Lizama finds evidence of some wrongdoing in UMDA’s lawsuit

Superior Court Associate Judge Juan T. Lizama has found evidence of some wrongdoing in connection with the lawsuit filed by the United Micronesia Development Association Inc. and UMDA Laolao LLC against a former UMDA director and various shareholders.

Lizama said from the evidence that plaintiffs UMDA and UMDA Laolao LLC have provided the court “it is clear that there is some wrongdoing that occurred.”

“What is uncertain at this juncture is who or what entities committed acts that exposed them to legal liability. This is why the court will allow these actions to proceed,” said Lizama in his written order issued on Friday.

UMDA and UMDA Laolao LLC sued former UMDA director atty. Robert Pfaff and many shareholders for fraud, misappropriation of funds, among other allegations.

UMDA sued Pfaff for breach of fiduciary duty.

The plaintiffs also sued shareholders G.E.T. Realty Trust; G.E.T. Realty Trustee Thomas C. Sorenson; Concorde Trust; Concorde Trustee Rothschild Trust Guernsey Limited; Rothschild Trust Guernsey Limited Account 2299; Davina Limited; Pirouette LLC Profit Sharing Plan; Monte Perucho Investeduras LLC; Raymond D. McCall; John Larson; David Amir Makov; Morley Inc.; and Morley Inc. Employee Stock Ownership Plan and Trust.

Also sued are Point Du Hoc Irrevocable Trust and its Trustee; WS Investment Trust; Norskanvest LLC; Pigavest A.G.; Irizarry, McCall & Squarrell PC; Irizarry & McCall P.C. Profit Sharing Plan; Global Leader Consulting Inc.; Profit Sharing of Global Leader Consulting Inc.; Keysdale

Ventures LLLP; First Court Ltd. Re Account #2305; and 50 unnamed co-defendants.

The plaintiffs sued all defendants for fraud in the inducement, assisting in breaches of fiduciary duty, conversion, and negligent misrepresentation.

In addition, McCall, and Irizarry & McCall P.C. are sued for malpractice, breach of fiduciary duty, and negligence.

The plaintiffs alleged that the defendants committed corporate malfeasance and fraud. They alleged that the defendants were all participants (in small or large ways) in an effort to deprive and harm UMDA.

The court conducted a hearing on Feb. 19, 2008, on a number of different motions presented by both plaintiffs and defendants.

In his order, Lizama granted the motion to set aside the default judgments entered against defendants Rothschild Trust Guernsey, Rothschild Trust Guernsey Limited Account 2299, Concorde Trust, and Davina Limited.

Lizama granted Thomas Sorenson’s motion to dismiss the claim against him due to failure of personal jurisdiction.

The judge said the first amended complaint only names Sorenson a handful of times and does not sufficiently allege why he as an individual should be named as a defendant in this matter.

Lizama denied David Amir Makov’s motion to dismiss him from the case based on lack of personal jurisdiction.

Lizama said he believes that the plaintiffs’ evidence establishes, at the very least, a minimum basis of sufficient contacts with the CNMI to justify the claim.

“Some of these contacts include his ownership in both the LLC and UMDA,” the judge noted.

Lizama granted the motion of KCT Irrevocable Trust, G.E.T. Realty Trust, and Concorde Trust to dismiss for being improper parties to the suit. But Lizama allowed plaintiffs to amend the complaint to name their trustees instead.

The judge granted the motion to dismiss Rothschild Account 2299 for being an improper party in the lawsuit.

“A bank account, a mere repository for money, is not a proper named party to this lawsuit,” he said.

Lizama denied the motions to dismiss jointly filed by defendants Makov, Paul Dingee, Pfaff, G.E.T. Realty Trust, Sorenson, and KCT Irrevocable Trust for reasons of personal jurisdiction and insufficient pleadings.

Lizama approved the scheduled depositions that have been agreed upon by the various parties in the case.

The judge denied the motion that G.E.T. and KCT are not subject to depositions and discovery.

Lizama declined to rule on the motion to compel Pfaff’s testimony and a confidentiality order at this time.

“At this time, the court is uncomfortable in demanding that Pfaff give testimony that he believes to be self incriminating, especially since the depositions have not yet occurred,” he said.

Lizama said that, after the depositions if the plaintiffs still believe that Pfaff should be compelled to testify they can make the motion.

Attorney Michael Dotts, counsel for plaintiffs, earlier stated that UMDA seeks to recover in this lawsuit any and all legal expenses, cost associated with loss of investment opportunities, and monetary penalties to be awarded by the court.

In a previous press statement, UMDA chairman Jose Lifoifoi stated that “we will take whatever legal action is necessary to insure that UMDA is fully protecting the interest of its shareholders.”

“Our Board of Directors fully supports this effort and understands that we are committed to spend the resources and time necessary to achieve this objective,” Lifoifoi said.

UMDA is a corporation chartered and existing under the laws of the CNMI. Located in Saipan, it has approximately 1,200 shareholders throughout Micronesia. It has a long history of investing in local projects.