13
I.
INTRODUCTION
14
Plaintiff Derron Gerard Flores, as Administrator of the Estate of Donald G. Flores,
15
16
(“Derron”) brings this action against Defendant MUFG Union Bank N.A. (“Union Bank”) to
17
collect principal and interest on a $200,000, 32-day certificate of deposit twenty four years after
18
his father, Donald G. Flores (“Flores”), took it out at Union Bank in 1993. There are three
19
pending summary judgment motions in this case: (1) Motion for Partial Summary Judgment as to
20
Plaintiff’s Claims of Violation of the Consumer Protection Act and Roll Over Interest Rate (ECF
21
22
No. 80); (2) Motion for Partial Summary Judgment as to Plaintiff’s Claims of Fraud, Bad Faith,
23
and Punitive Damages (ECF No. 82); and (3) Motion for Summary Judgment as to Plaintiff’s
24
CNMI Consumer Protection Act Cause of Action. (ECF No. 122.) The motions have been fully
25
briefed. 1 After consideration of all the papers, hearing argument of counsel for both parties, and
26
27
See Opp’n to Mot. for Partial SJ re CPA and Roll Over Interest Rate (ECF No. 86); Reply in Support of Mot. for
Partial SJ re CPA (ECF No. 96); Opp’n to Mot. for Partial SJ as to Claims for Fraud, Bad Faith, and Punitive
Damages (ECF No. 88); Reply in Support of Mot. for Partial SJ re Claims for Fraud, Bad Faith, and Punitive
Damages (ECF No. 97); Opp’n to Mot. for SJ as to CPA (ECF No. 126); Reply in Support of Mot. for SJ re: CPA
(ECF No. 127).
1
28
1
1
a review of the applicable law, the Court grants in part and denies in part Union Bank’s motions.
2
In particular, the Court denies Union Bank’s motion for partial summary judgment with respect
3
to the CPA claim based on the argument that Union Bank was not a “merchant” under the CPA.
4
5
(ECF No. 80.) The Court grants Union Bank’s motion for partial summary judgment with respect
6
to the rollover interest rate and punitive damages under the bad faith and fraud claims. (ECF
7
Nos. 80, 82), and grants Union Bank’s motion for summary judgment with respect to the CPA
8
claim based on the argument that the CPA cause of action did not survive Flores’ death and may
9
not be brought by his Estate. (ECF No. 122.)
10
II.
11
On September 10, 1993, Donald Flores went to the Oleai branch of Union Bank in Saipan
12
13
14
UNDISPUTED FACTS
to cash a $280,000 check he had received in a land transaction. (First Amended Complaint
(“FAC”) ¶ 6.) 2 After cashing the check, he kept $80,000 in cash and invested $200,000 in a
15
fixed-maturity time certificate of deposit (“TCD”). (FAC ¶¶ 6, 10.) The non-negotiable, non16
17
transferable TCD matured on October 12, 1993 (32 days), and earned 2.5 percent interest
18
payable at maturity. (Copy of TCD, Ex. 4, ECF No. 83-1.) Printed on the front of the TCD is a
19
disclaimer: “This certificate earns no interest after maturity . . .” (Id.) The TCD was payable to
20
“Donald G. Flores Only” and was payable to him “upon maturity, presentation and surrender of
21
this certificate, properly endorsed at the office of issue.” (Id.) Lourdes (“Lou”) S. Deleon
22
23
24
Guerrero, a Union Bank officer, helped Flores take out the TCD and signed the TCD as Union
Bank’s authorized agent. (Donald G. Flores Deposition (“Flores Deposition”), ECF No. 83-1, ex.
25
26
27
28
The purported verification of the FAC is defective because it was not made under penalty of perjury as required by
28 U.S.C. § 1746. Union Bank has not objected to consideration of the FAC as evidence supporting summary
judgment as it included the FAC as an exhibit to its summary judgment motions and cited from it liberally in its own
statements of undisputed facts. In the absence of an objection, the undisputed facts in the FAC may support
summary judgment. See Faulkner v. Fed’n of Preschool & Cmty. Educ. Ctrs., 564 F.2d 327, 328 (9th Cir. 1977) (per
curiam).
2
2
1
3, 40:10–16; 3 FAC ¶ 7.) At the time, Flores’ wife, Cecilia Flores (“Cecilia”), was seriously ill
2
and in need of costly, off-island medical treatment. (Id. 44:19 – 45:18.) When Flores asked Lou
3
what would happen if he didn’t take the CD out, she told him “your money will roll over.” (Id.
4
5
48:3–8.)
After Flores purchased the TCD, he and Cecilia left for California, where Cecilia
6
7
received medical treatment. (Id. 49:7–50:6.) Over the next few years, Cecilia stayed in
8
California, but Flores traveled periodically to Saipan to manage his farming business. (Id.)
9
During a visit to Saipan in April 1994, Flores went to Union Bank’s Oleai branch to check on his
10
11
12
checking account, but he did not inquire about the TCD. (Id. 58:14–59:16.) Flores did not intend
to redeem the TCD at that time. (Id. 80:19–25.)
13
14
In February 1999, Flores returned to Saipan when he and Cecilia were running low on
funds to continue paying for her medical needs. (Id. 60:24–61:10.) On or about February 10,
15
1999, Flores went to Union Bank’s Oleai branch and asked Lou if she remembered the $200,000
16
17
TCD. (Id. 61:11–19.) Flores had been unable to locate the original TCD and had no paperwork
18
with him when he went to the bank that day. (Id. 62:13–25.) Lou remembered that Flores had
19
purchased the TCD. (Id. 81:9–14.) She searched the bank’s records using Flores’ social security
20
number, but she was unable to find a record of the TCD. (Id. 63:12–17.) When Flores asked how
21
he could obtain his money, Lou told him, “When you find your certificate, bring and show it to
22
23
us.” (Id.) There was no discussion of other ways that Flores might be able to get his money if he
24
could not find the TCD. (Id. 82:5–17.) Flores did not speak to anyone else at Union Bank
25
regarding his TCD between February 1999 and March 2008. (Id. 62:04–06; 65:15–20; 66:6–12.)
