Duenas v Kallingal [2012] GUSC 4; 2012 Guam 04 (17 May 2012)

IN THE SUPREME COURT OF GUAM

JOSEPH T. DUENAS, as administrator for
the Estate of Rosario T. Quichocho,
Plaintiff-Appellee,

v.

GEORGE AND MATILDA KALLINGAL, P.C., GJADE, INC.,
FORTUNE JOINT VENTURE dba FORTUNE VENTURES,
Defendants-Appellants.

DEPARTMENT OF PUBLIC HEALTH AND SOCIAL SERVICES, GOVERNMENT OF GUAM,
Intervenors-Appellees.

Supreme Court Case No.: CVA11-001
Superior Court Case No.: CV1440-07

OPINION

May 17, 2012

Cite as: 2012 Guam 4

Appeal from the Superior Court of Guam
Argued and submitted on September 8, 2011
Hagåtña, Guam

Appearing for Defendants-Appellants: Ronald P. Moroni, Esq. Moroni Law Offices San Ramon Bldg. 115 San Ramon St., Suite 301 Hagåtña, GU 96910

Appearing for Plaintiff-Appellee: Vincent Leon Guerrero, Esq. P.O. Box 12457 Tamuning, GU 96932

BEFORE: F. PHILIP CARBULLIDO, Chief Justice; ROBERT J. TORRES, Associate Justice; and KATHERINE A. MARAMAN, Associate Justice.

MARAMAN, J.:

[1] Defendants-Appellants George and Matilda Kallingal, P.C. ("KPC") and Fortune Joint Venture ("FJV") appeal from the trial court's grant of summary judgment in favor of Plaintiff-Appellee Rosario T. Quichocho, finding FJV, KPC, and GJADE, Inc. ("GJADE") liable for rent owing to Rosario for use of her property. KPC also appeals the trial court's dismissal of KPC's counterclaim seeking execution of a new lease, as well as the final judgment awarding Rosario attorney's fees and interest on the total unpaid balance of rent, based on provisions in the lease. We affirm in part and reverse in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

[2] In December 1993, GJADE, a Guam corporation consisting of Mr. and Mrs. Gregorio[1] and Josephina Quichocho and their son Anthony Quichocho, entered into a joint venture agreement with KPC, a Guam corporation consisting of Drs. George and Matilda Kallingal. GJADE and KPC formed Fortune Joint Venture for the purpose of "financing and constructing an all concrete commercial building project for lease" on Lot No. 2416-R4 and Lot No. 2416-4. Appellant's Excerpts of Record ("ER") at 37 (Joint Venture Agreement, Dec. 15, 1993). The two lots, now known as Legacy Square, were owned by Gregorio Quichocho ("Gregorio") and his sister Rosario Quichocho ("Rosario"), respectively. Prior to the creation of FJV,[2] GJADE and KPC agreed in writing that GJADE would provide two parcels of property and KPC would acquire a construction loan from Bank of Guam.

[3] In June 1994, GJADE entered into a written lease with Rosario for Lot No. 2416-4 for a term of seventy-five years. In January 1995, a document entitled "Assignment of Lease Agreement" was signed by Anthony Quichocho, on behalf of GJADE, and George Kallingal, on behalf of FJV. ER at 34 (Assignment of Lease Agreement, Jan. 26, 1995). Legacy Square was erected in 1996. In 1997, KPC loaned itself and GJADE additional funds and gave itself a mortgage on the leasehold interest of both parcels that comprise Legacy Square.[3] Rosario stopped receiving rent in 1999. In October 2003, Rosario engaged the services of an attorney to help her recover past due rent. In September 2007, Rosario sent notices of default and demand to cure to GJADE, KPC, and FJV. On November 8, 2007, Rosario notified tenants of Legacy Square that the ground lease had been cancelled. One week later, KPC sent Rosario a letter stating that the cancellation was not effective, and that KPC intended to exercise the right to demand a new lease. On November 21, 2007, KPC sent another letter to Rosario, electing to obtain a new lease in accordance with the terms of the ground lease.

[4] Rosario filed a complaint against GJADE, FJV, and KPC, seeking a declaration of termination of the lease, all past due rent and real property taxes, a declaration of termination of KPC's leasehold mortgage, and a request for attorney's fees.[4] FJV and KPC filed a counterclaim, seeking the execution of a new lease. KPC then filed a motion for partial summary judgment, which the trial court granted in part, finding that the statute of limitations barred Rosario from collecting rent owed beyond the four years within which her complaint was filed. KPC filed two subsequent motions for partial summary judgment, claiming that Rosario was unable to prove damages and FJV and KPC were not liable for rent. Rosario filed a cross-motion for summary adjudication, urging the court to find that KPC and FJV were jointly and severally liable for all claims and that base rent payments plus 15% were owed to Rosario for rent post-filing of the complaint. The trial court denied KPC's motions and granted Rosario's cross-motion, finding that: FJV was an assignee of the lease and liable for rent and taxes while in possession of the property; KPC was a partner in the joint venture and jointly and severally liable for debts of FJV; Defendants breached the lease; and all rent collected by Defendants for use of the property was deemed to be held in trust and immediately payable to Rosario. In July 2009, KPC sent a letter to Rosario acknowledging that the ground lease was terminated and demanding a new lease pursuant to section 10(g) of the lease agreement. The trial court subsequently held a four-day bench trial on the issue of damages and issued its Findings of Fact and Conclusions of Law finding, among other things, that GJADE, FJV and KPC were jointly and severally liable to Rosario for rent owed under the ground lease from December 2003 to October 2007, including a 15% monthly penalty interest on the total unpaid balance, and that Rosario was entitled to reasonable attorney's fees and costs. KPC and FJV timely filed this appeal.

II. JURISDICTION

[5] This court has jurisdiction over an appeal from a final judgment of the Superior Court of Guam pursuant to 48 U.S.C.A. § 1424-1(a)(2) (Westlaw through Pub. L. 112-90 (2012)); 7 GCA §§ 3107(b) and 3108(a) (2005).

III. STANDARD OF REVIEW

[6] A trial court's decision to grant a motion for summary judgment is reviewed de novo. Guam Top Builders, Inc. v. Tanota Partners, 2006 Guam 3 ¶ 8; Guerrero v. McDonald's Int'l Prop. Co.