HAGÅTÑA (The Guam Daily Post) — The first phase of the trial related to DFS Guam not being awarded a concession agreement in 2013 by the A.B. Won Pat International Airport Authority finished earlier last week in the Superior Court of Guam.
After a week of witnesses were called to testify in a bench trial before Judge Arthur Barcinas, the first of three phases were completed Tuesday in the lawsuit filed by DFS.
The lawsuit, filed in 2014, alleged misconduct over the Airport awarding a concession agreement to Lotte Duty Free Guam, another defendant named in the suit and the current concessionaire for the Airport.
Throughout the trial, which began Aug. 2, attorneys argued over the issue of whether DFS’ protest to Lotte being awarded the 10-year concession agreement was done in a timely manner.
Lotte was awarded the agreement in April 2013. DFS submitted its first protest letter the following month. The Airport found it to be untimely.
Opening
Attorneys started the trial by giving opening statements for Barcinas to consider.
Jay Srinivasan, attorney for DFS, walked through the timeline of events during the procurement process in 2012.
Srinivasan said letters were sent by DFS leadership in the midst of the process. The first protest letter was sent in May 2013.
Srinivasan acknowledged the Airport’s position that the letter wasn’t timely, but stated it’s because DFS was considering letters prior to that as protest letters.
“It’s really a two-week story, 10-day story for (the protest letter). … To our surprise, the Airport’s turned it into a 20-year story to show why we weren’t timely. They want to go into ancient history,” Srinivasan stated.
He said the Airport is attempting to show there is only one point of ancient history.
“They really want to go to one data point of ancient history and that’s this Oct. 31, 2011, (letter),” Srinivasan said.
First witness
Jim Beighley, a former executive of DFS, was called as the first witness and was questioned about the timeline of events that occurred surrounding Lotte being awarded the concession agreement.
A letter was sent by DFS in May 2013 after it was announced in the media Lotte was awarded the bid and able to add more items of value to its bid.
“When we learned through the press release and then the interviews that there were clearly more things that were offered that we considered out of scope and not consistent with the RFP and it seemed from the … press interviews that were taking place, the Airport was quite excited about these things,” Beighley stated.
“That was a concern because it wasn’t part of the RFP,” Beighley said.
He said that DFS requested a copy of Lotte’s proposal after hearing it was awarded the bid.
Korea
Attorney Christian Calvo, who is representing the Airport, cross-examined Beighley and asked about a letter sent in October 2012, in the midst of the procurement process.
The October 2012 letter had to do with DFS’ concerns over Airport board members being part of Jeju Air’s inaugural flight from South Korea to Guam and meeting with Lotte leadership, who gave the board members gifts during the trip.
Calvo asked Beighley to confirm whether that was a protest letter or not.
“This was a letter of concern relaying information to the airport,” said Beighley, who added he didn’t intend to stop the procurement process but to make the Airport aware and request they conduct an investigation.
DFS objected to questions about the letter on the basis of relevancy. Barcinas allowed it because the claims from the October letter were included in subsequent letters, including a protest letter.
Objections
With DFS calling its last witness and the Airport not calling any witnesses, testimony concluded Aug. 8.
However, following the last witness being called, attorneys discussed objections made throughout the trial.
Calvo in particular objected to recorded depositions of Airport board members being put on the record. Although they were allowed to be played, Calvo held a standing objection and requested a ruling to be given by Barcinas.
“We object to hearsay and to authenticity. (DFS hasn’t) shown any of these witnesses were unavailable to testify here and they could have easily called them as witnesses,” Calvo said.
After the discussion, the court was in recess until parties met again later in the afternoon and concluded the first phase of the trial at 6 p.m. Tuesday, according to Jannette Samson, the Judiciary of Guam’s public information officer.
Samson told The Guam Daily Post on Friday the start of Phase 2 for the trial was pending.
Extension
Prior to the start of the trial, Public Law 37-23 was passed and authorized the Airport to extend its agreement with Lotte.
The agreement, which ended July 20, was officially extended three years by the Airport’s board of directors and was needed, according to Airport Deputy Executive Manager Ricky Hernandez, considering the uncertainty of the speed of recovery to pre-pandemic levels.
Hernandez said the contract gives Lotte a fixed fee for rent at $2.64 million that is paid in advance of the contract period. Other terms included paying a per in-plane passenger fee of $4 each for the first 1 million in-plane passengers, $4.50 each for 1 million and one to 1.5 million in-plane passengers, and $5 each for more than 1.5 million in-plane passengers for the duration of the contract, Hernandez said.
After the extension was passed and a day before trial began, Barcinas issued a decision and order in response to the Airport’s motion to dismiss the case for lack of subject matter jurisdiction in light of the passage of P.L. 37-23.
Barcinas denied the motion on the grounds that DFS is entitled to seek additional remedies for relief.
According to Post files, the Lotte concession agreement with the Airport in 2012 was worth $154 million.
Supreme Court
Before the first phase of trial concluded, the Supreme Court of Guam also issued an order and decision related to the disputes between DFS and the Airport, in particular an arbitration decision, which would make the Airport compensate “DFS for a violation of a contract, pre- and post judgment interest, as well as attorney’s fees,” according to a Judiciary news release.
In the arbitration case, the Airport appealed the court’s decision to have the authority pay DFS. However, considering the court only under narrow circumstances can overturn an arbitration decision, the higher court determined the Airport didn’t meet those criteria, the Judiciary stated in a news release issued Aug. 7.
“The court rejected GIAA’s claims that the arbitration panel impermissibly ruled on issues relating to a contract not subject to arbitration. Instead, the court found the arbitration panel only addressed issues raised by the contract with the arbitration clause,” the release stated, adding issues in the contract without an arbitration clause are being addressed in the local court.
The Supreme Court affirmed the arbitration and remanded the case to the trial court for a determination of the reasonable attorneys’ fees incurred by DFS during the litigation.
Genevieve Rapadas, attorney for the Guam International Airport Authority, is seen outside the courtroom of Judge Arthur Barcinas before GIAA’s court case against DFS Guam at the Superior Court of Guam in Hagåtña on Aug. 2. 2023.
Genevieve Rapadas, attorney for the Guam International Airport Authority, is seen outside the courtroom of Judge Arthur Barcinas before GIAA’s court case against DFS Guam at the Superior Court of Guam in Hagåtña on Aug. 2. 2023.
Christian Calvo, attorney for the Guam International Airport Authority, stands beside a wagon of documents before GIAA’s court case against DFS Guam at the Superior Court of Guam in Hagåtña on Wednesday, Aug. 2, 2023.