26
Flores continued to search for the original TCD during that time period because he believed that
27
the original TCD must be produced to the bank in order to get his money back. (FAC ¶ 25.)
28
3
Page references are to the ECF pagination and line numbers.
3
1
2
Ken Kato was Union Bank’s Oleai branch manager at the time Flores purchased his
TCD. (Decl. of Ken Kato ¶ 4, ECF No. 83-4.) Union Bank had a written policy to retain account
3
records, including records of certificate of deposits, for seven and a half years after an account
4
5
was closed. (Id. ¶ 6.) In the event a customer lost the original TCD, Union Bank would allow the
6
customer to redeem it so long as Union Bank had records showing the TCD had not yet been
7
redeemed. (Id. ¶ 8.) The customer would then be asked to sign an agreement indemnifying the
8
bank in case the original was later located and redeemed. (Id.) The indemnification agreement
9
would be attached to Union Bank’s copy of the TCD, and a Union Bank officer would need to
10
11
12
13
14
approve the entire transaction. (Id.)
On November 8, 2001, Union Bank sold its Saipan and Guam assets and liabilities to
First Hawaiian Bank (“FHB”). (Id. ¶¶ 3, 10.) Prior to the sale, Union Bank mailed letters to all its
customers, including certificate of deposit holders, advising them of the sale and explaining how
15
their accounts would be handled. (Id. ¶ 10.) Even after the sale, FHB sent correspondence to its
16
17
account holders about the transition of their Union Bank accounts to FHB. (Id.) Flores did not
18
know about the sale at the time it occurred but instead learned about it through media coverage.
19
(Flores Deposition, 86:12–24.) By September 2003, Flores had opened an FHB checking account
20
and was aware that FHB had bought the assets and liabilities of Union Bank’s Oleai branch. (Id.
21
87:7–88:3.) However, between February 1999 and March 2008, Flores made no attempt to cash,
22
23
redeem, or otherwise obtain the principal and interest from his TCD. (Id. 88:8–13.)
24
In March 2008, Cecilia found the original TCD. (Id. 88:4–7.) Flores immediately
25
contacted FHB and met on Saipan with Victoria Concepcion, an FHB employee. (Deposition of
26
Victoria Concepcion (“Concepcion Deposition”), ECF No. 83-1.) When he showed the TCD to
27
Victoria, she told him to check with Union Bank because FHB did not have any records of his
28
TCD. (Id. 123:15-18.)
4
1
2
On June 10, 2008, Flores’s attorney Jose S. Dela Cruz sent a letter to Union Bank’s
corporate headquarters in San Diego, California. (Ex. C, ECF No. 83-1.) Dela Cruz enclosed a
3
copy of the original TCD. (Id.) He advised Union Bank that Flores wanted to withdraw the
4
5
$200,000 principal and “all the interest that such principal amount has generated since the date of
6
deposit—September 10, 1993.” (Id.) Flores did not receive a response. (Ex. D, ECF No. 83-1.)
7
Three months later, Dela Cruz wrote a second letter addressed to Union Bank’s main branch in
8
San Diego. (Id.) Dela Cruz stated that he had not received a reply to his June 10 letter to
9
corporate headquarters and enclosed a copy. (Id.) He asked the branch manager to respond as
10
11
12
13
14
soon as possible and advised her that Flores would take “additional steps” if a reply was not
forthcoming. (Id.)
On September 22, 2008, Cheryl Robbins of Union Bank’s Office of the President,
responded in writing to Dela Cruz. (Ex. E, ECF No. 83-1.) She acknowledged receipt of Dela
15
Cruz’s two letters. (Id.) She stated that because the TCD closed over ten years ago, Union Bank
16
17
no longer had records from the time frame of Flores’ TCD. (Id.) Due to the lapse of time, Union
18
Bank was unable to assist him. (Id.) She advised Dela Cruz to file a claim with the State of
19
California in order to determine whether the TCD had escheated. (Id.)
20
III.
PROCEDURAL HISTORY
21
On September 22, 2011, Donald Flores filed suit against Union Bank and FHB in the
22
23
Superior Court of the Commonwealth of the Northern Mariana Islands to recover compensatory
24
and punitive damages for alleged breach of contract, unjust enrichment, negligence and gross
25
negligence, fraud, and violation of the Commonwealth’s Consumer Protection Act (“CPA”).
26
(Complaint, attached to ECF No. 1.) FHB removed the action to federal court on the basis of
27
diversity jurisdiction (FHB’s Notice of Removal, ECF No. 1) and Union Bank joined in FHB’s
28
notice of removal, (ECF No. 8.)
5
1
2
On February 15, 2012, the Court dismissed all five claims against FHB. (Mem. Opinion
and Order, ECF No. 23.) Flores’ claims for unjust enrichment and gross negligence were
3
dismissed with prejudice, while all other claims were dismissed without prejudice. (Id.) As to
4
5
Union Bank, the Court dismissed Flores’ claims for unjust enrichment and gross negligence with
6
prejudice, while the claims for breach of fiduciary duty and fraud were dismissed without
7
prejudice. (Id.) Flores was given leave to amend the Complaint, except with respect to the claims
8
of unjust enrichment and gross negligence. (Id.)
9
On February 24, 2012, Flores filed his First Amended Complaint against both banks.
10
11
(FAC, ECF No. 24.) The FAC alleged five causes of action: breach of contract, violation of the
12
CNMI CPA, negligence, bad faith under the CNMI’s Uniform Commercial Code, and fraud.
13
(Id.) FHB moved to dismiss the FAC (Mot. to Dismiss FAC, ECF No. 28) and the Court granted
14
FHB’s motion and dismissed it without prejudice from the lawsuit. (Mem. Opinion and Order,
15
ECF No. 42.)
