Hemlani v. Melwani, (2020)

• Docket Number: Supreme Court Case No. CVA19-001
• Decision Date: 31 December 2020
• Citation: Hemlani v. Melwani, 2020 Guam 31, Supreme Court Case No. CVA19-001 (Guam Dec 31, 2020)
• Parties: KAMLESH K. HEMLANI, individually and derivatively in the name of and on behalf of RADHI PURAN TRUST, Plaintiff-Appellant/Cross-Appellee, v. MANU & ANITA MELWANI, JETHMAL K. MELWANI, ISHWAR P. HEMLANI, VINOD I. & YOGITA V. HEMLANI, RADHI P. HEMLANI ESTATE, PARAMANAND MELWANI ESTATE, RADHI'S FOUNDATION, RADHI PURAN TRUST, RADHI FAMILY TRUST, PACIFIC RAINBOW, INC., SAFETY 1st SYSTEMS INC., PACIFIC AMERICAN TITLE INSURANCE & ESCROW COMPANY, VASUDEV B. HEMLANI, P.D. HEMLANI FOUNDATION, LTD., CHITRA HEMLANI, SONA HEMLANI, PADI DARYANANI, and DOES 1-95, Defendants-Appellees/Cross-Appellants.
• Court: Guam Supreme Court

2020 Guam 31

KAMLESH K. HEMLANI, individuallyand derivatively in the name of and on behalf ofRADHI PURAN TRUST, Plaintiff-Appellant/Cross-Appellee, v. MANU & ANITA MELWANI, JETHMAL K. MELWANI,ISHWAR P. HEMLANI, VINOD I. &YOGITA V. HEMLANI, RADHI P. HEMLANI ESTATE,PARAMANAND MELWANI ESTATE, RADHI'S FOUNDATION,RADHI PURAN TRUST, RADHI FAMILY TRUST, PACIFIC RAINBOW, INC.,SAFETY 1st SYSTEMS INC., PACIFIC AMERICAN TITLE INSURANCE &ESCROW COMPANY, VASUDEV B. HEMLANI, P.D. HEMLANI FOUNDATION, LTD.,CHITRA HEMLANI, SONA HEMLANI, PADI DARYANANI,and DOES 1-95, Defendants-Appellees/Cross-Appellants.

Supreme Court Case No. CVA19-001

SUPREME COURT OF GUAM

Argued and submitted: October 18, 2019

December 31, 2020

Superior Court Case No. CV1527-13

OPINION

Appeal from the Superior Court of Guam

Argued and submitted on October 18, 2019

Hagåtña, Guam

Appearing for Plaintiff-Appellant/Cross-

Appellee Kamlesh Hemlani:

Thomas M. Tarpley, Jr., Esq.

Thomas McKee Tarpley Law Firm

GCIC Bldg.

414 W. Soledad Ave., Ste. 904

Hagåtña, GU 96910

Appearing for Defendant-Appellee Radhi's

Foundation nka Radhi Puran's Foundation:

Louie J. Yanza, Esq.

Law Office of Louie J. Yanza, P.C.

One Agana Bay

446 E. Marine Corps Dr., Ste. 201

Hagatña, GU 96910

Appearing for Defendants-Appellees/Cross-

Appellants Vasudev Hemlani and P.D. Hemlani

Foundation, Ltd.:

Kathleen V. Fisher, Esq.

Rodney J. Jacob, Esq.

E. Christian Calvo, Esq.

Calvo Fisher & Jacob LLP

259 Martyr St., Ste. 100

Hagåtña, GU 96910

Appearing for Defendant-Appellee/Cross-

Appellant Estate of Radhi P. Hemlani:

Jon R. Ramos, Esq.

Cabot Mantanona LLP

929 S. Marine Corps Dr., Ste. 200

Tamuning, GU 96913

Appearing for Defendants-Appellees Manu &

Anita Melwani et al.:

Bill R. Mann, Esq.

Berman O'Connor & Mann

Bank of Guam Bldg.

