NMI Supreme Court affirms ruling dismissing Victoria Hotel owners’ lawsuit against ANZ Guam

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THE CNMI Supreme Court has affirmed the ruling of Superior Court Associate Judge Joseph N. Camacho in dismissing the Victoria Hotel owners’ lawsuit against ANZ Guam Inc.

Associate Justice John A. Manglona, Associate Justice Perry B. Inos, and Chief Justice Alexandro C. Castro, in their  opinion issued Saturday, pointed out that the District Court for the NMI has already decided on all three allegations in the lawsuit, which prevents relitigating the case in the CNMI Superior Court.

On August 22, 2018 the plaintiffs Edward Lizama as personal representative of the estate of Jesus T. Lizama, Victoria Lizama and J & JEV Enterprises Inc., filed a lawsuit against ANZ Guam/ Citizens Security Bank alleging wrongful foreclosure, breach of contract, and violation of the Commonwealth Consumer Protection Act.

The lawsuit claimed that (1) ANZ, and its predecessor, Citizens Security Bank or CSB, never obtained a full-service banking license in the CNMI; when it executed the mortgage, and when it sought to foreclose on Jesus Lizama’s properties, in 2000, ANZ knew that it was not a duly licensed full-service bank in the CNMI; (2) “Only full-service operating banks in the CNMI could mortgage and foreclose fee simple interest in lands situated in the CNMI as provided under the exception to Article XII, Section 2, of the CNMI Constitution”; and (3) that after the plaintiffs “defaulted on the loan, the U.S. Department of Agriculture, as guarantor, paid ANZ its 70% guaranteed obligation,” which was not disclosed to the plaintiffs by ANZ or the USDA, and after which defendant continued to seek payment of the debt from the plaintiffs.

Judge  Camacho, in a 23-page order issued on June 14, 2019, stated that the Victoria Hotel lawsuit was based on the same three issues that were fully litigated and were decided with finality in federal court. He then granted the ANZ Guam Inc. motion to dismiss.

Judge Camacho found that the grounds forming the basis for each of the plaintiffs’ three causes of action were barred by issue preclusion also known as collateral estoppels.

In their appeal, the Lizamas argued that the trial court made an error in dismissing the case under the doctrine of issue preclusion. They also argued that Judge Camacho erred in holding that ANZ Guam Inc. did not engage in banking business when it made the loan, secured the loan with a mortgage, and foreclosed on the mortgage; and in dismissing the Lizamas’ Consumer Protection Act and Commonwealth Debt Collection Act claims without leave to amend their complaint.

Affirming the order of dismissal by the lower court, the justices said, “The Lizamas fail to demonstrate any attempt to obtain consent from ANZ to amend the complaint or that they moved to amend the complaint before or after the motion to dismiss.”

Absent those actions, the trial court cannot grant leave to amend and its failure to do so was not an abuse of discretion, the justices added.

“It follows that we also cannot remand with instruction to grant leave to amend.”

On July 2, 2018 the U.S. Court of Appeals for the Ninth Circuit affirmed the ruling of District Court for the NMI Chief Judge Ramona V. Manglona in dismissing the lawsuit of Victoria Hotel owners with prejudice against ANZ Guam Inc.

Judge Manglona dismissed Victoria Hotel’s claims of violation of the Racketeer Influenced and Corrupt Organizations Act, and for failure to state a claim on Jan. 23, 2017.

The federal judge said because the RICO claim provided the sole basis for the  original jurisdiction of the court over the case, “the court declines to exercise supplemental jurisdiction over the remaining state law claims.”

Judge Camacho in his order noted that after the Ninth Circuit issued its opinion, ANZ scheduled a foreclosure sale for July 20, 2018 at 10 a.m. held at the Victoria Hotel premises in Garapan, but ANZ did not accept any bids.

Judge Camacho said the following month the Lizamas filed a lawsuit “alleging nearly verbatim three of the same causes of action it previously brought in the federal court, which are based on the same grounds that the district court previously considered and rejected in dismissing the Lizamas’ complaint.”

Judge Camacho said the Lizamas have failed to state claims for relief based on the alleged violations warranting dismissal.

The lawsuit stems from foreclosure proceedings brought by ANZ Guam against the Lizamas.

ANZ Guam provided a $1.8 million loan to the Lizamas and took a mortgage over real property in the CNMI to secure the debt — up to 70% of which was guaranteed by the U.S. Department of Agriculture.


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