ATTORNEY Juan T. Lizama has asked the Superior Court to deny Kan Pacific Saipan Ltd.’s motion for summary judgment in its breach of contract lawsuit against his client, Imperial Pacific International LLC.
Lizama also asked the court to issue an order dismissing the case because the plaintiff has failed to join an indispensable party, the CNMI Department of Public Lands.
He said DPL is within the court’s personal jurisdiction because it is a CNMI government “agency” as defined by 1 CMC § 9101(b).
According to Lizama, DPL must be joined pursuant to Rules 19(1)(B)(i) and 19(2) for two reasons: (1) DPL is a third-party beneficiary to the contract in dispute, and (2) IPI will not be able to fully protect its interest regarding DPL’s involvement with the 2016 settlement and how it was carried out unless DPL is joined.
“First, Part 4(c) of the 2016 settlement provided for $16 million to be paid directly from [Kan Pacific Saipan or] KPS to DPL and made DPL a third-party beneficiary. Section 7 made KPS and IPI jointly and severally liable for rental payments to DPL. There is ample case law in the United States providing for third-party beneficiaries to contracts to be joined to contract disputes,” Lizama said.
“Second, DPL is indispensable to resolving this suit because DPL has additional facts and evidence needed to fully determine any liability that IPI would have to KPS, as well as DPL’s potential liability to parties in this case. Such facts include what DPL knew about the 2016 settlement and how it was carried out, which could determine whether DPL should have taken action to recognize the 2016 settlement as void in order to ensure a fair competition for the next lease, or clearly terminate it,” Lizama said.
Thus, IPI’s interests will be impaired without the joinder of DPL, he added.
According to the factual background of the lawsuit, on Dec. 15, 1977, Kan Pacific leased 146 hectares of public land from the NMI for 40 years. The following day, Dec. 16, 1977, the lease was executed a second time with revisions.
The relevant difference between the two leases lies in a provision requiring the NMI’s consent or approval to any assignment or sublease of KPS’s interest in the latter.
Sometime between October and December of 2015, local newspapers published that ongoing negotiations were occurring between KPS and IPI.
Later, news articles revealed that a deal was “signed.” Under the deal IPI would take over KPS’s existing lease.
The intent was for IPI to be in the best position to get the next lease from DPL.
According to Lizama, Saipan Entertainment brought suit contesting the legality of the transaction since DPL did not consent.
That suit lead to a settlement nullifying the transaction, Lizama added.
In 2016, KPS and IPI entered into a new agreement that essentially transferred KPS’s existing lease to IPI (e.g., it transferred all assets and operations from KPS to IPI and required KPS to encourage present employees to join IPI). In return, IPI would pay Kan Pacific $17.5 million, with an initial payment of $12.5 million and then $200,000 for 25 years, starting June 2017 said Lizama.
He said under part 4(c) of the 2016 settlement, $16 million would be paid directly from KPS to DPL and that DPL would be a third-party beneficiary.
Section 7 made KPS and IPI jointly and severally liable for rental payments to DPL, he added.
“IPI did not win the new lease with DPL in part due to its inability to meet the requirements imposed by DPL. After making three annual payments to KPS, IPI did not make the payment in 2020, leading to the present lawsuit,” Lizama said.
In July 2020, Kan Pacific, through attorney Joseph Iacopino, filed a complaint against IPI and 50 unnamed individuals for breach of contract for an undetermined amount.
The lawsuit stated that prior to June 1, 2020 Kan Pacific, IPI, and 50 Does, entered into a written agreement, which contractually obligated the defendant to pay a certain sum of money to the plaintiff on or before June 1, 2020.
The complaint stated that “the…agreement includes a confidentiality provision.”