16
17
Following FHB’s dismissal from the case, Union Bank moved for summary judgment on
18
grounds that all of Flores’ causes of action are time barred—either by the applicable statutes of
19
limitations or by the equitable doctrine of laches. (Mot. for Summ. J. due to Laches, ECF No. 81;
20
Mot. for Partial Summ. J. re SOL, ECF No. 83.) Union Bank also moved for partial summary
21
judgment as to Flores’ claims of violation of the CPA and Roll Over Interest Rate (ECF No. 80),
22
23
as well as partial summary judgment as to Flores’ claims of fraud, bad faith, and punitive
24
damages (ECF No. 82.) On November 8, 2013, the Court granted summary judgment to Union
25
Bank on all claims on the grounds of statute of limitations and laches. (Decision and Order
26
Grant. Def. Union Bank’s Mot. for Summ. J. on Grounds of SOL and Laches (“Decision”), ECF
27
No. 102.) Union Bank’s remaining partial summary judgment motions (ECF Nos. 80, 82) were
28
denied as moot. (Id.)
6
1
Flores timely appealed the Decision. (Notice of Appeal, ECF No. 104.) Flores
2
unfortunately passed away during the pendency of the appeal on June 2, 2014. (Decl. of Sean
3
Frink ¶ 3 and Ex. A, Appellant’s Mot. for Substitution of Donald G. Flores as Plaintiff4
5
Appellant, Ninth Circuit Court of Appeals Case No. 13-17434, Docket Entry No. 19 (June 10,
6
2014)). Subsequently, Flores’ Estate was established in the CNMI Superior Court. (Civil Action
7
No. 14-0134-CV.) Cecilia Flores, Flores’ wife, was appointed Administrator of the Estate but
8
also passed away during the pendency of the appeal in this matter. (Decl. of Juan Lizama., ECF
9
No. 113.) Derron Flores, the only son of Donald and Cecilia Flores and the sole heir of Flores’
10
11
Estate, was then appointed as Administrator of his father’s Estate. (Decl. of Sean Frink ¶¶ 3-4;
12
Ex. B, Order, CNMI Superior Court Civil Action No. 14-0134 (Dec. 1, 2015), ECF No. 123).
13
As the Administrator of Flores’ Estate, Derron then filed a Motion to Substitute as the
14
Plaintiff-Appellant in the appeal before the Ninth Circuit. (Decl. of Sean Frink ¶ 5; Ex. C, Mot.
15
of Derron Gerard Flores to be the Substitute of Cecilia Josephine Flores as Plaintiff-Appellant,
16
17
Ninth Circuit Court of Appeals Case No. 13-17434, Docket Entry Nos. 37-1, 37-2 (Nov. 30,
18
2015), ECF No. 123). On December 1, 2015, the Ninth Circuit granted Derron’s motion to
19
substitute and directed the Clerk of Court to substitute Derron Gerard Flores, administrator of the
20
Estate of Donald G. Flores, as appellant in the appeal. (Decl. of Sean Frink ¶ 6; Ex. D, Order,
21
Ninth Circuit Court of Appeals Case No. 13-17434, Docket Entry No. 39 (Dec. 1, 2015), ECF
22
23
24
25
26
No. 123).
On March 4, 2016, the Ninth Circuit issued a memorandum affirming in part, reversing in
part, and remanding the case for further proceedings. Flores v. First Hawaiian Bank, 642
Fed.Appx. 696 (9th Cir. 2016) (unpublished). The Ninth Circuit reversed this Court’s decision
27
that the statute of limitations began to run in 1999; instead, it found that the statute of limitations
28
period began from September 22, 2008. Id. at 697. Based on this finding, the Ninth Circuit held
7
1
that decedent’s contract claim, which was subject to a six year period of accrual, and CPA claim,
2
which was subject to a four year period of accrual, were not barred by the statute of limitations.
3
Id. at 698. Flores’s tort claims, however, were time-barred because they were subject to a two
4
5
year period of accrual. Id. Furthermore, the Ninth Circuit held that Flores’s fraudulent
6
concealment claim failed to toll the tort claims. Id. Even assuming that laches could apply in
7
addition to the applicable statute of limitations, the doctrine of laches would not bar Flores’
8
claims. Id. The remaining causes of action, therefore, are Flores’s breach of contract claim and
9
CPA claim. Id.
10
11
12
13
14
IV.
LEGAL STANDARD
Under Fed. R. Civ. P. 56(a), the court “shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” The party seeking summary judgment “always bears the initial
15
responsibility of informing the district court of the basis for its motion, and identifying those
16
17
portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file,
18
together with the affidavits, if any,’ which it believes demonstrate the absence of a genuine issue
19
of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party
20
makes this showing, the nonmoving party must “set forth specific facts showing that there is a
21
genuine issue for trial.” Anderson v. Liberty Lobby, 477 U.S. 242, 250 (1986). When ruling on a
22
23
defendant’s motion for summary judgment, “[t]he mere existence of a scintilla of evidence in
24
support of the plaintiff’s position will be insufficient; there must be evidence on which the jury
25
could reasonably find for the plaintiff.” Id. at 252. The nonmoving party must “do more than
26
simply show that there is some metaphysical doubt as to the material facts.” Matsushita Elec.
27
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). The judge’s inquiry asks “whether
28
reasonable jurors could find by a preponderance of the evidence that the plaintiff is entitled to a
8
1
verdict—‘whether there is [evidence] upon which a jury can properly proceed to find a verdict
2
for the party producing it[.]’” Anderson, 477 U.S. at 252 (citing Schuylkill and Dauphin Imp. Co.
3
v. Munson, 81 U.S. 442, 448 (1871)).
4
V.
5
DISCUSSION
6
A.
7
Defendant Union Bank requests that Flores’ CPA claim be dismissed because Union
8
CNMI Consumer Protection Act Claim
Bank was not a “merchant” under the CPA at the time of the alleged unlawful act or practice in
9
2008, and because the Estate of Donald G. Flores is not a “person” under the CPA entitled to
10
11
bring a claim. (ECF No. 80 at 9-10, ECF No. 122 at 1, respectively.) Union Bank also argues that
12
even if the Court found Union Bank to be a “merchant,” Flores is not entitled to liquidated
13
damages under the CPA because there is no evidence that Union Bank willfully violated the
14
CPA. (ECF No. 80 at 11-12.) The Court will address each of the arguments in turn.
