SENIOR Judge Marilyn L. Huff of the U.S. District Court for the Southern District of California will preside over the lawsuit filed by the Commonwealth Ports Authority against two companies for failing to keep up with their lease payments.
CPA sued Phoenix Services Inc. and Pride Keen Limited in Superior Court for breach of contract.
CPA said the two companies brought in five yachts to the CNMI pursuant to a business agreement with Imperial Pacific International LLC and failed to pay lease payment for use of local commercial docks.
Phoenix Services and Pride Keen, represented by attorney Stephen Nutting, removed the lawsuit from the local court and filed it in the District Court for the NMI on April 3.
The defendants deny the allegations.
On April 10, Chief Judge Ramona V. Manglona of the District Court for the NMI disqualified herself from handling the case.
“Because the undersigned’s brother, who is within the third degree of relationship, is a member of the board of directors for the Commonwealth Ports Authority, the undersigned disqualifies herself pursuant to 28 U.S.C. § 455(b)(5)(i),” she said in her order.
The parties were also notified that a magistrate judge is available to conduct all court proceedings in the civil action.
A telephonic conference before Judge Huff is scheduled for today, April 19, at 9:30 a.m.
CPA, represented by attorney T. Robert Torres, has asked the court to issue a judgment in favor of CPA and award it damages, with the sum total still to be determined plus interest of 9% a year.
According to the lawsuit, Phoenix Services owes CPA over $91,000 in delinquent fees.
Phoenix Services is the company that procured the yachts from Pride Keen and signed a lease agreement with CPA for the use of Saipan’s commercial docks.
As for Pride Keen, although it had no involvement in the lease agreements, CPA stated that the company has been unjustly enriched as it owns the two vessels that have been docked on Saipan’s commercial docks for years for free.
CPA sued the two companies for breach of contract (promissory note, monthly permit fees, home port fees for the yachts, Grand Marianas 4 and 5), breach of covenant and good faith and fair dealing, and unjust enrichment.
CPA likewise asked the court to issue an order directing the luxury yachts, specifically Mariana 4 and Mariana 5, to remain docked at CPA’s Delta Dock at the defendants’ expense at its current state until judgment for damages is paid in full or until the vessels are sold for the purpose of fulfilling the judgment the court issues.
Phoenix Services leased Charlie Dock 2 from CPA from December 2015 to November 2020. In October 2019, Phoenix Services submitted a bunker application to also lease Delta Dock from CPA.
CPA and Phoenix Services entered into an agreement, with CPA issuing the entity a revocable permit for the use of Delta Dock. For the use of the dock, Phoenix agreed to pay home port fees per vessel that would be docked there, in addition to a monthly permit fee.
According to CPA, in March 2020, Phoenix Services ceased operations due to the pandemic and failed to pay for both the use of Charlie Dock 2 and Delta Dock
CPA entered into an alternative agreement with Phoenix Services soon after reducing the fees for the use of Delta Dock in consideration of the pandemic and its impact on the economy.
In February 2021, Phoenix Services asked for discounts on the monthly permit fee, to which CPA obliged by waiving 50% of the monthly permit fee from October 2020 to March 2021. CPA also provided the company with a draft of a promissory note for repayments toward past due fees.
On March 30, 2021, CPA and Phoenix Services entered into an agreement regarding the promissory note, with Phoenix Services promising CPA that it would pay its debts from the Charlie Dock lease agreement and the Delta Dock permit. The total amount due to CPA was $91,827.35.
CPA said Phoenix Services has only made two payments toward the promissory note — a $5,000 payment on April 28, 2021, and another on July 16, 2021, totaling $10,000.
Phoenix Services has made no additional payments even after CPA’s notice of default and demand for full payment on Sept. 29, 2021, the lawsuit added.
Marilyn Huff
