Supreme Court: "Superior Court Erred" In Mendiola vs. Bell

Guam - The Supreme Court of Guam issued an opinion Tuesday in the case of Mendiola v. Bell, reversing several findings of the Superior Court, but affirming the Judgment.
This case stems from a complaint brought by Orion and Julie Ann Mendiola, and Gemma De Guzmanand Alejandro Austria against the developer of the subdivision in which they purchased homes, TTI Properties, and three of its officers and shareholders – Robert Terry, Eric Bell, and Rick Beliveau.
The Mendiolas and the De Guzmans each built a home on the lots. Because of a failure to install a storm drainage system in the subdivision as required by Guam’s Subdivision Law at the time the lots were sold to the homeowners, their homes suffered severe flooding during Typhoon Chata’an and Supertyphoon Pongsona.
The homeowners alleged claims of negligence, breach of contract, fraudulent deceit, and violations of the Guam Consumer Protection Act (CPA), seeking the remedies of rescission of their land sale contracts and full restitution.
Because TTI and Terry eventually initiated bankruptcy proceedings, the case against them was stayed, and the Superior Court only tried the claims against Bell and Beliveau.
The Superior Court ruled that there was no violation of the CPA, and also ruled that Bell and Beliveau were liable for the homeowners’ losses, but only those losses suffered as a result of Supertyphoon Pongsona.
The homeowners appealed. In an opinion authored by Associate Justice F. Philip Carbullido and concurred by Chief Justice Robert J. Torres and Associate Justice Katherine A. Maraman, the court held that the failure of the subdivider to provide storm drainage as required by Guam’s Subdivision Law was a material omission reasonably likely to mislead the homeowners into purchasing the lots at issue, and therefore, that the Superior Court erred in ruling that there was no violation of the CPA.
The court also held that because there was a violation of the CPA, the facts of the case coupled with the remedies available through the CPA support granting the homeowners the equitable remedy of rescission. However, the court upheld the Superior Court’s ruling that Bell and Beliveau were not liable to the homeowners for full restitution and rescission of their land sale contracts because they were not in control of the operations of TTI at the time the lots were subdivided and sold to the homeowners.
The issue of liability for the rescission of the land sale contracts and full restitution, however, could not be properly addressed until such time that the stay of proceedings against Terry and TTI is lifted.