15
1.
16
17
18
19
20
Union Bank was a “merchant” under the CPA because the alleged unlawful
act or practice started in 1999 and was complete in 2008 when Union Bank
unequivocally refused to honor the TCD.
Union Bank argues that it was not a “merchant” subject to the CPA in September 2008
when Union Bank, through its Office of the President in California, refused to pay Flores’ TCD
because they no longer had any record of it. (ECF No. 80 at 10.) At the time of the refusal, Union
21
Bank had already stopped doing business in the CNMI and surrendered its authority to transact
22
23
business in the CNMI. (Id. at 10.) Flores contends, however, that the alleged unlawful act or
24
practice started in 1999 when he first returned to Union Bank and was told that there was no
25
record of his TCD. (Opp’n to Mot. for Partial SJ re Violation of CPA and Int Rate 8.) At this
26
time, Union Bank was still engaged in commerce in the CNMI and considered a “merchant”
27
subject to the CPA. (Id.) Flores does not cite a specific provision for his claim of violation of the
28
CPA but instead references the CPA generally, 4 CMC § 5101 et seq. (FAC ¶¶ 51-55.)
9
1
2
A CPA violation consists of (1) an unlawful act or practice, (2) in the conduct of trade or
commerce. See Isla Financial Services v. Sablan, 6 N.M.I. 338, 342 (2001) (citing 4 CMC §
3
5105). One of the purposes of the CPA is to “[p]rohibit practices by merchants which deceive,
4
5
6
7
8
mislead, or confuse the consumer.” 4 CMC § 5102(b)(1). “Merchant” means:
any person required to have a business license from the Commonwealth to engage
in commerce or any person who, from without the Commonwealth, engages in
commerce within the Commonwealth or in any act essential to this commerce, or
any person who conducts any lottery, game of chance, or entertainment within the
Commonwealth, or any agent, broker, or other representative of such person.
9
4 CMC § 5104(f). Union Bank’s motion for partial summary judgment asserts that because the
10
11
alleged unlawful act or practice took place in 2008, it could not be considered a “merchant”
12
under the CPA since it was no longer licensed to engage in commerce in the CNMI at the time.
13
Based on the alleged facts, Flores’ CPA claim appears to be based on two unlawful acts or
14
practices listed under Section 5105 of the CPA. Section 5105(l) provides that it shall be unlawful
15
to “engag[e] in any other conduct which similarly creates a likelihood of confusion or of
16
17
misunderstanding.” 4 CMC § 5105(l). Section 5105(m) provides that it shall be unlawful to
18
“engag[e] in any act or practice which is unfair or deceptive to the consumer[.]” 4 CMC §
19
5105(m). Union Bank’s motion focused on these two provisions, and so the Court will only
20
address them.
21
The Commonwealth Supreme Court has previously addressed the issue of what creates a
22
23
likelihood of confusion or misunderstanding, or is unfair or deceptive to the consumer under the
24
CPA. Isla Financial Services v. Sablan, 2001 MP 21 ¶ 21 (N. Mar. I. 2001). The court found that
25
the operative question was not whether the merchant actually deceived the consumer, but
26
“whether [the merchant] acted in a way that was unfair or would likely cause confusion to a
27
hypothetical person.” Id. at ¶¶ 22-24 (internal citations omitted). The consumer “need only show
28
that it was more probable than not that [the merchant’s] conduct created a likelihood of
10
1
confusion or misunderstanding or was unfair or deceptive to a hypothetical consumer.” Id.
2
(citing In re Estate of Barcinas, 4 N.M.I. 149, 154 (N. Mar. I. 1994)).
3
A reasonable trier of fact could find that beginning in 1999, Union Bank created a
4
5
likelihood of confusion or misunderstanding for Flores, because it knew that he had purchased a
6
TCD with Union Bank but it did not have a record of it and he could not find the original copy.
7
Even before agreeing to purchase the TCD, Flores alleges that Lou told him in the event he could
8
not withdraw his TCD immediately upon maturity, a mere 32 days, the TCD would continue to
9
exist with the interest rate rolling over. (Flores Deposition 48:3-6, ECF No. 83-1.) As a result,
10
11
Flores purchased the TCD. (Id. 48:9-13.) Yet when Flores made his initial demand for his money
12
in 1999, six years later, Union Bank did not pay him. (Id. 63:5-64:17.) Lou, the same Union
13
Bank officer who authorized the TCD, told him that Union Bank lacked any record of the
14
existence of the TCD, but that he could still come back with the original TCD. (Id.) From 1999
15
to 2008, Flores continued to look for the original TCD. (Id. 65:6-14.) Flores continued doing
16
17
business with Union Bank, and then with FHB when they took over, but did not make any
18
further demands until he found the original TCD. (Id. 65:15-20.) Flores “was made to believe
19
that if he found his CD, he would be paid his CD[.]” (ECF No. 86 at 8-9; Flores Deposition
20
82:05-10.)
21
There is also evidence in which a reasonable trier of fact could find that Union Bank
22
23
engaged in unfair or deceptive acts or practices throughout this time period which culminated
24
when it unequivocally refused to honor Flores’ original TCD in 2008. Flores justifiably relied on
25
Lou’s representations in 1999 that despite Union Bank’s lack of records, he could still return to
26
the bank with the original TCD. When Flores returned to the bank in 2008 with the original
27
TCD, FHB (as the purchaser of Union Bank) indicated that he could not be paid because there
28
was no record of his TCD. (FAC ¶ 27.) Flores then sent a copy of his original TCD to Union
11
1
Bank at its California headquarters and an office branch, and demanded payment of the principal
2
and all interest due to him. (Ex. C, ECF No. 83-1.) Union Bank declined his two requests
3
because it did not have any record of the TCD. (Ex. E, ECF No. 83-1.) Flores argues such acts
4
5
deceived, misled, and confused him. (Opp’n to Mot. for Partial SJ re Violation of CPA and Int
6
Rate 9.) Union Bank refused to honor the original TCD in 2008 even though, according to
7
Flores, the TCD was never paid out. Flores has sufficiently alleged facts showing the denial of
8
access to the principal and applicable interest for which he provided evidence that he was
9
entitled.
