Saipan mayor’s suit vs FHB dismissed anew

U.S. District Court for the NMI Chief Judge Ramona V. Manglona dismissed again yesterday Saipan Mayor Donald G. Flores’ claims against the First Hawaiian Bank but allowed him to amend his lawsuit.

Manglona said that if discovery on the remaining causes of action against FHB’s co-defendant, Union Bank of California, unearths evidence that FHB acquired Flores’ certificate of deposit when it bought the Union Bank Saipan branch in 2001, “justice may require that Flores be permitted to amend again.”

In granting FHB’s motion to dismiss, Manglona said that Flores had years to investigate this matter before suing and to have developed factual allegations that would support his claims against FHB, yet he has failed to do so.

Flores is suing Union Bank and FHB for allegedly refusing to return the principal and interest earned on a certificate of deposit in the amount of $200,000 that he bought from the then Union Bank Saipan branch in 1993.

On Nov. 15, 2001, Union Bank sold all assets and liabilities of its Saipan branch office to FHB.

Flores then sued the two banks for breach of contract, unjust enrichment, negligence or gross negligence, breach of fiduciary duty, and fraud.

In March, Manglona granted FHB’s motion to dismiss Flores’ suit, ruling that Flores may maintain an action against Union Bank for breach of contract and negligence but fails to state a claim in his complaint against FHB.

Flores then filed an amended complaint against the two banks. He revived his claims against FHB for breach of contract, negligence, and fraud and raised two new claims: violation of the Consumer Protection Act and bad faith. Flores put in additional facts to cure the defects in his original complaint.

FHB then filed a motion to dismiss the amended complaint, asserting that the new facts actually make Flores’s claims less plausible than they were before. FHB argued that adding two new claims was an improper attempt to expand the lawsuit after dismissal.

Manglona heard the motion last April 12. Union Bank did not join FHB’s motion to dismiss.

In her order issued yesterday, Manglona ruled that the allegations in Flores’s amended complaint do not plausibly suggest that Union Bank transferred to FHB its obligations on Flores’ CD. “Therefore, Flores has not made out a claim for relief against First Hawaiian in breach of contract or negligence,” the judge said.

Manglona said that Flores also claims that FHB, through some of the same officers and employees that had worked for Union Bank, intentionally participated in “fraudulent cover-up and withholding of information of the status of Flores’ CD, for the benefit of First Hawaiian.”

Manglona said even if this conspiracy to defraud actually happened, Flores did not fall for it.

“He never believed the alleged misrepresentation and so never acted, or forebore from acting, in justifiable reliance on it or suffered an injury because of it,” the judge said.

Even if express assumption of the debt cannot be shown, Manglona said that Flores seems to believe that any $200,000 sitting in the vault when FHB took over the Union Bank Saipan branch must be his $200,000, consigned to FHB for safe keeping.

“This is not a sound legal theory on which to base recovery. Flores did not leave money in a safe deposit box; he deposited money in a bank,” Manglona said.

She said that Flores cannot recover damages merely on a showing that FHB mishandled its own records.