THE two companies sued by the Commonwealth Ports Authority for failing to keep up with their lease payments have denied any wrongdoing.
CPA last month filed a lawsuit against Phoenix Services Inc. and Pride Keen Limited in Superior Court for breach of contract, and alleged that the two companies brought in five yachts to the CNMI pursuant to a business agreement with Imperial Pacific International LLC but failed for to pay for the use of the CNMI’s 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, 2023.
In answer to the complaint, the defendants said they “are without knowledge or information sufficient to form a belief as to the truth of each and every allegation contained in the paragraphs…of the complaint and therefore [deny] them.”
Nutting also asserted 23 affirmative defenses against the complaint’s allegations.
Moreover, he said, the “relief sought by plaintiff is barred because the parties entered into a novation.”
According to an online legal dictionary, novation refers to the process of substituting an existing contract with a replacement contract.
CPA, represented by attorney Robert T. 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 the company had no involvement in the lease agreement, it has been unjustly enriched as it owns the two vessels that have been docked on Saipan’s commercial docks for years for free, CPA stated.
CPA sued the 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 also wants the court to issue an order directing the luxury yachts, specifically Grand Marianas 4 and 5, to remain docked at CPA’s Delta Dock at the defendant’s expense 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 in order to also lease Delta Dock from CPA, the complaint stated.
For the use of Delta Dock, Phoenix agreed to pay home port fees per vessel that would be docked there, in addition to a monthly permit fee, CPA stated.
Sometime in March 2020, the business plan faltered and ceased operations due to the pandemic and Phoenix Services 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.
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.
CPA said Phoenix Services has made no additional payments, even after CPA’s notice of default and demand for full payment on Sept. 29, 2021.