10
11
The Ninth Circuit determined that the CPA claim accrued on September 22, 2008, Flores
12
v. First Hawaiian Bank, 2016 WL 851607 at *1. This Court finds that there is sufficient evidence
13
to enable a reasonable trier of fact to find that when the CPA claim accrued in 2008 due to Union
14
Bank’s unequivocal refusal to pay, that refusal related to the denial of the TCD’s existence in
15
1999 and requirement that Flores produce the original TCD before the bank would pay. When
16
17
Flores returned to Union Bank in 1999 to withdraw his 1993 TCD, he was still within the seven
18
and a half year retention period for closed accounts. (Decl. of Ken Kato ¶ 6, ECF No. 83-4.) Lou
19
told Flores, however, that there was no record of it. (Flores Deposition 63:12-17.) This was
20
despite the fact that Lou was the same Union Bank officer who issued the TCD in 1993. (Flores
21
Deposition 81:9–14.) It was only until 2008, when Flores’ wife found the original TCD, that
22
23
Flores was able to confirm with Union Bank the existence of his TCD. (Flores Deposition 88:4-
24
7.) Because Union Bank’s refusal to honor the TCD in 2008 completed the alleged unlawful act
25
or practice and gave rise to the cause of action, a reasonable trier of fact could find that this
26
conduct related back to Union Bank’s initial denial of its existence in 1999 and notice to Flores
27
that the original TCD was needed before payment would be made. In 1999, Union Bank was still
28
a “merchant” subject to the CPA during the significant period from 1993 to 2001. (Decl. of Lisa
12
1
Rockwell ¶ 14, ECF No. 83-3.) Accordingly, Union Bank’s motion for partial summary
2
judgment on Flores’ CPA claim based on the argument that it was not a merchant under the CPA
3
is denied.
4
5
2.
Donald Flores was a “person” under the CPA at the time he filed suit,
but the CPA cause of action abated upon his death.
6
Having determined that Union Bank was a “merchant” under the CPA, the Court now
7
8
9
examines whether a cause of action under the CPA survives Flores’ death so that it may be
brought by his estate. Union Bank argues that it does not because estates are not “persons” under
10
the CPA and consequently, Derron, as Administrator of Flores’ Estate, cannot pursue a private
11
cause of action under the CPA. (Def. Mot. for Summ. J. as to CPA 1-2, ECF No. 122.) Union
12
Bank relies on the absence of any reference to “estates” or their ilk in the CPA’s definition of
13
14
“persons” as well as a CNMI Superior Court case that held that an estate could not bring a claim
15
under the Act. (Id. at 5-7.) Plaintiff argues that the Superior Court decision is distinguishable
16
because Donald Flores satisfied the definition of “person” at the time he initiated the CPA cause
17
of action, and that his claim did not abate upon his death. (Opp’n to Mot. for Summ. J. as to CPA
18
5, ECF No. 126.) This Court agrees with Union Bank.
19
20
Only “person[s]” aggrieved as a result of a violation of the CPA may bring a CPA private
21
cause of action. 4 CMC § 5112(a). The CPA defines a “person” to be “natural persons,
22
corporations, firms, partnerships, joint stock companies, and associations or other organizations
23
of persons.” 4 CMC § 5104(g). Absent from this definition is any reference to estates or their
24
like. The CPA’s definition of “persons” derives from the Consumer Protection Act of 1989,
25
26
CNMI Pub. L. 6-26. Prior to the adoption of Public Law 6-26, a “person” was defined under the
27
CPA as “natural persons, corporations, trusts, partnerships, incorporated or unincorporated
28
associations, and any other legal entity.” 33 TTC § 352(1) (emphasis added). The catch-all
13
1
provision—“and any other legal entity”—was removed and replaced in 1989 with the narrower
2
language “or other organizations of persons.” While a valid argument could be made that
3
“estates” fall into the former definition of “persons” as a legal entity, it is undisputed that it
4
5
6
cannot fall within the current definition.
More significantly, the CNMI Superior Court previously looked at this issue and
7
determined that estates are not “persons” under the CPA. The court in Morita v. Scuba World,
8
Inc. et al., explained that:
9
10
11
12
[o]nly those bodies listed under the [Consumer Protection Act] are entitled to bring
a claim under the Act. Estates are not included in those enumerated under the
definition of “person,” and cannot be construed as a consumer under the Act. Thus,
[the Estate] is not entitled to bring a claim or obtain relief under the [CPA].
Accordingly, Defendant’s Motion for Summary Judgment with respect to
Plaintiff’s Consumer Protection Act Cause of Action is GRANTED.
13
14
Morita v. Scuba World, Inc. et al., Civ. No. 07-0248 at 3-4 (NMI Super. Ct. July 29, 2011)
15
(Order Granting Def.’s Mot. for Summ. J. re CPA and Granting Def.’s Mot. for Summ. J. re
16
Punitive Damages on Pls.’ Wrongful Death Claim) (emphasis added). Estates are therefore
17
considered a separate legal entity. As such, Flores’ Estate is not entitled to initiate a claim or
18
obtain relief under the CPA under the guise of “other organizations of persons.”
19
20
Since estates do not qualify as “persons” entitled to bring a CPA claim, the question then
21
turns on whether the CPA claim abated upon the death of Flores, the consumer. There is no
22
question that Donald Flores initiated a valid CPA claim as a natural person aggrieved by an
23
alleged violation of the Act pursuant to 4 CMC § 5112(a). The CPA claim accrued in 2008, and
24
Flores timely filed suit in 2011. See 4 CMC § 5110 (four-year statute of limitations). Flores
25
26
passed away during the pendency of the appeal of this Court’s decision granting summary
27
judgment to Union Bank. His son Derron is now the plaintiff as the administrator of Flores’
28
Estate. Since there is no dispute that Derron, as administrator of Flores’ Estate, is a proper party,
14
1
the only remaining issue is whether the CPA claim was extinguished upon Flores’ death. See
2
Fed. R. Civ. P. 25(a)(1) (court may order substitution of the proper party if a party dies and the
3
claim is not extinguished).
