Fed court: No jurisdiction in Guam resident’s suit

The federal court has dismissed a lawsuit filed by a Guam resident against a CNMI corporation in which he is a shareholder, citing lack of jurisdiction.

U.S. District Court for the NMI Chief Judge Ramona V. Manglona also ruled that because the court does not reach the merits of the case that Joseph D. Lopez Sr. filed against PDJ International Inc., PDJ’s motion for summary judgment is denied as moot.

Lopez had sued PDJ for allegedly failing to allow inspection and copying of corporate records and for wrongful distribution of dividends.

In dismissing the case, Manglona said a federal court has jurisdiction over the underlying dispute if the suit is between citizens of different states, and the amount in controversy exceeds $75,000, exclusive of interest and costs.

The judge said at the end of discovery, Lopez had received more than 800 pages of corporate documents from PDJ, and been granted access to PDJ’s corporate books and records at the Noka Oi Termite & Pest Control Saipan office.

Nevertheless, Manglona said, Lopez could not identify any PDJ funds that he would be entitled to within the relevant time period to support his $240,000 claim.

Manglona said PJD, for its part, has shown that Lopez’s claim is for less than $75,000.

Manglona said that, from Oct. 1, 2010, to the end of 2015, PDJ only received $65,445.83. That means Lopez would be entitled to a third of this, $21,815.28, if shareholder dividends were declared.

According to court records, Lopez Sr. is a citizen of Guam who holds one-third of the shares in PDJ International Inc., a CNMI corporation.

The remaining shares are held equally by Paul Romias Sr. and Paul Romias Jr.

PDJ obtains revenue in the form of management fees from No Ka Oi Saipan and dividends from No Ka Oi Philippines, the latter of which PDJ owns 39.9 percent of the stock.

Lopez alleges that beginning in 2010, PDJ failed to issue any shareholder dividends to him despite PDJ continuing to receive management fees from No Ka Oi Saipan and dividends from No Ka Oi Philippines.

From Oct. 1, 2010 though the end of 2015, PDJ received $16,500 in management fees from No Ka Oi Saipan and $48,945.83 in declared dividends from No Ka Oi Philippines, amounting to $65,445.83.

No evidence has been presented to show that dividends were distributed to any PDJ shareholders during this period.

Furthermore, the board of directors of PDJ has resolved to use any declared dividends from No Ka Oi Philippines to pay legal fees, not for shareholder distribution.

Lopez alleges that he was denied access to PDJ’s corporate records.

PDJ admits that it did not respond to Lopez’s letter or provide copies of the corporate records in 2012 and 2013. PDJ later provided Lopez with more than 800 pages of documents, as well as the opportunity to inspect and copy PDJ’s corporate documents.

In 2014, Lopez sued PDJ in federal court on the basis of diversity jurisdiction. Lopez is domiciled in and a citizen of Guam, and PDJ is a CNMI corporation.

He also alleges that the amount in controversy exceeds the sum of $75,000 as he is entitled to one-third of at least $240,000 in unpaid dividends.

In 2016, PDJ filed a motion to dismiss the case for lack of jurisdiction, asserting that Lopez failed to establish that the amount in controversy exceeded the requisite $75,000.

The court denied the motion without prejudice to allow discovery on the issue of the amount in controversy.

In May 2016, PDJ filed a motion for summary judgment on the grounds that there are no material facts that are subject to dispute.

Lopez then filed a motion to compel discovery with respect to corporate meeting minutes from No Ka Oi Philippines, among other records.

Given that Noka Oi Philippines is outside the court’s jurisdiction, the court denied Lopez’s motion to compel.