By Bryan Manabat
[email protected]
Variety News Staff
PRESIDING Judge Joseph N. Camacho has ruled that the Moody’s Aaa corporate bond yield is consistent with the prudent investor rule and will be used to calculate prejudgment interest in a decades-old land-taking case, setting the rate at 5.4016%.
In a 13-page order issued June 8, the Superior Court held that the Moody’s Aaa rate “justly compensates” plaintiff Nicolas C. Sablan, who sued the Department of Public Lands in 2019 over the taking of his property, Lot 2002-3-RW, without payment. The parties previously stipulated that the property was worth $112,000 when it was taken on Jan. 27, 1992, leaving the appropriate prejudgment interest rate as the primary issue before the court.
Sablan was represented by attorney Michael Dotts, while the Commonwealth was represented by Assistant Attorney General Alison Nelson.
The ruling follows a series of evidentiary and Daubert hearings held in 2024 and 2025, during which both sides presented expert testimony on how a reasonably prudent investor would have grown the 1992 principal over the ensuing 34 years. The plaintiff’s expert, Kerry Campbell, advocated a diversified investment portfolio based on Modern Portfolio Theory. The Commonwealth’s expert, Kevin Christensen, recommended using the Moody’s Aaa corporate bond yield, a benchmark widely adopted in federal takings cases.
In his order, Judge Camacho wrote that the Moody’s Aaa rate — previously used in a 2024 CNMI inverse-condemnation ruling — satisfies the constitutional requirement to place the landowner “in as good a position pecuniarily as he would have occupied if the payment had coincided with the appropriation.”
The court rejected Campbell’s argument that a diversified stock-and-bond portfolio more accurately reflected prudent investment behavior. Judge Camacho found that Modern Portfolio Theory improperly tailors investments to an individual’s risk profile, contrary to CNMI precedent requiring an objective, hypothetical prudent investor.
The judge also dismissed concerns that Moody’s Aaa yields fail to keep pace with inflation. Citing federal inflation data, he noted that $112,000 in 1992 would equate to roughly $270,000 in 2026 buying power, while the Moody’s-based calculation would produce an estimated $669,920, “outpacing inflation and providing a reasonable return.”
The ruling affirms that trial courts have broad discretion in setting prejudgment interest in inverse-condemnation cases, but that discretion remains bounded by the constitutional mandate of just compensation.
“The Moody’s Aaa Corporate Bond Yield is an acceptable prejudgment interest rate that is consistent with the prudent investor rule and justly compensates Plaintiff for the inverse condemnation land taking,” Judge Camacho wrote.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
