Global Gaming Philippines, LLC v. Razon, Jr.

Background

Global Gaming Philippines, LLC sued Bloomberry Resorts and Hotels, Inc., Sureste Properties, Inc., and their shareholder Enrique K. Razon, Jr. Global Gaming sought, among other relief, enforcement of a foreign arbitration award issued on September 27, 2019. In an earlier round of this case, the court dismissed Global Gaming’s conversion claim against Razon but allowed it to replace that claim with a trespass-to-chattels claim.

Global Gaming and the debtor defendants had agreements concerning Global Gaming’s option to purchase shares connected to the development of Solaire, a casino in the Philippines. After Global Gaming exercised the option, the parties entered a participation agreement requiring Razon to buy the shares at fair market value if the management agreement ended in circumstances specified by that agreement. Razon later terminated the management agreement, and Global Gaming began arbitration.

Global Gaming alleged that Razon interfered with its ownership and ability to sell the shares. The alleged conduct included causing trading in the shares to be suspended, obtaining and maintaining Philippine court orders that prevented the sale, withholding consent needed to transfer the shares to a trading account, making false or misleading disclosures to the Philippine Stock Exchange, refusing to comply with parts of the arbitration award, and renewing bonds that kept the court orders in place. The arbitration award found in Global Gaming’s favor and included a finding that the debtor defendants, under Razon’s control, had actively impeded Global Gaming’s right to sell the shares.

Motion and Legal Standard

Razon moved to dismiss Count V, the trespass-to-chattels claim. He argued that the claim was barred by res judicata, a rule that generally prevents a party from bringing a claim that was already decided or could have been brought in an earlier proceeding. He also argued that Philippine law governed and did not recognize an equivalent claim, that the trespass claim duplicated Global Gaming’s claim to enforce the arbitration award, and that Global Gaming could not seek punitive damages.

At the motion-to-dismiss stage, the court accepted well-pleaded factual allegations as true and viewed reasonable inferences in Global Gaming’s favor. The complaint had to allege enough facts to make the claim plausible, rather than merely possible.

Res Judicata and Claim Splitting

The court rejected the res judicata defense under both New York and Philippine law. The trespass claim included allegations about conduct occurring after the arbitration award, including later public filings, Razon’s alleged failure to cooperate with the award, and continued renewal of the bonds supporting the Philippine court orders. Those events could not have been raised in the earlier arbitration in the same way because they had not yet occurred.

The court also reasoned that the claim was not barred merely because some allegations overlapped with matters addressed in the arbitration. Under the cited Second Circuit precedent, conduct occurring after the earlier proceeding can form the basis for a later claim. The court likewise found that the Philippine rules against splitting claims did not require dismissal because the claim relied in part on distinct post-award conduct. It added that any damages for the trespass claim could not duplicate damages represented by the arbitration award and would have to be based on conduct occurring after that award.

Whether the Complaint Stated a Claim

The parties agreed that the allegations stated a trespass-to-chattels claim under New York law. The dispute was whether the claim was viable under Philippine law. The court concluded that Philippine law would recognize a claim based on the alleged interference with Global Gaming’s property rights, either under provisions concerning ownership and the right to dispose of property or under the Philippine law of quasi-delict, a claim for damage caused by a person’s fault or negligence that can also cover intentional conduct.

The court noted that Philippine law recognizes ownership rights in non-tangible property, including shares of stock. It also recognized a statutory right to sue for conduct that obstructs or impairs the right against deprivation of property without due process. Because both New York and Philippine law recognized a potential claim on the alleged facts, the court found it unnecessary to choose between those laws at this stage and did not decide what elements Global Gaming would have to prove at trial.

Punitive Damages

The court allowed Global Gaming to seek punitive damages. The management agreement limited punitive damages for disputes “under” that agreement, but the court found that the alleged trespass occurred after Razon terminated the agreement and was not a claim brought under it. The agreement did not use broader language covering claims merely related to the agreement.

The court also found that Philippine law did not bar punitive damages as a matter of law. Philippine law allows moral and exemplary damages in circumstances including willful property damage, bad-faith conduct, and certain quasi-delicts. The court found that the complaint sufficiently alleged bad faith, including allegations that Razon used personal and business relationships to halt trading and knowingly caused substantial harm to create leverage in the arbitration.

Under New York law, the court concluded that Global Gaming did not have to meet the usual public-harm requirement for punitive damages in certain contract-and-tort cases. The alleged interference was extra-contractual conduct that could support a claim even without a contractual relationship, and Razon had terminated the agreement before the alleged wrongful conduct. The court found no other basis to dismiss the punitive-damages request.

Duplicative Claims

The court also rejected the argument that the trespass claim duplicated Global Gaming’s claim to enforce the arbitration award. Claims are duplicative when they arise from the same facts and seek the same damages. The court found that the trespass claim involved additional conduct, including post-award actions, different alleged motivations, and interference with Global Gaming’s exercise of ownership rights. Those allegations could support damages, including punitive damages, that were distinct from damages connected to enforcement of the award.

Disposition

The court denied the defendant’s motion to dismiss Count V of the second amended complaint. The Clerk of Court was directed to close the motion at Docket 232. The opinion resolved only the motion to dismiss; it did not determine whether Global Gaming would ultimately prevail or receive damages.