CNMI law and Department of Public Lands regulations are not a buffet line from which DPL can choose what it wants on any given day, E-Land attorney Charity Hodson told the Superior Court.
She said the CNMI government believes that E-Land has failed to state a claim for the relief it seeks, and it also claims that the Department of Public Lands was required to rescind the notice of the award because the Office of Attorney General determined that the proposal was noncompliant with the minimum rental rate set forth by regulation, Hodson said.
However, she added, the government “sidesteps altogether the critical fact that DPL and DPL legal counsel (assigned from the Office of the AG and subject to the supervision of the attorney general himself) have, throughout the entire proposal and review process prior to the rescission of the award, assured E-Land that its proposal was indeed compliant with regulations, and explicitly represented to E-Land that it would not be disqualified for proposing less than five percent,” Hodson added.
The owner and operator of Kensington Hotel Saipan, Coral Ocean Golf Resort and Pacific Islands Club, E-Land sued DPL and DPL Secretary Sixto Igisomar, in his official capacity, for the cancelation of the Mariana Resort property lease agreement.
Last month, the AG’s office, through civil division chief John Lowrey, asked the Superior Court to dismiss with prejudice E-Land’s lawsuit for failure to state a claim.
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 its secretary from reissuing RFP20-RED004 until such time that the court has ruled on E-Land’s complaint.
“All of E-Land’s causes of action are fatally flawed and fail to state a claim upon which relief can be granted,” Lowrey said.
DPL lawfully rescinded the notice of award because the proposed lease did not comply with DPL regulations, Lowrey added.
In her 18-page opposition, Hodson asked the court to deny DPL’s motion to dismiss.
She said, “DPL has erroneously set an arbitrary across-the-board minimum rent policy which it treated previously as a discretionary policy but now treats as a mandate.”
She said, “DPL in this case has taken a policy which is not mandated by any statute, and has chosen to read it so restrictively that it is no longer a policy and ignores actual statutory discretion committed to the DPL secretary to negotiate basic rent and to act in the best interest of public land beneficiaries.”
Hodson said DPL is “exercising discretion freely in many instances and confines itself to its regulations as it pleases, blithely injecting lease terms when it suits DPL and arbitrarily asserting regulatory limits when it says so.”
“This is improper,” she added. “The terms in CNMI law and DPL Regulations are not a buffet line from which DPL can choose what it wants on any given day,” she said.
Hodson said the DPL secretary exercised his discretion to negotiate basic rent and did so in awarding the RFP to E-Land, and then changed his mind after E-Land had already issued a proposal and a best and final offer.
Hodson said the CNMI government’s argument that the award had not yet materialized into a lease is a red herring, because E-Land’s claim is for a declaratory judgment, not a breach of contract.
“The government would have this court summarily dismiss E-Land’s claims because E-Land is a Korean investor and the government apparently feels entitled to change the rules as it wills on any given day,” Hodson said.
On July 13, 2021, 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 plaintiff’s complaint.
E-land, and DPL had previously agreed to “freeze” the court proceedings.
In its complaint, E-Land is seeking 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.
According to E-Land 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.
E-land said its proposed total investment was $220 million, of which $213.2 million would be directly related to development investment.
E-Land said it also offered a total of $6.8 million in public benefits:
• $2.5 million toward the infrastructure development of the DPL Homestead Program;
• $1.05 million for the repair and upgrade of the existing Marpi swimming pool;
• $0.4 million to develop a baseball field in Tanapag; and,
• $2.85 million for a lifelong education center to facilitate learning about Micronesian traditions and culture.