111 Chalan Santo Papa, Ste. 503,

Hagåtña, GU 96910 BEFORE: KATHERINE A. MARAMAN, Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; and ROBERT J. TORRES, Associate Justice.¹

TORRES, J.:

[1] Plaintiff-Appellant/Cross-Appellee Kamlesh K. Hemlani ("Kamlesh") appeals a final judgment of the Superior Court dismissing his complaint without prejudice for lack of standing. The Superior Court granted summary judgment for Defendants-Appellees/Cross-Appellants Vasudev B. Hemlani ("Vashi"), P.D. Hemlani Foundation, Ltd. ("PDHF"), and Radhi P. Hemlani Estate ("Radhi's Estate"). That court held Kamlesh is foreclosed from bringing any action on behalf of the Radhi Puran Trust because he did not have the permission of at least one other co-trustee. The court also found Kamlesh lacked standing to challenge a memorandum of settlement from 2011 and the resulting distributions. On cross-appeal, Vashi, PDHF, and Radhi's Estate allege that the Superior Court erred in denying their motion to expunge the lis pendens Kamlesh filed with his complaint.

[2] We reverse the judgment dismissing Kamlesh's complaint for lack of standing against the individual defendants but affirm the judgment dismissing the complaint against the named estates or trusts. We also affirm the order denying the motion to expunge the lis pendens.

I. FACTUAL AND PROCEDURAL BACKGROUND

[3] This case has been before us before in two related appeals: Melwani v. Hemlani, 2015 Guam 17, and Hemlani v. Melwani, 2016 Guam 33 ("Hemlani I"). While this dispute has a protracted factual history, we will recite only the facts most relevant to this appeal. See Babauta v. Babauta, 2013 Guam 17 ¶ 3.

[4] Before their deaths, spouses P.D. and Radhi Hemlani accumulated substantial assets and organized a portion of their estates into the Radhi Puran Trust. The trust instrument named P.D. and Radhi as the settlors and initial co-trustees. Upon the death, resignation, removal, or incapacity of both initial co-trustees, the trust instrument—as originally written—named Jack P. Hemlani, Ishwar P. Hemlani ("Don") and Vasudev or Vasdev B. Hemlani ("Vashi") as successor co-trustees. P.D. and Radhi later amended the trust to replace Jack with Kamlesh as successor co-trustee. From its inception, the trust instrument's preamble has stated: "A majority of the successor cotrustees shall bind this Trust for all purposes." See Record on Appeal ("RA"), tab 1 (V. Compl., Dec. 17, 2013), Ex. 6 (Radhi Puran Trust, Oct. 7, 1997). We refer to this as the "majority-trustee requirement."

[5] The trust instrument also instructed how to divide the assets after either settlor died. Upon the first settlor's death, two sub-trusts would be created—the survivor's trust and the residuary trust. The survivor's trust would contain that spouse's separate property and one-half of the community property; the residuary trust would contain the deceased's separate property and one-half of the community property.

[6] In the last two years of his life, P.D. was hospitalized numerous times. During his final hospitalization on March 10, 2004, P.D. was discharged after Don signed a waiver stating P.D. was being released against the medical advice of the doctor and hospital. On March 11, 2004, Radhi, acting for herself and as P.D.'s attorney-in-fact, amended the trust instrument a second time. The second amendment allowed a settlor to unilaterally change the trust if the other became incapacitated and changed how property would pass upon a settlor's death. The second amendment came with a memorandum naming Don, Jethmal K. Melwani, and Manu Melwani as successor trustees. The memorandum granted the trustees "full power to buy, sell, mortgage, or lease any real or personal property owned by The Radhi Puran Trust" and granted the settlors "the power to alter, amend or revoke the Trust." RA, tab 1, Ex. 10 at 1-3 (Mem. Radhi Puran Trust Agreement with Power of Sale, Mar. 11, 2004).