4
In determining whether the CPA claim, a statutory cause of action, survives the death of
5
6
the consumer, we first look to the statute itself. “The most basic canon of statutory construction
7
is that ‘the [statutory] language must be given its plain meaning, where the meaning is clear and
8
unambiguous.’” Saipan Achugao Resort Members’ Ass’n v. Yoon, 2011 MP 12 ¶ 23 (N. Mar. I.
9
2011) (quoting Calvo v. N. Mariana Islands Scholarship Advisory Bd., 2009 MP 2 ¶ 21 (N. Mar.
10
11
I. 2009)). When the written law and local customary law are silent, Commonwealth courts then
12
apply “the rules of the common law, as expressed in the restatements of the law approved by the
13
American Law Institute and, to the extent not so expressed as generally understood and applied
14
in the United States[.]” 7 CMC § 3401; see Ada v. Sablan, 1 N.M.I. 415, 424 (1990).
15
Here, the CPA does not expressly provide for survival of a CPA claim upon the death of
16
17
the consumer. Flores has failed to cite to any authority on point, 4 and the Court has not found
18
any relevant CNMI case law to support this proposition. “[U]nless some statute can be found
19
providing for the survival of a statutory cause of action, the action abates upon the claimant’s
20
death.” 1 Am. Jur. 2d Statutory causes of action, generally § 59 (2017); Lornson v. Siddiqui, 735
21
22
In his Opposition, Flores cites to two cases, but neither is on point. (Opp’n to Mot. for Summ. J. as to CPA, ECF
No. 126.) In U.S. ex rel. Colucci v. Beth Israel Medical Center, 603 F.Supp.2d 677, 681 (S.D.N.Y. 2009), the
district court held that a qui tam action under the False Claims Act (“FCA”) can survive the death of the relator.
When a federal statute contains no explicit statement on the right of survivability, as is the case here, the general rule
under federal common law is that claims under federal statutes survive a plaintiff’s death if the statute is remedial,
not penal. Id. at 680 (citing Ex parte Schreiber, 110 U.S. 76, 80 (1884)). Qui tam actions are distinguishable from
statutory causes of action. The issue of survivability as to qui tam actions focuses on the remedial or penal nature of
the statute whereas statutory causes of action are analyzed in terms of whether survival is specified in the statute
itself or in another statute. Compare 1 Am. Jur. 2d § 59 Statutory causes of action, generally (2017) with 1 Am. Jur.
2d § 62 Actions for penalties—Qui tam actions (2017). In the second case, Wright v. Finance Service of Norwalk,
Inc., 22 F.3d 647, 650 (6th Cir. 1994), the Sixth Circuit held that the executrix of the estate had standing to sue the
debt collection agency under the Fair Debt Collection Practices Act (“FDCPA”). This case is distinguishable
because unlike the CPA, which expressly limits private actions to any “person” aggrieved as a result of a CPA
violation, the FDCPA’s “liability section [§ 1692k] is couched in the broadest language possible” such that “any
aggrieved party may bring an action under § 1692e.” Id. at 649-50.
4
23
24
25
26
27
28
15
1
N.W.2d 55, 66 ¶ 41 (Wis. 2007) (“Thus, unless some statute can be found providing for survival,
2
the action abates.”) (internal citation omitted); Lowe v. Experian, 340 F. Supp. 2d 1170, 1176-77
3
(D. Kan. 2004) (holding that the decedent’s Kansas Fair Credit Reporting Act claim did not
4
5
6
survive her death due to the lack of a provision for the survivability of the claim and the inability
for the claim to fall under the state’s general survival statute).
7
8
Even if survival is not addressed in the statute itself, however, a statutory cause of action
will survive the death of the claimant if survival is specified in another statute. 1 Am. Jur. 2d
9
Statutory causes of action, generally § 59 (2017); Keeney v. Infinity Ins. Co., 231 F. Supp. 2d
10
11
488, 492 (S.D.W.Va. 2002) (injured driver’s West Virginia Unfair Trade Practices Act claim did
12
not survive driver’s unrelated death because his claim was not one that would have survived
13
under common law nor was it listed as an action that survived under statute); Johnson v.
14
Household Finance Corp., 453 F.Supp. 1327, 1329 (S.D.Ill. 1978) (holding that the Truth in
15
Lending Act action, a statutory cause of action, did not survive the death of the plaintiff because
16
17
survival was not mandated by the TILA or another state statute). “A survivorship statute operates
18
to preserve the decedent’s claim for damages; the claim ‘survives’ the decedent and belongs to
19
the estate.” Indalecio v. Yarofalir, 2006 WL 2242754 ¶ 15 (N. Mar. I. 2006). The CNMI’s
20
general survival of actions statute, 7 CMC § 2601(a), only addresses tort claims. It provides:
21
A cause of action based on tort shall not be lost or abated because of the death of
the tortfeasor or other person liable. An action thereon may be brought or
continued against the personal representative of the deceased person, but punitive
or exemplary damages may not be awarded nor penalties adjudged in the action.
22
23
24
The CNMI’s general survival of actions statute is very narrow compared to other jurisdictions
25
26
27
whose definition of “persons” under their consumer protection act also explicitly excludes
“estates” or their like. 5 See Haw. Rev. Stat. § 663-7 (“A cause of action arising out of a wrongful
28
See Hawaii Unfair and Deceptive Trade Practices Act, Haw. Rev. Stat. § 480-1 (“‘Person’ or ‘persons’ includes
individuals, corporations, firms, trusts, partnerships, limited partnerships, limited liability companies, and
5
16
1
act, neglect, or default . . . shall not be extinguished by reason of the death of the injured person.
2
The cause of action shall survive 6 in favor of the legal representative of the person and any
3
damages recovered shall form part of the estate of the deceased.”); Cal Civ. Code § 377.21 (“A
4
5
pending action or proceeding does not abate by the death of a party if the cause of action
6
survives.”). 7 Unlike these other jurisdictions in which their general survival of action statute may
7
save a CPA claim, the CNMI’s general survival statute does not.
