Manglona remands to Superior Court Torres’ 4 claims in suit vs E-Land, others

The federal court has granted attorney Vincent DLG Torres’s motion to remand to the Superior Court as to his four remaining claims in his lawsuit against E-Land World Co. Ltd. and others.

Remanded are claims for accounting, fraudulent concealment and usurpation of corporate opportunity, breach of fiduciary duty, and assisting a breach of fiduciary duty.

At the hearing, Torres voluntarily agreed to arbitrate his first cause of action, fraudulent misrepresentation.

U.S. District Court for the NMI Chief Judge Ramona V. Manglona granted defendants’ motion to compel arbitration as to Torres’ first cause of action, fraudulent misrepresentation.

The defendants in this case are E-Land World Ltd., Suwaso Corp., Micronesian Resort Inc., and Dennis Seo. E-Land is the majority shareholder of the Coral Ocean Point Golf Resort.

Having granted defendants’ motion to compel arbitration as to the lawyer’s first cause of action, fraudulent misrepresentation, Manglona said she will dismiss the claim and retain jurisdiction to enforce any arbitration.

Torres alleged in his lawsuit that defendants made several fraudulent representations to him regarding defendants’ plans for COP during negotiations surrounding their agreement, which he relied on to his detriment as a minority shareholder in Suwaso Corp.

Suwaso Corp. owns COP. In 2012, Marianas Resort Inc. and Yusuke Fumoto agreed to sell his 85 percent ownership interest in Suwaso to Marianas Resort Inc. Torres remains a minority shareholder of Suwaso stock, holding a 15 percent ownership interest.

Manglona denied defendants’ motion to compel arbitration and motion to dismiss, or alternatively, stay action as to Torres’ remaining four claims.

Torres sued the defendants for allegedly failing to provide a proper accounting, embarking upon a scheme to misappropriate business opportunities and funds, and negotiating loans over $5 million without proper authorization. The case was originally filed in the Superior Court. The defendants then moved to transfer the lawsuit to the District Court.

The defendants, though counsel Richard W. Pierce, also moved the District Court to compel all Torres’s claims to arbitration before the American Arbitration Association.

Pierce asserted that Torres is legally bound by the broad arbitration agreement in the Purchase and Sale Agreement of Capital Stock of Suwaso Corp. (Agreement).

The Agreement, Pierce said, was executed on Aug. 23, 2012 and amended on Oct. 12, 2012 by Fumoto and Micronesia Resort Inc.

Pierce said Torres negotiated the agreement on behalf of Fumoto. The agreement, he said, effectuated the transfer of a majority ownership interest in Suwaso Corp. from Fumoto to Micronesia Resort Inc.

In Torres’ opposition to compel, attorney William M. Fitzgerald, counsel for Torres, said E-Land and co-defendants continue to misstate and mischaracterize the facts in order to create a false narrative that will comport with these general principles.

Fitzgerald said the court must decide the question of arbitrability because Torres did not agree to be bound by the arbitration clause or the rules of the American Arbitration Association.

In her decision and order issued last Thursday, Judge Manglona ruled that the defendants have established that the Agreement could “conceivably affect the outcome” of Torres’s first cause of action.

Manglona said she finds that the agreement “relates to” Torres’ suit as to the first cause of action such that the District Court has removal jurisdiction.

Manglona said the agreement “falls under” the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (Convention) because it involves a commercial transaction, namely a purchase and sale agreement of Suwaso stock, executed between a Japanese citizen, Fumoto, and a Korean corporation (E-Land) acting through a CNMI corporation (Micronesian Resort Inc.)

Manglona concluded that the defendants have met their burden to establish subject matter jurisdiction.

With respect to the four remaining claims, Manglona said these claims are state-law claims entirely separate from the Agreement.

Therefore, Manglona said, the four claims provide the District Court with no independent basis for federal jurisdiction.

With respect to comity, Manglona noted that because CNMI state law will apply to the remaining claims, the Superior Court would be better suited to handle the case.

Manglona granted Torres’s motion to remand the remaining four claims but denied his request for attorney’s fees.

In denying defendants’ motion to dismiss the claims, Manglona ruled that she does not find the remaining state law claims of Torres interdependent with the fraudulent misrepresentation claim so as to justify a stay.

In this case, Manglona said, the state law claims do not hinge on the Agreement and can be independently asserted by Torres as a minority shareholder of Suwaso.