Yoshida v Guam Transport and Warehouse Inc [2013] GUSC 5; 2013 Guam 5 (17 April 2013)

IN THE SUPREME COURT OF GUAM

LAWRENCE S. YOSHIDA,
Plaintiff-Appellant,

v.

GUAM TRANSPORT AND WAREHOUSE, INC.,
Defendant-Appellee.

Supreme Court Case No.: CVA12-017
Superior Court Case No.: CV0012-10

OPINION

Filed: April 17, 2013

Cite as: 2013 Guam 5

Appeal from the Superior Court of Guam
Argued and submitted on October 29, 2012
Hagåtña, Guam

Appearing for Plaintiff-Appellant: Thomas M. Tarpley Jr., Esq. Thomas McKee Tarpley Law Firm, A.P.C. 414 W. Soledad Ave., Ste. 904 Hagåtña, GU 96910

Appearing for Defendant-Appellee: Jacqueline Taitano Terlaje, Esq. Law Office of Jacqueline Taitano Terlaje, P.C. 250 Route 4, Ste. 204 Nanbo Guahan 250 Bldg. Hagåtña, GU 96910

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

MARAMAN, J.:

[1] Plaintiff-Appellant Lawrence S. Yoshida lent money to his employer, Defendant-Appellee Guam Transport and Warehouse, Inc. ("GTW") in 1996-1999 and 2006. Claiming that GTW still owes him money for the loans, Yoshida filed a Complaint for Monies Owed in the Superior Court of Guam. In its Findings of Fact and Conclusions of Law, the trial court concluded that Yoshida could not recover any money from GTW because there were no written contracts evidencing valid loan agreements. Yoshida now appeals the trial court's judgment.

[2] We find that the loans were made and the money is owing, and we therefore vacate the judgment and remand the matter to the trial court to determine, in a matter consistent with this opinion, the amount GTW owes Yoshida on the 1996-1999 and 2006 loans.

I. FACTUAL AND PROCEDURAL BACKGROUND

[3] Yoshida is a former assistant manager, corporate officer, and shareholder of GTW. Yoshida worked for GTW from April 7, 1995 through December 31, 2009. While Yoshida worked at GTW, GTW paid Yoshida's home mortgage and living expenses as part of his compensation plan. Aside from Yoshida's employee compensation plan, GTW made no express agreements with Yoshida to pay any of Yoshida's debts, except those related to loans that Yoshida made to GTW in 2006, as described below.

[4] During Yoshida's employment with GTW, GTW faced cash flow problems. To help with GTW's cash flow problems, Yoshida deposited money into GTW's account at the request of his friend, Barry Honda. Honda is a shareholder and the Chief Executive Officer ("CEO") of GTW. Yoshida made a deposit into GTW's business account in 1996, another deposit in 1999, and two more deposits in 2006.

1996-1999 Deposits

[5] At Honda's request, Yoshida wrote two checks totaling $25,000 between 1996 and 1999. The first check for $15,000.00 was made on September 11, 1996. The second check for $10,000.00 was made on August 24, 1999.

[6] Both Yoshida and Honda characterized the money that Yoshida deposited into GTW's account in 1996 and 1999 as loans. At some point, Yoshida and Honda orally agreed to the general repayment of the 1996-1999 loans. But the parties made no express agreement as to a specific term of repayment or whether interest would accrue.

2006 Deposits

[7] Yoshida wrote two more checks to GTW in 2006 at Honda's request, totaling $45,000.00. On November 30, 2006, Yoshida wrote the first check for $15,000.00. Thereafter, on February 27, 2006, Yoshida wrote the second check for $30,000.00. Both checks were deposited into GTW's account for business purposes.

[8] Honda and Yoshida both characterize the 2006 deposits as loans. Again, Yoshida and GTW made no express agreements on terms of repayment or whether interest would accrue on the 2006 loans. GTW did, however, orally agree to make payments on Yoshida's Bank of Hawaii line of credit, which Yoshida had drawn upon to make the 2006 deposits into GTW's account.[1]

[9] Beginning in April 2006, GTW made monthly payments on Yoshida's Bank of Hawaii line of credit to repay the 2006 deposits. GTW stopped making monthly payments on Yoshida's Bank of Hawaii line of credit in December 2009, the same month that Yoshida resigned.