8
Interpretation of the CNMI’s general survival of actions statute was further narrowed by
9
the Commonwealth Supreme Court in 2006. In Indalecio v. Yarofalir, 2006 MP 18, the
10
11
Commonwealth Supreme Court held that the CNMI Legislature’s silence as to the survival of
12
tort claims upon a victim’s death “was not an oversight, but a calculated decision” to show that
13
tort claims, including fraud claims, could not survive the death of the victim. Id. at ¶ 22. This
14
Court recently acknowledged that the Indalecio rule can have harsh results when applied to these
15
types of circumstances. See Cecilia Flores v. Concepcion, et al., Case No. 15-cv-10 at 8, ECF
16
17
No. 29 (D. N. Mar. I. April 25, 2016) (Order Denying Mot. for Substitution and Dismissing Case
18
Without Prejudice) (“Allowing a thief to make off with money that rightfully should go to the
19
victim’s heirs, except for the unfortunate circumstance that the victim died during the pendency
20
of the litigation, is a harsh and unfair result.”). Nonetheless, the Commonwealth Supreme Court
21
in Indalecio saved the claim by recharacterizing it as a wrongful death claim belonging to the
22
23
estate. Id. This Court cannot save the CPA claim here.
24
25
26
27
28
incorporated or unincorporated associations”); California Consumers Legal Remedies Act, Cal. Civ. Code § 1761(c)
(“‘Person’ means an individual, partnership, corporation, limited liability company, association, or other group,
however organized”).
6 “Under HRS § 663-7 there survives in favor of the decedent’s legal representative only such cause of action as the
decedent himself had at the moment of his death.” Greene v. Texeira, 505 P.2d 1169, 1172 (Haw. 1973) (citing
Rohlfing v. Akiona, 369 P.2d 96, 98 (Haw. 1961)).
7 “Except as otherwise provided by statute, a cause of action for or against a person is not lost by reason of the
person’s death, but survives subject to the applicable limitations period.” Cal. Civ. Code § 377.20.
17
1
2
In construing state law, district courts must follow the decisions of the state’s highest
court. Harvey’s Wagon Wheel, Inc. v. Van Blitter, 959 F.2d 153, 154 (9th Cir. 1992) (citation
3
omitted). “Only if there is no precedent or convincing evidence that the highest court of the state
4
5
would decide differently would we need to predict state law.” Mangold v. California Public
6
Utilities Comm’n, 67 F.3d 1470, 1479 (9th Cir. 1995) (internal quotation marks and citation
7
omitted). The lack of an express survival provision in the CNMI’s CPA, the Commonwealth
8
Supreme Court’s strict construction of the CNMI’s survival of claims statute in Indalecio, and
9
the CNMI Legislature’s unwillingness to broaden 7 CMC § 2601 since Indalecio leaves this
10
11
Court with no basis to conclude that a deceased consumer’s CPA claim has a right of survival.
12
The opportunity to allow a CPA claim to survive the death of a consumer rightfully belongs to
13
the Legislature. Accordingly, Union Bank’s motion for summary judgment as to the CPA cause
14
of action is granted. Because the Court must dismiss the CPA claim for Derron’s lack of standing
15
to pursue this private right of action on behalf of his father, the Court need not address Union
16
17
18
19
20
Bank’s motion for partial summary judgment on the issue of willful violation of the CPA as it is
mooted.
B.
Roll Over Interest Rate
Union Bank argues that its obligation to pay interest on Flores’ TCD depends on the plain
21
language of the TCD, which states that it “matures on OCT. 12, 1993 (32 days) and earns interest
22
23
at the rate of 2.50%” and “earns no interest after maturity.” (Def. Mot. for Partial Summ. J. re
24
Violation of CPA and Int. Rate 7-8, ECF No. 80.) Flores alleges, however, that at the time he
25
opened the TCD, he informed Lou that he was leaving Saipan for an indefinite period of time
26
and asked whether Union Bank will roll over the TCD if he does not return to Saipan soon. (FAC
27
¶ 11.) Flores recalls that Lou “assured him that Union Bank will roll over the CD and will
28
continue to earn interest at the then prevailing rate.” (Id. ¶ 12.)
18
1
2
A TCD may qualify as an instrument in writing evidencing a transaction “between the
parties, and hence must be considered in the light of the same rules of law and evidence as other
3
written instruments.” See Verdi v. Helper State Bank, 196 P. 225, 227 (Utah 1921); Montgomery,
4
5
Superintendent of Banks, et al. v. Smith, 145 So. 822, 826 (Ala. 1933) (“A certificate of deposit
6
is defined to be a written acknowledgement by a bank of the receipt of a sum of money on
7
deposit which it promises to pay to the depositor, to his order, . . . whereby the relation of debtor
8
and creditor between the bank and the depositor is created.”) (internal citations omitted). Under
9
CNMI law, “[w]here the language of a writing is plain and precise, a court can, as a matter of
10
11
law, establish the intentions of the parties as declared in the writing.” Del Rosario v. Camacho, 6
12
N.M.I. 213, 227 (2001) (citing Santos v. Santos, App. No. 98-029 (N.M.I. Sup. Ct. May 20,
13
2000) (Opinion at 7) (an unambiguous instrument conveying property must be construed to its
14
terms)). “[L]anguage in a contract is to be given its plain grammatical meaning unless doing so
15
would defeat the parties’ intent.” Commonwealth Ports Auth. v. Tinian Shipping Co., 2007 MP
16
17
22 ¶ 17. To determine the parties’ intent, the Court looks “only within the four corners of the
18
agreement to see what is actually stated, and not at what was allegedly meant.” Id. The parol
19
evidence rule excludes evidence of prior or contemporaneous agreements or negotiations to
20
change or modify the terms of a binding integrated agreement. See Del Rosario v. Camacho, 6
21
N.M.I. 213, 227 (2001) (citing Restatement (Second) of Contracts §§ 213, cmt. a, b, 215 (1981));
22
23
Seol v. Saipan Honeymoon Corp., App. No. 96-011 (N.M.I. Sup. Ct. Apr. 12, 1999) (Opinion at
24
4)). In Del Rosario, the court stated that it “considers parol evidence, not to determine that a
25
party meant something other than what he said, but only to show what he meant by what was
26
said.” Del Rosario, 6 N.M.I. at 227 (citing Sablan v. Cabrera, 4 N.M.I. 133, 140 n.40 (1994)).
