THE Office of the Attorney General civil division has asked the Superior Court to dismiss with prejudice the lawsuit of Mariana E-Land Corporation against the Department of Public Lands for failure to state a claim.
E-Land, owner and operator of Kensington Hotel Saipan, Coral Ocean Golf Resort, and Pacific Islands Club, has sued the Department of Public Lands and DPL acting Secretary Sixto Igisomar, in his official capacity, for the cancellation of the Mariana Resort property lease agreement. The AG’s office represents DPL in the lawsuit.
E-Land wants the Superior Court to issue a temporary restraining order and a preliminary injunction pursuant to Rule 65(a) of the NMI Rules of Civil Procedure, preventing DPL and/or the acting secretary from reissuing RFP20-RED004 until such time that the court has ruled on E-Land’s complaint.
But according to Office of the AG’s civil division chief John Lowrey, “All of E-Land’s causes of action are fatally flawed and fail to state a claim upon which relief can be granted.”
In a motion to dismiss filed on Tuesday, Lowrey said DPL lawfully rescinded the notice of award because the proposed lease did not comply with DPL regulations.
“Because DPL’s decision to rescind the notice of award to E-Land was lawful and required by regulations, E-Land cannot prevail on its claim for injunctive relief,” Lowrey said.
“Accordingly, E-Land has failed to state a claim for relief for all causes of action, and its complaint should be dismissed with prejudice per Rule 12(b)(6) and without leave to amend, because any amendment would be futile,” Lowrey added.
E-Land never formed a contract with DPL regarding the RFP, and any lease agreement would need to be approved by the attorney general and Legislature before it could take effect, Lowrey said.
He added that a lease that does not comply with DPL’s regulations is void, and must be rejected as outside of DPL’s legal capacity.
Had the attorney general not rejected the lease, it would still have been void, Lowrey said.
“Further, even if the attorney general did not reject the lease, and DPL did not rescind the notice of award to E-Land, DPL could not agree to E-Land’s suggested changes to the lease and the parties would not have been able to execute a final lease,” he added.
“Assuming [for the sake of argument] that DPL accepted E-Land’s suggested changes, the attorney general did not reject the lease, and the lease was not yet discovered to be void ab initio for failure to comply with DPL’s regulations, the CNMI Legislature would still have to approve the lease. Per Commonwealth law, DPL ‘may not transfer an interest in more than five hectares of public land for use for commercial purposes without approval of the Legislature in a joint session,’ ” Lowrey said.
Here, he added, “the property subject to the RFP has an aggregate area of 1,449,221 square meters, which is greater than five hectares. Without the necessary legislative approval and an enforceable lease agreement in compliance with DPL regulations, E-Land does not have any rights to the lease or to occupy public land.”
Last month, following a stipulation from E-Land and DPL, Superior Court Associate Judge Joseph N. Camacho issued a preliminary injunction enjoining DPL from reissuing RFP-RED004 pending a determination of the merits of the plaintiff’s complaint that was filed on July 13, 2021.
E-land, and DPL had previously agreed to “freeze” the court proceedings.
In its complaint through attorney Charity Hodson, E-Land seeks a declaratory judgment declaring as improper DPL’s rescission of the notice of award dated March 22, 2021 as well as DPL’s April 29, 2021 letter with the draft lease attached (referenced RD21-0157), and the cancellation of RFP20-RED004.
This should be reversed, the lawsuit added.
Moreover, the lawsuit stated, the court should issue judgment against the DPL secretary for breach of his fiduciary duty; and an injunction to prevent the defendants from reissuing the RFP.
Hodson said the DPL secretary “breached his fiduciary duty in rejecting a proposal that was in the best interest of the Commonwealth by failing to stand by the original, correct, assessment that E-Land’s rent fee was actually greater than the rate of 5% fair market value and 1% of revenue.”
CNMI taxpayers have therefore been injured by the breach of fiduciary duty because of the loss of a $220 million investment in the CNMI, Hodson added.
Judge Camacho has scheduled a motion hearing for Oct. 12, at 2:30 p.m.