Guam United Warehouse Corporation v DeWitt Transportation Services of Guam Inc [2003] GUSC 19; 2003 Guam 20 (18 November 2003)

IN THE SUPREME COURT OF GUAM

GUAM UNITED WAREHOUSE CORPORATION,
Plaintiff-Appellee / Cross-Appellant

vs.

DeWITT TRANSPORTATION SERVICES OF GUAM, INC.,
A Guam Corporation,
Defendant-Appellant / Cross-Appellee

OPINION

Supreme Court Case No.: CVA02-015
Superior Court Case No.: CV2095-93

Filed: November 18, 2003

Cite as: 2003 Guam 20

Appeal from the Superior Court of Guam
Argued and submitted on April 7, 2003
Hagåtña, Guam

Plaintiff-Appellee/Cross-Appellant:James M. Maher, Esq. Maher & Thompson, P.C. 140 Aspinall Ave., Ste. 201 Hagåtña, GU 96910

Defendant-Appellant/Cross-Appellee: Vincent Leon Guerrero, Esq. Thomas C. Sterling, Esq. Klemm, Blair, Sterling & Johnson A Professional Corporation Ste. 1008, PDN Building 238 Archbishop F.C. Flores Street Hagåtña, GU 96910

BEFORE: F. PHILIP CARBULLIDO, Chief Justice; JANET HEALY WEEKS and MIGUEL S. DEMAPAN, Justices Pro Tempore.

CARBULLIDO, C.J.:

[1] Defendant-Appellant-Cross-Appellee DeWitt Transportation of Guam (hereinafter ADeWitt@) appeals the trial court=s decision, which found the existence of a valid and enforceable contract between itself and Plaintiff-Appellee-Cross-Appellant Guam United Warehouse Corporation (hereinafter AGuam United@). Guam United cross-appeals and alleges that the trial court committed the following errors with respect to the damages issues: in awarding interest on DeWitt=s security deposit; in awarding simple instead of compound interest on the judgment; in concluding that Guam United failed to mitigate its damages; in denying Guam United=s request for rent in the cold storage unit; in denying Guam United=s request for the cost of repair by Quality Builders; and, in allowing an undisclosed witness to testify. We affirm in part and reverse in part.

I.

[2] On August 12, 1971, the Guam Economic Development Authority entered into a lease with the Guam Development and Investment Corporation (hereinafter AGEDA Lease@) for property located in Cabras Island. Guam Development and Investment Corporation assigned its interest in the GEDA Lease to its sister company, Guam United on October 31, 1972. On August 13, 1982, a Management Agreement was executed between Guam United and Coral Transportation & Warehouse Co., Ltd., for a term of three years, ending on May 31, 1985.

[3] Coral Transportation was acquired by DeWitt around November 1, 1983. Thus, when the 1982 Management Agreement expired, on June 1, 1985, Guam United and DeWitt executed another Management Agreement (hereinafter Aold Management Agreement@) for the use of the Cabras lot and warehouse for a six-year term expiring on May 31, 1991. Under this old Management Agreement, DeWitt was required to place a $26,000.00 security deposit and make monthly payments of $17,000.00.

[4] In anticipation of the old Management Agreement=s expiration, in early October 1990, the parties commenced negotiations for a new agreement.[1] Despite various drafts and discussions, no new agreement was finalized when the old Management Agreement expired.[2] Resultingly, the parties entered into a month-to-month arrangement until an agreement could be finalized. Under this temporary arrangement, DeWitt was required to place a $54,400.00 security deposit and to make monthly payments of $27,200.00.

[5] The parties were able to finally reach an agreement (hereinafter Anew Management Agreement@), which was drafted by Guam United and sent to DeWitt in early November, 1992.[3] Through its President, Patrick Mack (hereinafter AMack@), DeWitt signed the agreement on December 11, 1992. Under the terms of the new Management Agreement, DeWitt=s security deposit remained at $54,400.00, with the following payment scheme: (1) January 1, 1993- December 31, 1993, monthly payments of $26,680.00 and (2) January 1, 1994- December 31, 1994, monthly payments of $29,880.00. DeWitt sent the signed new Management Agreement to Guam United, however, Guam United failed to immediately execute it. Instead, on December 29, 1992, Guam United sent a letter to DeWitt, which began with A[w]hen we were on Guam last week, I spoke to Jerry Ingling [sic] about resolving the following issues before we can execute the lease which you already signed. . .@ See DeWitt=s Excerpts of Record, tab M, pp. M1-M2 (December 29, 1992 letter). DeWitt failed to respond to the December 29 letter and on January 7, 1993, Guam United sent a follow up letter seeking confirmation of the issues raised in its December letter.

[6] However, DeWitt did not respond to the January 7 correspondence. In light of its fear that it did not have a commitment from Guam United for the use of Guam United=s warehouse, DeWitt felt it had to relocate its operations. Consequently, DeWitt began negotiations with Sigallo Pac Ltd. for the use of another warehouse facility and on February 3, 1993, DeWitt and Sigallo Pac entered into a sublease for the Sigallo Pac warehouse. However, even with the Sigallo Pac warehouse agreement, DeWitt continued to make monthly payments of $27,200.00 to Guam United and to occupy the Cabras premises.[4]

[7] On February 23, 1993, Guam United, through its President Maria Chen, finally signed the new Management Agreement. The two parties met on February 26, 1993, wherein Mack apparently flaunted to Guam United Owner Joe Fang (hereinafter AFang@) a draft letter from a San Diego attorney, which purported to rescind the new agreement.[4] However, Mack failed to execute and deliver the letter to Fang on that night or any day after. When Fang insistently inquired if DeWitt intended to rescind their agreement, Mack replied in the negative.[5]

[8] Apparently, DeWitt was attempting to sublease the premises to another party and informed Guam United of its attempts to do so.[6] However, around March 1993, Guam United discovered the premises empty. DeWitt, however, continued to make payments until April. Although, it promised to pay May=