[10] Yoshida then filed an Amended Complaint for Monies Owed ("Complaint"), setting forth two claims for relief. In his first claim for relief, Yoshida asserted that GTW owed him a total of $139,636.88 plus interest and costs for the 2006 loans.[2] In his second claim for relief, Yoshida alleged that GTW owed him $25,000.00 plus interest and costs for the 1996-1999 loans.

[11] GTW in its Answer denied the balance owed on the 2006 loans and also denied any obligation to repay the 1996-1999 loans. GTW also asserted the doctrine of unclean hands as an affirmative defense in an attempt to bar any recovery by Yoshida.

[12] GTW sought leave of court to file an amended answer and counterclaim, and the request was granted by the trial court. Notwithstanding, GTW subsequently notified the trial court that it would not amend as it had previously requested.

[13] GTW again requested leave of court to file an amended answer and counterclaim. Specifically, GTW sought to amend its answer to include a counterclaim alleging that Yoshida owed GTW money because Yoshida embezzled from GTW. The trial court denied GTW's second request for leave of court to amend its answer.

[14] The trial court then heard the matter by bench trial and issued its Findings of Fact and Conclusions of Law.

[15] The trial court concluded that Yoshida could not recover his 1996-1999 deposits nor any interest related to the deposits because Yoshida and GTW lacked an express or implied contract evidencing a valid loan agreement. Additionally, the trial court held that the statute of frauds barred Yoshida from any recovery. According to the trial court, the testimony established that the repayments of the 1996-1999 deposits were not to be completed within one year, and that, accordingly, the agreement would have to be reduced to writing to be enforceable.

[16] The trial court similarly found that Yoshida could not recover what remained owing on his 2006 deposits or on any interest related to his 2006 deposits.[3] The trial court determined that Yoshida could not recover what remained owing on his 2006 deposits because Yoshida and GTW lacked an express or implied contract regarding a repayment schedule for and the general terms of the 2006 loans. The trial court also found that the statute of frauds barred Yoshida from any further recovery of his 2006 deposits. According to the trial court, the loan agreement was required to be in writing because GTW agreed to pay Yoshida back over an undefined duration and because GTW promised to pay Yoshida back by making payments on Yoshida's Bank of Hawaii line of credit.

[17] The trial court also rejected GTW's unclean hands affirmative defense. In rejecting the affirmative defense, the trial court explained that Honda "did not prove that Yoshida embezzled, violated fundamental conscience, good faith, or other equitable principles of his prior employment" with GTW. RA, tab 51 at 4 (Finds. Fact & Concl. L., Feb. 8, 2012). Furthermore, the trial court found that Honda's assertions related to the unclean hands affirmative defense were baseless and motivated by a separate dispute between Honda and Yoshida.

[18] Yoshida timely filed a notice of appeal from the trial court's judgment rendered on March 26, 2012.

II. JURISDICTION

[19] 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. 112-207 (2012)); 7 GCA §§ 3107(b), 3108(a) (2005).

III. STANDARD OF REVIEW

[20] Following a bench trial, the trial court's findings of fact, whether based on oral or documentary evidence, shall not be set aside by the reviewing court unless clearly erroneous, and "due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." Town House Dep't Stores, Inc. v. Ahn et al., 2000 Guam 32 ¶ 13 (internal citations omitted). The trial court's conclusions of law are reviewed de novo. Id.

IV. DISCUSSION

A. Whether the 1996-1999 and 2006 Loans of Money are Contracts Under 18 GCA § 47101

[21] When determining whether Yoshida and GTW formed an enforceable contract with regard to Yoshida's deposits to GTW, the trial court did not apply the relevant statutory provision governing the loan of money, 18 GCA § 47101. See RA, tab 51 at 4-5 (Finds. Fact & Concl. L.) (omitting an 18 GCA § 47101 analysis). Title 18 GCA § 47101 provides: "A loan of money is a contract by which one delivers a sum of money to another, and the latter agrees to return at a future time a sum equivalent to that which he borrowed." 18 GCA § 47101 (2005) (emphasis in original).

