WISHING to avoid costs associated with further litigation, the NMI Settlement Fund and the Commonwealth Utilities Corporation have reached an agreement settling their dispute regarding CUC’s unpaid employer contributions.
The parties agree that CUC will pay the NMISF $3,469,797 in $50,000 monthly increments following the approval of their agreement by the District Court for the NMI.
The NMISF, through attorney Nicole Torres-Ripple, filed a notice in federal court regarding the settlement of Superior Court civil action 11-0114-CV and request for approval of the settlement.
Background
On May 5, 2011, the then-NMI Retirement Fund filed a lawsuit against CUC to collect unpaid employer contributions. The lawsuit alleged violations of the CNMI Constitution, breach of contract and void assignment of debt. It sought judgment in the amount of $3,175,225 plus $740,462 in penalties, and $527,716 in economic damages as of April 29, 2011.
In Dec. 2011 the NMI Retirement Fund moved for partial summary judgment. CUC filed its opposition and cross-motion for partial summary judgment on Feb. 20, 2012. On May 10, 2012, the CNMI government intervened and opposed the NMI Retirement Fund’s motion for partial summary judgment.
On May 17, 2012, the lawsuit was moved to District Court for the NMI following the NMI Retirement Fund’s petition for bankruptcy.
On Aug, 15, 2012, the bankruptcy was dismissed and the case was remanded to the CNMI Superior Court.
On Aug. 15, 2017, the NMI Retirement Fund, CUC, the CNMI government, and the NMI Settlement Fund stipulated to the substitution of the NMI Settlement Fund as the plaintiff in the Superior Court lawsuit based on the Retirement Fund’s assignment and transfer of all rights, title, and interest in and to the litigation pursuant to a settlement agreement approved by the federal court in Sept. 2013.
The CNMI Superior Court approved the stipulation on Aug. 16, 2017.
Following a hearing on March 28, 2018, on the partial summary judgment by the NMISF originally filed by the NMI Retirement Fund, the Superior Court denied the motion and ordered that “the pleadings be amended to include the updated information, arguments, and complaints in this case.”
On April 10, 2019, the NMISF filed its first amended verified complaint in Superior Court and added the CNMI government as defendant. On March 16, 2020, the NMISF filed a second amended complaint against CUC, alleging breach of contract and unenforceable memorandum of understanding.
Settlement discussions
The parties subsequently entered into settlement discussions and reached a tentative settlement.
In her notice filed on June 14, 2023, Torres-Ripple stated that on Dec. 13, 2022, the parties met again and reached an agreement in principle.
“The terms of the agreement require the CUC to pay to the Settlement Fund $50,000 per month until the settlement balance of $3,469,797.00 is paid in full, subject to interest for late monthly payments at a rate of 5% per annum, calculated from the earliest unpaid monthly payment until such time the entire unpaid balance is paid,” she said.
“On May 16, 2023, the parties executed the settlement agreement, subject to this Court’s approval,” she added.
The settlement agreement between CUC and the NMISF was signed by the trustee, Joyce C.H. Tang, CUC acting Executive Director Bettina G. Terlaje and CUC Board Chair Janice Tenorio.
Previously, in its opposition, the CNMI Office of the Attorney General asked the federal court to issue an order preventing the NMISF from engaging in a lawsuit against the CNMI government to recover unpaid pension liabilities from CUC.
Citing the settlement agreement approved by the federal court in Sept. 2013, the AG’s office stated that Betty Johnson, the settlement class and the NMI Retirement Fund (now the NMI Settlement Fund) had agreed to release the CNMI government from any liabilities or lawsuit prior to the date of the final approval of the settlement agreement.
Johnson lawsuit
In 2009, retiree Betty Johnson sued the CNMI government for its failure to pay the amounts that it was required by law to pay to the NMI Retirement Fund since 2005.
According to the lawsuit, the Fund would run out of money by June 2014 and would no longer be able to pay retirement benefits.
In Sept. 2013, the parties agreed to settle the lawsuit and the U.S. court approved a $779 million consent judgment in case the CNMI government did not meet its obligations to the Settlement Fund.
The NMI Settlement Fund was created by the federal court as part of the settlement between the CNMI government and the retirees.
The settlement was intended to be a full and final agreement where “each and every claim that has been alleged or could have been alleged, in the Johnson action, shall be settled and compromised,” the CNMI AG’s office stated.
It added that the settlement agreement relieved the Commonwealth of additional complaints from the NMI Settlement Fund unrelated to the enforcement of the settlement agreement.
