Bank OK’d to include brother of judge’s wife in her suit

The U.S. District Court for the NMI Bankruptcy Division has allowed Bank of Hawaii to include the brother of the wife of Superior Court Presiding Judge Roberto C. Naraja in her defamation lawsuit against the bank.

In an order last week, Bankruptcy Division Chief Judge Ramona V. Manglona said BOH is not a creditor attempting to bypass the protections of bankruptcy court for its own satisfaction.

Rather, Manglona said, BOH seeks to bring debtor Joaquin Villagomez Deleon Guerrero into the lawsuit filed by his sister, Frances Deleon Guerrero Naraja, so that it may obtain a complete resolution of the ownership rights to a disputed $290,000.

That would assist the disposition of the pending bankruptcy action that Joaquin Deleon Guerrero filed before the bankruptcy court, said Manglona in granting BOH’s request.

The ownership issue of the $290,000 is the subject in Mrs. Naraja’s lawsuit against BOH. The money was held in a joint bank account of Joaquin Deleon Guerrero and two of his sisters, Mrs. Naraja and Gloria Deleon Guerrero Sablan.

In his bankruptcy filings, Deleon Guerrero charterized the $290,000 as a nonpriority unsecured claim that he owes the Lorenzo Deleon Guerrero Family Trust.

The money is currently being held by the Superior Court pursuant to a writ of execution in a lawsuit against Deleon Guerrero and his wife by the Commonwealth Development Authority.

Mrs. Naraja’s defamation suit against BOH alleges that the money was in her account, to which she “had an absolute right to use.”

BOH, through counsel Sean Frink and Catherine J. Cachero, asked the bankruptcy court to lift the automatic stay in Deleon Guerrero’s bankruptcy case.

The bank made the request so it may file a third-party claim against Deleon Guerrero in Mrs. Naraja’s suit, along with the other potential claimants to the money so that one court can determine the various parties’ interests in the money.

The filing of a bankruptcy petition acts as an automatic stay on the commencement of judicial actions against the debtor. The purpose of the stay is to give debtors a reprieve from their creditors and collection efforts while they organize their estate.

In granting BOH’s request, Manglona said under certain circumstances, the bankruptcy court can provide relief by terminating, annulling, modifying or conditioning the automatic stay, after notice and a hearing.

Manglona said one ground for relief from the automatic stay is “for cause, including the lack of adequate protection of an interest in property of such party in interest.”

BOH argued that Mrs. Naraja’s defamation suit is a non-bankruptcy suit involving multiple parties, and it cannot be effectively resolved without the involvement of Deleon Guerrero, who was one of three parties named in the bank account at issue.

Deleon Guerrero himself asserted that he has no personal interest in the $290,000. At most, Deleon Guerrero has asserted a fiduciary interest in the money in his role as a trustee of the Family Trust.

Manglona noted that at the hearing last week, Thursday, Deleon Guerrero withdrew his opposition to the bank’s request based on the bank’s argument.

Manglona said Deleon Guerrero agreed that the hardship from lifting the stay falls on the bankruptcy estate, not the debtor or himself, because the case trustee would be the actual party to litigate BOH’s third party claim.

Case trustee Mark Heath did not assert a position to BOH’s request.

Manglona said she finds that a limited lifting of the stay in this instance does not violate the general policies underlying the stay.

Mrs. Naraja is suing BOH for allegedly refusing to honor her eight cashier’s checks totaling $290,000 that she had purchased in 2016. She accuses BOH of telling other banks on Saipan that she had improperly secured the cashier’s checks.

Aside from defamation, Mrs. Naraja, through counsel William M. Fitzgerald, is also suing BOH for allegedly dishonoring the cashier’s checks and conversion.

Mrs. Naraja seeks for the return of $290,000.

BOH filed a counterclaim against Mrs. Naraja and third-party claims against CDA, Gloria Deleon Guerrero Sablan, and the Lorenzo Deleon Guerrero Family Trust.