1. 1996-1999 Deposits are Loans of Money

[22] Yoshida asserts that his 1996-1999 deposits totaling $25,000.00 to GTW are loans of money, which by definition are "contracts" under 18 GCA § 47101. Appellant's Br. at 6 n.3 (July 19, 2012). We agree. The 1996-1999 deposits are loans of money because Yoshida delivered a sum of $25,000.00 to GTW, and GTW agreed to return Yoshida's $25,000.00 at a later time.

a. Yoshida Delivered a Sum of Money to GTW in the Amount of $25,000.00

[23] As Yoshida points out, the trial testimony established that Yoshida delivered $25,000.00 to GTW. Appellant's Br. at 3-4 (July 19, 2012). On direct examination, Yoshida testified that he loaned GTW $15,000.00 in 1996 and $10,000.00 in 1999 to help address GTW's financial problems:

[Tarpley]	Now, Mr. Yoshida, the second claim for relief in your complaint is a cause of action for $25,000.00 and other loans to GTW. Did you loan or had you loaned GTW $25,000.00, apart from the $45,000.00 loan?
[Yoshida]	Yes, I did.
[Tarpley]	Could you turn to Exhibit 6? Can you identify that?
[Yoshida]	Yes.
[Tarpley]	Would you describe it for the record?
[Yoshida]	It was a $10,000.00 loan that I loaned in 1999 to Guam Transport & Warehouse.
[Tarpley]	And the date of that is, what?
[Yoshida]	August 24, 1999.
[Tarpley]	And why did you make that loan to Guam Transport & Warehouse?
[Yoshida]	I was asked if I could loan the company the amount because of cash flow problems.
[Tarpley]	Could you turn to Exhibit 7? Can you identify that?
[Yoshida]	Yes. This is the same thing. Due to financial problems, I was asked for a loan for $15,000.00 on September 11, 1996.
[Tarpley]	And have either of these loans been repaid?
[Yoshida]	No, not -- it was not repaid.

Transcripts ("Tr."), tab 2 at 27 (Bench Trial, Feb. 3, 2012).

[24] On direct examination, GTW's CEO, Barry Honda, confirmed Yoshida's loans totaling $25,000.00 to GTW:

[Tarpley]	And would you agree with that today, that he loaned you the $25,000.00?
[Honda]	I would say, yes, because I saw the two checks and it was deposited in our account.
[Tarpley]	But, didn't you say that you had cash flow problems and Mr. Yoshida loaned this, the money?
[Honda]	Whenever he -- yes.
[Tarpley]	You did say that?
[Honda]	Yeah.
[Tarpley]	All right. And would you agree with that today?
[Honda]	That's a long time ago.
[Tarpley]	Okay. But you agree, you said that in your deposition under oath; correct?
[Honda]	Yes.

Id. at 61.

[25] On cross examination, Honda again acknowledged Yoshida's $25,000.00 loan to GTW:

[Terlaje]	Okay. Are you confident that these were loans from Mr. Yoshida?
[Honda]	Yes.
[Terlaje]	Okay. And do you recall any conversations involving those loans?
[Honda]	I asked Mr. Yoshida if he could loan us money and he said, yes.

Id. at 64.

b. GTW Agreed to Return Yoshida's $25,000.00 at a Later Time

[26] Honda further testified on cross examination that GTW agreed to return the $25,000.00 to Yoshida at a later time:

[Terlaje]	Okay. And did GTW at that time agree to a repayment term?
[Honda]	It never was brought up.
[Terlaje]	Okay. Did GTW agree to pay interest on that loan?
[Honda]	No.
[Terlaje]	Okay.
[Honda]	No.
[Terlaje]	And so all that was said was GTW will pay back $25,000.00 at some point?
[Honda]	Yes.

Id.

[27] Therefore, because Yoshida delivered a sum of $25,000.00 to GTW, and because GTW agreed to return Yoshida's $25,000.00 at a later time, there has been a loan of money as defined under 18 GCA § 47101. 18 GCA § 47101. Because "[a] loan of money is a contract" under section 47101, we hold that the 1996-1999 loans of money are enforceable as such. Id.