Maratita takes Fitial to court over ‘unconstitutional’ power agreement; seeks TRO

FOR an unauthorized public indebtedness resulting from what she believes is an unconstitutional $190 million power purchase agreement, Rep. Janet U. Maratita yesterday sued in Superior Court Gov. Benigno R. Fitial, former Attorney General Edward T. Buckingham, the Commonwealth Utilities Corp. and Saipan Development LLC, the shadowy Delaware company formed five days before it was awarded the contract.

Through her counsel, Ramon K. Quichocho, Maratita filed the complaint on behalf of herself and the CNMI taxpayers.

She is seeking a court order temporarily restraining the defendants from “continuing, pursuing, and/or performing on, the Aug. 3, 2012 power purchase agreement, and for an order to show cause why a preliminary injunction against [the] defendants, restraining the same activities, should not issue.”

According to her lawsuit, the defendants’ “wrongful acts and conduct” will cause her and  taxpayers to suffer immediate, irreparable injury, loss or damage.

Maratita, R-Saipan, said her and the CNMI taxpayers’ health, safety and well-being will be compromised and jeopardized as the CNMI’s meager resources will be diverted to fund “an illegal contract.”

She said she has no adequate remedy at law for the injuries she and the taxpayers suffered and will continue to suffer due to the defendants’ wrongful conduct, and that no precise amount of damage to their safety, health and well-being could be determined.

Maratita believes  she will succeed in permanently enjoining the defendants from spending $190 million of public funds without appropriation by the Legislature and certification by the Department of Finance.

The issuance of a TRO, her complaint stated,  is in the public interest because it seeks to prevent defendants “from improperly, illegally, and unconstitutionally expending public funds to benefit a few, without legal justification or right to do so.”

Maratita requested the court to hear the motion for preliminary injunction at the earliest possible time.

Causes of action

In her complaint, Maratita said she brought action against the defendants for (1) illegal expenditure of public funds; (2) breach of fiduciary duty; (3) declaratory relief; and (4) injunction.

Invoking Section 9, Article X of the CNMI Constitution, Maratita filed the case against the defendants as a taxpayer who may bring an action against the government or its instrumentalities to enjoin the expenditure of public funds for other than public purposes.

Citing 1 CMC §121, Maratita stated that the power purchase agreement expenditure does not fit any of the definition of public purpose.

“Since defendants Fitial, Buckingham, and CUC incurred a public indebtedness in violation of the CNMI Constitution and laws, any expenditures of public funds under the power purchase agreement are illegal expenditures and all expenditures must be enjoined,” she said.

The agreement must be cancelled, she added.

If public funds have already been spent, Maratita asked that the “mysterious” beneficiary,  Saipan Development LLC, be ordered to return the money to the Department of Finance and not to CUC which, she added, cannot be trusted with the people’s money.

Maratita said Fitial, Buckingham and CUC breached their fiduciary duties in secretly executing the power purchase agreement with Saipan Development, granting it exclusive right to develop a diesel-generated electric power plant on Saipan.

Maratita also noted the option to lease agreement with the Department of Public Lands on March 27, 2012, an agreement kept secret by the defendants and continue to keep secret, she said.

That agreement granting Saipan Development exclusive option to lease public lands occupied by CTSI and the surrounding areas in Lower Base was executed on Aug. 3, which was again kept under wraps, Maratita added.

According to her complaint, the agreement is “clearly a public debt which was not authorized by the affirmative two-thirds of the members of the CNMI Legislature.”

The defendants, moreover, failed to ensure that their “unlawful, unconscionable and unjust undertaking was not in excess of 10 percent of the aggregate assessed valuation of the real property within the commonwealth, which violates the CNMI Constitution.”

Likewise, this “public indebtedness” is for operating expenses of CUC which violates the CNMI Constitution.

It was neither appropriated by the Legislature nor certified by the Department of Finance, and is therefore a violation of Section 8 Article X of the CNMI Constitution, the complaint stated.

It added that there is “no constitutional, legal nor moral justification to mobilize available resources to respond to Fitial’s emergency declaration” for CUC which allowed him to award the contract to Saipan Development.

The agreement disregarded procurement rules and regulations, Maratita’s complaint stated.

For this breach in fiduciary duty, Maratita said she and the CNMI taxpayers will suffer financial losses in the form of “guaranteed payments” of $636,091 per month for 25 years to Saipan Development, “payments not subject to alteration, adjustment, setoff, counterclaim, abatement or force majeure.”

She said she and the taxpayers will suffer losses in the form of production fees: $0.0153 per plant produced kWh to cover costs of lubricant oils consumables and spare parts.

CNMI taxpayers, she said, will also suffer losses in the form of operations and maintenance fees amounting to $0.0191 per plant produced kWh per month.

They will also suffer losses through production fees as CUC will be responsible for provision of fuel to operate the facility at the capacity that CUC requires.

Maratita said these breaches of fiduciary duties by the defendants are the sort that can be repeated so award of damages alone is inadequate as remedy.

Maratita asked the court for declaratory judgment that the power purchase agreement is unconstitutional, illegal, unconscionable and/or unjust and should be cancelled.

Specifically, she asked judgment that (1) payments to Saipan Development under the agreement is unconstitutional, unlawful, unfair and unjust expenditure of public funds for a public purpose; (2) expenditure under the contract is unconstitutional because it was not certified, controlled or regulated by Finance; (3)  the defendants breached their fiduciary duties by entering into the agreement that guaranteed expenditure of public funds for 25 years without certification or appropriation; (4)  the defendants incurred a public debt without the approval of two-thirds of the Legislature for operating expenses; and (5) the agreement was “an unconscionable contract.”

Maratita is asking for a permanent injunction to keep the defendants from engaging in future “unlawful and/or improper transactions.”

She asked the court for actual, general, compensatory and consequential damages in the amount to be determined in trial.

She also asked for award or other damages as can be shown by the plaintiff, attorney fees and costs, pre- and post-judgment interest, and for all other reliefs that she is entitled to under law or equity as the court finds just and proper.

The defendants have 20 days to respond in writing to the complaint.