Bank opposes remanding $40M lawsuit to Superior Court

MUFG Union Bank and two bank employees are opposing the request of the widow of former Saipan mayor Donald Glenn P. Flores to remand her $40-million lawsuit for fraud against them to the Superior Court.

Union Bank and co-defendants Victoria Borja Concepcion and Ken Kato, through counsel Sean E. Frink, said a section of the Edge Act and the rationale for granting jurisdiction to the federal courts supports the removal of Cecilia U. Flores’ lawsuit to the U.S. District Court for the NMI.

Edge Act allows national banks to engage in international banking through federally chartered subsidiaries. Section 632 of the Act authorizes removal of lawsuits filed against national banks to federal courts.

Frink said Section 632 of the Edge Act applies to national banks doing business in the CNMI.

He also asserted that a section of the Covenant provides that Section 632 of the Edge Act, a banking law, applies to the CNMI, just as it applies to Guam.

The lawyer said the Edge Act also applies directly to the CNMI because the Commonwealth is a “dependency or insular possession.”

Mrs. Flores, through counsel Juan T. Lizama, is suing Union Bank of California and its former employees, Borja Concepcion and Kato, over a bank manager’s alleged unauthorized release of Mr. Flores’ money years prior to his death from his $200,000 time certificate of deposit to a person representing him.

Mrs. Flores asked the Superior Court to hold Union Bank liable to pay her $20 million in damages. She also asked the court to hold Concepcion and Kato responsible to pay her $20 million in damages. She demanded payment for court costs and attorney’s fees.

MUFG Union Bank, however, recently sought to move the lawsuit to the federal court, with Frink asserting that the Edge Act expressly provides for removal of cases in state court that meet its jurisdictional requirements “at any time before the trial.”

Mrs. Flores opposed the removal.

Lizama asserted that Mrs. Flores’ case was filed in the Superior Court and the basis for removal under the Edge Act is not sufficient to confer jurisdiction on the U.S. District Court for the NMI.

In Union Bank and co-defendants’ opposition filed Thursday, Frink said the acts complained of by Mrs. Flores “arises out of” transactions involving banking in a dependency or insular possession of the United States.

Frink said there is no question that Union Bank is a national bank and that the events in question took place in the CNMI, which like Guam is a “dependency or insular possession of the United States.”

In Mrs. Flores’ motion, however, Frink said, she also apparently claims that this lawsuit does not “arise out of transactions involving…banking.”

Frink said a review of plaintiff’s complaint makes it clear that this entire case is fundamentally premised upon her claim that she is at least a part-owner of the $200,000 CD issued by the bank to the now deceased Mr. Flores on Sept. 10, 1993.

Frink said the CD—and all of the events that surrounded its issuance and Mr. Flores’ repeated demands for payment of the funds and interest represented by the CD—is the foundation upon which the complaint is built.

Frink said Mrs. Flores attempts to make much of the fact that her only causes of action are for fraud due to statements that were either made or not made to her regarding the CD.

He said a review of Mrs. Flores’ two causes of action, however, makes clear that her fraud claims are entirely about the CD, the events surrounding its issuance, and her husband’s demands for payment of the funds represented by the CD.

In other words, the lawyer pointed out, not only does this lawsuit “arises out of” the “transactions involving” the CD, is it entirely about the CD.

In 2011, Donald Flores filed a lawsuit in federal court against Union Bank of California and FHB for allegedly refusing to return the principal and interest earned on the CD. Donald Flores passed away in June 2014.