The plaintiffs want the court to declare the lease agreement null and void, and award them costs and reasonable attorney’s fees in an amount to be determined by the court, and other relief the court seems just and reasonable.
Press Secretary Charles P. Reyes Jr., in an e-mail, said the lawsuit “is not in the best interests of the people, government, and economy of the CNMI and the governor will continue to support this resort development for the people, government, and economy of the CNMI.”
Reyes said Kumho, the parent company of Saipan Laulau, is committed to the CNMI.
“They are embarking on a multi-million dollar development,” he added. “They have significantly expanded flight service and there are very few other large investors with the willingness and capability of providing such value to the CNMI.”
Reyes described the lawsuit aswithout merit, adding that the government will file a motion to dismiss it.
“Do these plaintiffs also want Asiana to stop flight service to the CNMI? This lawsuit is frivolous and it completely fails to appreciate the enormous value created by this investment,” Reyes said.
The plaintiffs, through their counsel, former Judge Edward Manibusan, are seeking a declaratory judgment that the defendants breached their fiduciary duty to the commonwealth by leasing public land at an unreasonably low price on terms that are favorable to the lessee, and for a period that exceeds the permissible term allowable under the CNMI Constitution.
Saipan Laulau is wholly owned by Kumho Holdings Company Ltd., a South Korean company.
The plaintiffs said they will suffer irreparable harm if the defendants are not restrained from proceeding with the development of the property.
The property consists of 1,615,053 square meters of public land in Kagman.
The lease agreement was signed on Dec. 6, 2007 by Saipan Laulauand DPL.
According to the plaintiffs, Fitial, as chief executive of the government, owes a strict fiduciary duty to the people to faithfully execute the functions of his office.
They stated that the DPL secretary likewise breached his duty by disposing public land to a private entity in a less than commercially reasonable manner.
It is also a breach of duty to allow the lease of prime public land for longer than 40 years, the plaintiffs stated.
DPL leased the property for $4,120,080 or $103,002 per year.
The plaintiffs said the governor and DPL’s failure to lease the property on a reasonable basis resulted in a minimum loss of $16,551,920 to the government.
They said the lease does not contain any public benefit obligations, no public access guarantee or any junior golf programs or fundraising programs required of Saipan Laulau.
They stated that the company is not required to continue programs for students of Kagman High School as well as the junior golf and outreach programs for the local community.
According to the complaint, there is no provision in the lease agreement requiring the lessee to purchase local materials for construction, require its parent company to bring into the CNMI additional Asiana Airlines flights, or guarantee the expenditure of any certain dollar amounts that will benefit the CNMI’s ailing tourism industry.
The plaintiffs noted that the governor also approved a plan to provide up to $18 million in tax relief for the lessee.
Saipan Laulau became the owner and operator of Laolao Bay Golf Resort through a lease agreement signed on Oct. 13, 2007 between Shimizu Corp. and DPL’s predecessor, the now defunct Marianas Public Lands Corp.
Kumho Holdings purchased all of the shares of Saipan Laulau on March 14, 2007 for $16,600,000.
DPL terminated the Oct. 3, 1989 original lease agreement with Saipan Laulau on Dec. 6, 2007 and entered into a new lease agreement on the same day.
The new agreement covers a 25-year period with an option to extend for another 15 years, or until 2047.
The plaintiffs said the lease agreement between Saipan Laulau and the government runs from 1989 to 2047, a period of 58 years, which is a violation of the Constitution.
