By Cherrie Anne E. Villahermosa
Variety News Staff

THE Superior Court has dismissed a law firm’s small claims of $3,000 for damages and attorney’s fees against an insurance firm in connection with the surety bonds proceeds of three alien workers.
Associate Judge Ramona V. Manglona, in an order on Monday, ruled in favor of Royal Crown Insurance Corp. and dismissed the complaints of Smith & Williams law firm without prejudice.
Manglona said that the assignment under which Smith and Williams claim standing to bring its action in this case is premised upon the director of labor’s recovery on the bonds issued by Royal Crown.
The order stated that the complaint fails to state a present cause of action against the defendant.
Manglona added that the plaintiff’s third party cause of action against the defendant is legislatively preempted by the provisions of the CNMI’s Nonresident Workers Act, or 3 CMC 4411.
Smith & Williams, through attorney Eric Smith, filed small claims actions against Royal Crown and was seeking $3,000 in principal damages plus interest and attorney fees based upon the Oct. 10, 2001 “Assignment of Proceeds of Labor Bond to Pay Attorney Fees” and based upon the claim that Guo Zhu Huang, Guo Hong Wu and Cheng Wei Xie are third party beneficiaries of the bonds issued by Royal Crown.
According to the complaint, Huang, Wu and Xie, through the law firm, possess a right to enforce the bond directly against the surety under general principles of contract and suretyship law.
Huang, Wu and Xie were all nonresident employees of Pacific Zhi Da Company Ltd.
Pursuant to the requirements of 3 CMC 4435, Pacific Zhi Da Company Ltd. delivered to the director of labor separate surety bonds issued by Royal Crown Insurance, naming the then-Department of Labor and Immigration and the Division of Labor as the obligee on the bonds.
Between May and October of 1998, the three nonresident workers along with other 13 other alien workers filed labor complaints with the Division of Labor against Pacific Zhi Da Company Ltd.
A series of administrative hearings took place between November 1999 and April 2000 until the hearing officer issued an order on Aug. 11, 2000 that awarded the claimants specified back wages and other relief and required the employer to make payment of the award to the Division of Labor within 30 days.
The employer filed an appeal that was denied by the secretary of labor. The employer also filed a complaint for judicial review of the final order in Superior Court. The complaint was dismissed for lack of jurisdiction.
On June 26 and 27, 2001, the Division of Labor issued a separate notice of claim to Royal Crown for each of the bonds issued with respect to the three alien workers.
On Sept. 11, 2001, Smith & Williams served the Division of Labor with its own “Notice of Claim Against Labor Bonds” identifying Huang, Wu and Xie as the claimants and former clients who are all indebted to the law firm for $1,000 each in legal fees incurred during their labor cases and in related deportation proceedings.
The law firm’s notice also stated that “the law firm intends to pursue a small claim actions against the three workers” and to satisfy any judgment obtained from the proceeds of the labor bonds.
On Oct. 10, 2001, Huang, Wu and Xie signed a document drafted by Smith & Williams titled “Assignment of Proceeds of Labor Bond to Pay Attorney Fees.”
The document stated that the workers agreed that the proceeds of the labor bonds purchased by their former employer for their benefit in the amount of $1,000 each for a total of $3,000 are hereby assigned to Smith & Williams in order to pay their attorney fees.
The document specifically authorized and directed the Division of Labor to pay the law firm the sum of $3,000 from the proceeds of the said bonds.
The order stated that no evidence was presented to show any further official activity on the part of Division of Labor to collect on the bonds until April 22, 2003. Royal Crown has made no payment on the bonds and the Division of Labor has not commenced an action to enforce its claim on the bonds.
Judge Manglona said the issue faced by the court is whether the assignment grants the plaintiff the present right to bring these small claims actions directly against the surety for the recovery of proceeds under the bonds, even assuming that the assignors were third party beneficiaries of the bond.
Manglona said the authority to collect and administer the proceeds of a labor bond has been legislatively delegated to the director of labor, and to date the Division of Labor has not collected any proceeds from the bonds and the Division of Labor is not a party to this action.
Manglona added that third party suits of this nature would interfere with the duty of the director of labor to collect and administer the proceeds of labor bonds and disrupt the administrative procedures put in place by the Nonresident Workers Act.
“The suit must be denied by the court,” the judge said.