Hemlani v Flaherty [2003] GUSC 16; 2003 Guam 17 (7 August 2003)

IN THE SUPREME COURT OF GUAM

P.D. Hemlani,
Plaintiff-Appellant,

vs.

Michael Flaherty, Anao Point Estates,
a Guam Limited Partnership,
Defendants-Appellees

OPINION

Supreme Court Case No. CVA02-009
Superior Court Case No. CV0343-00

Filed: August 7, 2003

Cite as: 2003 Guam 17

Appeal from the Superior Court of Guam
Argued and submitted on February 11, 2003
Hagåtña, Guam

Appearing for Plaintiff-Appellant: Ross E. Putnam, Esq. 153 Martyr St. Hagåtña, Guam 96910

Appearing for Defendants-Appellees: Ron Moroni, Esq. Law Offices of Tarpley & Moroni 137 Murray Building, Suite 201 Hagåtña, Guam 96910

BEFORE: F. PHILIP CARBULLIDO, Chief Justice; FRANCES M. TYDINGCO-GATEWOOD, Associate Justice; RICHARD H. BENSON, Justice Pro Tempore.

CARBULLIDO, C.J.:

[1] Plaintiff-Appellant P.D. Hemlani (AHemlani@) filed suit for fraud, intentional misrepresentation, and negligent misrepresentation against Defendant-Appellee Michael Flaherty (AFlaherty@) arguing that Flaherty failed to disclose a mortgage on real property sold by Flaherty to Hemlani and transferred through a grant deed. Flaherty moved for and was granted summary judgment by the trial court. We affirm.

I.

[2] This is an appeal from a summary judgment. Although the facts underlying the real property conveyance were disputed by the parties, Flaherty, in his summary judgment motion, accepted Hemlani=s version of the facts. Thus, the facts as alleged by Hemlani control this analysis.

[3] Hemlani=s Complaint alleged the following facts. In May 1998, Flaherty offered to sell a parcel of real property located in Yigo, Guam for $30,000.00. Hemlani accepted the offer and tendered a check for $30,000.00 in exchange for a grant deed to the property. Hemlani attempted to record the grant deed at the Department of Land Management but was denied because he did not have affidavits of transferee and true consideration from Flaherty. Hemlani subsequently ordered a title report on the property and discovered a mortgage that had been recorded on December 6, 1993 and another mortgage that was recorded on December 30, 1998. Hemlani made repeated requests for delivery of free and clear title, but Flaherty failed to comply.

[4] In March 2000, Hemlani filed suit against Flaherty for fraud, intentional misrepresentation, and negligent misrepresentation. Hemlani sought Flaherty=s specific performance in the execution of a deed which was free and clear of all liens and encumbrances, and compensation in the form of general, special, consequential and punitive damages.

[5] In July 2001, Flaherty filed a motion for summary judgment. The trial court granted this motion. In March 2002, the remaining issue on specific performance went to bench trial. Hemlani did not appear and the trial court entered judgment of dismissal. Hemlani appealed.

II.

[6] This court has jurisdiction over this appeal from a final judgment of the Superior Court. Title 7 GCA '3107(b) (1993).

[7] A grant of summary judgment is reviewed de novo. Iizuka Corp. v. Kawasho Int=l (Guam), Inc., 1997 Guam 10, & 7. Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Guam R. Civ. P. 56(c).

III.

[8] Flaherty presented three arguments in his summary judgment motion: (1) the undisputed facts showed that no fraud, or intentional or negligent misrepresentation occurred; (2) the alleged encumbrance on the property did not exist; and (3) Hemlani suffered no damages in removing any encumbrance and therefore cannot recover damages. The trial court=s Order granting summary judgment offered no analysis other than to state that ADefendant is entitled to judgment as a matter of law for the reasons stated in Defendant=s memorandum of points and authorities which accompanied Defendant=s motion of summary judgment.@ Appellant=s Excerpts of Record, p. 22 (Order).[1] Our determination of whether Flaherty is entitled to summary judgment based upon his three arguments begins with a de novo examination of Hemlani=s Complaint and causes of action.

[9] The Complaint presents causes of action for fraud, intentional misrepresentation and negligent misrepresentation. The elements of fraud are: A(1) a misrepresentation; (2) knowledge of falsity (or scienter); (3) intent to defraud to induce reliance; (4) justifiable reliance; and (5) resulting damages.@ Transpacific Export Co. v. Oka Towers Corp., 2000 Guam 3 & 23. The tort of intentional misrepresentation has the same elements as fraud. See Lim v. The.TV Corp. Int=l, 121 Cal. Rptr. 2d 333, 339 (Ct. App. 2002). The elements of a cause of action for negligent misrepresentation are: A(1) a misrepresentation of a past or existing material fact; (2) without reasonable grounds for believing it to be true; (3) with intent to induce another's reliance on the fact misrepresented; (4) ignorance of the truth and justifiable reliance thereon by the party to whom the misrepresentation was directed, and (5) damages.@ Fox v. Pollack, 226 Cal. Rptr. 532, 537 (Ct. App. 1986). The first element of all three causes of action requires a complainant to prove, prima facie, that a misrepresentation occurred.

A. The Alleged Misrepresentation.

[10] With respect to the cause of action for fraud, Hemlani=s Complaint alleges the following misrepresentation.

On or about May 7, 1998, the defendant, with intent to defraud plaintiff and induce plaintiff to buy property described in paragraph 5 for the sum of $30,000.00 represented to plaintiff that the property was free and clear of all liens and encumbrances and that he would deliver marketable title. The representation was false and defendant knew it to be false at the time it was made, and at all times mentioned in this complaint.

Appellant=s Excerpts of Record, p. 3,& 13 (Complaint). With respect to the cause of action for intentional misrepresentation, the Complaint states:

Defendant Michael P. Flaherty represented to plaintiff that the property was free and clear of all liens and encumbrances and that he would deliver marketable title. In addition, defendant Michael P. Flaherty represented to plaintiff that he would execute all the necessary documents to deliver such marketable title.

Appellant=s Excerpts of Record, p. 5, & 24 (Complaint). Finally, with respect to the cause of action for negligent misrepresentation, the Complaint states:

Defendant Flaherty with the intent to induce plaintiff to purchase the aforementioned property, represented to plaintiff that the property was free and clear of all liens and encumbrances and that he would deliver marketable title. In addition, defendant Flaherty represented that he would execute all the necessary documents to consummate the conveyance of said property, which he failed to do so [sic].

Appellant=s Excerpts of Record, p. 6, & 30 (Complaint).

[11] Flaherty=s summary judgment motion argued that he made no express statements to Hemlani that the property title was free and clear. Upon review of Hemlani=s Opening Brief, it becomes clear that he now admits that misrepresentation was not an express statement, but that it was implied.[2] Hemlani makes two arguments: (1) pursuant to Title 21 GCA '4210, Flaherty made an implied statement that the property title was free and clear, and (2) Flaherty had a duty to disclose the mortgages and failed to do so to Hemlani=s detriment.

B. 21 GCA '4210.

[12] Hemlani=s argument here is correct. Section 4210 provides:

From the use of the word grant in any conveyance by which an estate of inheritance or fee simple is to be passed, the following covenants, and none other, on the part of the grantor for himself and his heir to the grantee, his heirs, and assigns, are implied, unless restrained by express terms contained in such conveyance:

1. That previous to the time of the execution of such conveyance, the grantor has not conveyed the same estate, or any right, title, or interest therein, to any person other than the grantee.