27
Here, the face of Flores’ TCD states:
28
19
1
2
3
4
5
. . . $200,000.00 has been deposited by Donald G. Flores. Payable to Donald G.
Flores only upon maturity, presentation and surrender of this certificate, properly
endorsed at the office of issue. This certificate matures on OCT. 12, 1993 (32
days) and earns interest at the rate of 2.50% with an annual percentage yield of
2.50% interest payable AT MATURITY. This certificate earns no interest after
maturity, there is an early withdrawal fee if a withdrawal is made before maturity.
(Compl., Ex. A) (emphases added). The language of the TCD is plain and straightforward. The
6
date and signature of the TCD indicates that Lou, an authorized Union Bank officer, approved
7
8
9
the purchase of the TCD on September 10, 1993. The TCD in this case is therefore a binding
integrated agreement because it: (1) lists all pertinent terms of the TCD, including the initial
10
deposit, interest rate, date of maturity, and beneficiary; (2) identifies the parties to be bound by
11
the agreement; and (3) indicates approval by an authorized Union Bank officer. It is clear that on
12
September 10, 1993, both Flores and Union Bank mutually consented to be bound by the terms
13
14
15
16
17
of the TCD.
Flores argues that the TCD is not a contract but rather evidence of the existence of a
contract. (Opp’n to Mot. for Partial SJ ECF 80 at 2.) In particular, he states that the TCD is
“nothing much more than a receipt of payment” with the real contract being the oral agreement
18
between Flores and Lou. (Opp’n to Mot. for Partial SJ ECF 80 at 3.) Even if this Court were to
19
20
accept Flores’ proposition that the TCD is a receipt, a receipt “may contain a contract, and a
21
contract embraced in a writing, which also acknowledges the receipt of money, stands upon the
22
same footing as other written contracts and cannot be varied or modified by parol evidence.” The
23
Delaware, 81 U.S. 579, 601 (1871) (holding that insofar as a receipt is the evidence of contract
24
between parties, “it stands on footing of all other contracts in writing and cannot be contradicted
25
26
or varied by parol evidence”); Morse v. Rice, 54 N.W. 308, 309 (Neb. 1893) (“where a receipt
27
also embodies a stipulation in the nature of a contract, it is not open to contradiction, but is
28
conclusive upon the parties, in the absence of proof of fraud or mistake”); but cf. Geler v.
20
1
National Westminster Bank USA, 763 F.Supp. 722, 725 (S.D.N.Y. 1991) (holding the CD is not
2
an integrated writing because depositor did not sign the CD or otherwise “unequivocally
3
manifest[] his assent to its terms”). The TCD in this case goes beyond the mere
4
5
acknowledgement of the receipt of money; it specifically identifies the parties to be bound,
6
acknowledges approval by a Union Bank officer, and unambiguously lays out all pertinent terms
7
of the TCD. To hold that Union Bank shall be bound by an oral agreement which modifies the
8
terms so plainly and precisely laid out in the TCD which Flores possessed and which Union
9
Bank approved, would be to ignore the parties’ true intent. Consideration of Lou’s prior or
10
11
contemporaneous statement that the TCD will “roll over” and continue to earn interest at the
12
prevailing rate (FAC ¶ 12) would add a condition not stated on the TCD, which clearly states that
13
the TCD “earns no interest after maturity.” Union Bank’s obligation to pay interest on Flores’s
14
TCD rests solely on the plain language of the TCD. The terms of the TCD clearly prohibit
15
interest after maturity on October 12, 1993. For these reasons, Union Bank’s motion for partial
16
17
summary judgment as to Plaintiff’s claim for roll over interest rate is granted.
18
C.
19
Union Bank moved for an order granting partial summary judgment dismissing Flores’
20
Request for Punitive Damages
claims of fraud and bad faith and prayer for punitive damages. (Def Mot. for Partial SJ re Claims
21
of Fraud, Bad Faith, Pun Damages, ECF No. 82.) This motion is based on the FAC, where Flores
22
23
has stated that damages “may include as the case may be, actual, liquidated, and punitive.” (FAC
24
19.) Flores clarifies in his opposition, however, that he only seeks punitive damages for his bad
25
faith and fraud claims. (Opp’n to Mot for Partial SJ 13, ECF No. 88.) His response was therefore
26
limited solely to bad faith and fraud. (Id.) The Ninth Circuit upheld this Court’s decision that all
27
of Flores’ tort claims are time-barred, Flores v. First Hawaiian Bank, 642 Fed. Appx. at 698, and
28
therefore no punitive damages are available for the claims of bad faith and fraud. Union Bank’s
21
1
motion for partial summary judgment as to Flores’ prayer for punitive damages under the fraud
2
and bad faith claims is therefore granted.
3
VI.
CONCLUSION
4
5
Based on the foregoing, Defendant Union Bank’s motion for partial summary judgment
6
as to Flores’ claims of violation of the CPA (because it is not a “merchant” under the CPA) and
7
roll over interest rate (ECF No. 80) is DENIED IN PART AND GRANTED IN PART; motion
8
for partial summary judgment as to Flores’ claims of punitive damages under the bad faith and
9
fraud claims (ECF No. 82) is GRANTED; and motion for summary judgment as to Flores’ CPA
10
11
12
13
cause of action (because the Estate is not a “person” under the CPA) (ECF No. 122) is
GRANTED.
IT IS SO ORDERED this 6th day of April, 2017.
14
15
16
RAMONA V. MANGLONA
Chief Judge
17
18
19
20
21
22
23
24
25
26
27
28
22
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?