BANK of Guam has sued the former IHOP Saipan operators and is demanding payment of $317,238.28.
Represented by attorney Charity Hodson, the bank filed the complaint in Superior Court last week and named as defendants Pacific Pancakes (CNMI) LLC, dba IHOP, Pacific Foods (CNMI) LLC, former Sen. Ray Anthony N. Yumul, his brother Rep. Ralph N. Yumul, and Juan B. Cepeda.
The defendants were sued for breach of contract, conversion, and unjust enrichment.
Hodson asked the court to rule in favor of BOG and issue a judgment against Pacific Pancakes in the amount of $253,848.65, pre-judgment interest in the amount of $54,632.97, and late charges in the amount of $8,756.96 as of March 1, 2021.
Hodson also wants the court to issue a judgment against Ray Anthony N. Yumul, Ralph N. Yumul, and Juan B. Cepeda, individually in the amount of $302,433.57 for the commercial guaranty.
Moreover, the lawyer asked for a judgment order against Pacific Foods in the amount of $302,433.57 for the commercial guaranty.
The bank is likewise seeking a post-judgment interest of 9% per annum from the date of judgment until fully paid by the defendants.
According to the lawsuit, on or about Jan. 22, 2016, Pacific Pancakes dba IHOP obtained a loan from the bank in the amount of $578,500, with a variable interest rate based on the Bank of Guam Reference Rate (which was then 4%) plus a margin of 1.75 percentage points, adjusted, if necessary, for the minimum and maximum rate limitations, with a minimum rate of 5.75 % per annum.
The lawsuit noted that under the direction and control of the Department of Commerce, the Commonwealth Development Authority provides administrative services for the CNMI State Small Business Credit Initiative-Collateral Support Program.
On Jan. 22, 2016, Bank of Guam entered into a cash collateral deposit agreement with the CNMI Department of Commerce, which provided that Commerce pledged cash collateral to the bank because Pacific Pancakes desired to obtain a loan from the bank to purchase equipment, furniture, and fixtures for the project planned for with the Pacific Pancakes’ original loan with the bank.
In March 2018 Pacific Foods purchased Pacific Pancakes. The Yumul brothers and Cepeda “are members of Pacific Foods,” the lawsuit stated.
It also stated that when Pacific Pancakes fell behind in its payments, the bank issued notices of default on April 25, 2018; May 26, 2018; June 26, 2018; July 26, 2018; Aug. 25, 2018; and Sept. 5, 2018.
On Nov. 9, 2018, Pacific Pancakes and the bank entered into a revision agreement under the loan, which provided that Pacific Pancakes would pay the loan in three payments of interest only, commencing Dec. 25, 2018, and on the 25th of each month; thereafter, Pacific Pancakes would pay 55 consecutive monthly installments in the amount of $10,946.19 from March 25, 2019, until the final payment on Oct. 25, 2023.
On March 28, 2019, Pacific Pancakes and the bank entered into another loan revision agreement under which Pacific Pancakes would pay three consecutive monthly installments of accrued interest only in the amount of $3,441.41 from April 25, 2019, to June 25, 2019, after which point Pacific Pancakes would pay 55 consecutive monthly installments of $10,946.19 from July 25, 2019 to Feb. 25, 2024, on which date the entire principal and unpaid interest would become due and payable in full.
According to the lawsuit, Pacific Pancakes again fell behind in its payments and the bank issued notices of default to Pacific Pancake.
From February 2020 to August 2020, the bank took possession of all of Pacific Pancakes’ collateralized business assets (including kitchen equipment fixtures, restaurant furniture, inventory, and supplies) and sold them at auction to the highest bidder for $44,000, the proceeds of which were applied to the loan account as a principal reduction on June 25, 2020.
The lawsuit stated that the bank is required to exhaust all collection efforts prior to calling on the State Small Business Credit Initiative collection guaranty.
The bank forwarded the matter to attorney Charity Hodson for collection on July 25, 2020.
The bank issued notices of default and demand on guarantors for payment on Oct. 14, 2020.
Despite the bank’s demand for payment, the defendants failed and continue to fail to make payments on the account to cure the default, the lawsuit stated.