[7] The next day, March 12, 2004, P.D. died. According to the trust instrument, P.D.'s property was placed in the residuary trust, and Radhi's property was placed into the survivor's trust. That same day, Radhi executed a third amendment to the trust, signing the document as "remaining settlor" and "initial co-trustee." RA, tab 1, Ex. 11 at 3 (Third Amend. Radhi Puran Trust, Mar. 12, 2004). The third amendment modified the trust instrument's preamble and replaced Kamlesh and Vashi with Jethmal and Manu as successor co-trustees.

[8] On May 3, 2004, Rashi executed a fourth amendment to the trust instrument. The fourth amendment was intended to supersede the original trust instrument. This amendment named Vashi as a successor co-trustee, eliminated the sub-trusts, and distributed the assets from the deceased settlor's trust to Radhi's surviving settlor's trust. It also stated that the changes were to "apply to [P.D.'s] property as if in effect at the time of his death." RA, tab 1, Ex. 12 at 1-2 (Fourth Amend. Radhi Puran Trust Agreement, May 3, 2004).

[9] After P.D. died, the parties litigated several issues related to his estate. The probate proceedings—Superior Court Case No. PR0074-04 and Supreme Court Case No. CVA06-010²—administered P.D.'s will, which named Radhi as sole beneficiary. In its factual findings, the probate court found: "About the time that P.D. died on March 12, 2004, Petitioner [Radhi] removed Vashi Hemlani, P.D.'s nephew, from his position as a successor trustee to the Radhi Trust. Don has since resigned from his position as successor trustee." RA, tab 1, Ex. 8 at 8 ¶ 31 (Finds. Fact & Concl. L., Aug. 1, 2006).

[10] On March 24, 2009, Vashi filed a complaint in Superior Court Case No. CV0506-09 against Radhi and many of the same parties here, alleging that they improperly amended the Trust. On July 27, 2011, the parties entered the 2011 Memorandum of Settlement ("2011 MOS") to resolve the matter. Under the 2011 MOS: (1) Vashi dismissed the lawsuit; (2) Vashi formed PDHF, "with the same charitable purpose as Radhi's Foundation"; (3) the Trust transferred assets amounting to millions of dollars to PDHF, including $1.3 million in cash; and (4) all of P.D.'s probated assets were split in half, with PDHF receiving one-half and the Trust, the Radhi Foundation, and Radhi sharing the other half. Kamlesh was not a party to the case, nor was he a signatory to the 2011 MOS. RA, tab 1, Ex. 26 at 1-2 (Mem. Settlement, July 27, 2011).

[11] In 2012, Kamlesh filed a complaint in Superior Court Case No. CV0758-12, alleging causes of action for breach of fiduciary duty and unjust enrichment against some of the same defendants here.³ Kamlesh's main complaint was that Radhi was incompetent because she was subject to a guardianship and, therefore, unable to execute the amendments. After reviewing the guardianship's factual determinations, the Superior Court determined Radhi was not found incompetent and remained the sole trustee of the Radhi Puran Trust. Because Radhi was the sole trustee at this time, the court dismissed Kamlesh's complaint for lack of standing; Kamlesh did not appeal.

[12] Following this dismissal, on August 18, 2013, Radhi died. Several months later, Kamlesh filed the action before us. Based on this long series of amendments and disputes, Kamlesh alleges Radhi "was deceived and/or imposed upon" by defendants Manu, Jethmal, and Don. RA, tab 1 at 16 (V. Compl.). The deceit and imposition allegedly caused losses or waste to the Trust andbenefited the defendants. In bringing this suit, Kamlesh alleges the wasteful transactions amounted to millions of dollars.

[13] At the early stages of this suit, the Superior Court dismissed the complaint for lack of standing. The court held Kamlesh lacked standing because the trust had terminated. The court also dismissed Manu's counterclaim for malicious prosecution based on Kamlesh's filing of lis pendens. When dismissing the counterclaim, the court denied Kamlesh's request for attorney's fees and sanctions under the Citizen Participation in Government Act ("CPGA"). On appeal, this court reversed the dismissal for lack of standing, finding that, although the trust terminated, Kamlesh had powers to wind up the trust as trustee. Hemlani I, 2016 Guam 33 ¶ 36. We did not decide other challenges to standing, such as...