THE dispute between the Commonwealth Ports Authority and Star Marianas Air Inc. over airport fees continues as CPA filed its answers — including a $3.9 million counterclaim — to the airline’s allegations in Superior Court.
SMA, through its attorney Mark Scoggins, is alleging that CPA has failed and continues to fail to adjust the fees and charges as provided in their airline use agreement.
SMA said since it uses aircraft with fewer than nine passenger seats, not all provisions of the agreement are applicable to SMA.
According to the agreement, SMA said, all rates and charges should be reasonable and non-discriminatory, and adjusted annually based on the cost of CPA’s facility or the service provided to the airline.
SMA said CPA should have provided SMA with copies of CPA’s proposed annual budget and allowed SMA to comment on the rates of fees.
SMA said if CPA does not timely give annual notice of the rates for fees and charges, “adjustments for overpayment and underpayment shall be made after the calculations are properly made and notice properly given.”
Because CPA has not provided SMA with a sufficiently detailed budget submission, CPA has charged and continues to charge SMA for amounts not related to its actual operational costs for the services provided to SMA.
SMA further alleged that CPA failed to repair the damage on SMA’s preferential use premises caused by Super Typhoon Yutu which forced SMA to conduct its operations with the use of shipping containers as offices, and with no running water or restroom.
SMA is asking the Superior Court to enter judgment in its favor and award damages sustained by SMA for breaches of the agreement.
CPA’s answers
Through its counsel, Robert T. Torres, CPA denied SMA’s claim that not all provisions of the agreement are applicable to SMA, and that SMA is not required to pay fees for services and airport facilities.
CPA also denied SMA’s allegation that CPA failed to adjust the fees and charges based on the agreement, and to properly calculate them.
CPA likewise denied SMA’s allegation that CPA has not provided the airline with a detailed budget submission, and has breached the agreement by failing to reduce fees and charges.
Regarding the premises damaged by Yutu, CPA said it admits the allegations “to the extent that some — but not all — sections under Article 10 [of the agreement] require that certain damages be repaired with due diligence by CPA at its own cost and expense and to the same extent and quality as obtained by SMA at the commencement of its operations.”
CPA denied that it failed to repair the facility but admitted that SMA is currently conducting its Saipan International Airport operations out of renovated shipping containers.
CPA also admitted that SMA is entitled to reduction of fees as a result of the damaged facilities, but CPA denies the allegation that CPA failed to do so, saying it is unclear which fees and charges SMA is claiming it has an entitlement to reduce.
Counterclaim
In its counterclaim, CPA said SMA first breached the contract in Feb. 2014 when it refused to pay CPA for its use of the airport.
“As a result of SMA’s material breach of the [airline use agreement or] AUA, CPA has been damaged in the amount of $3,924,679.56 for the period between February 2014 to October 2021,” CPA said.
It also stated that SMA’s breach of contract claim is barred, in whole or in part, because SMA breached the implied covenant of good faith and fair dealing.
Under the implied covenant of good faith and fair dealing, SMA was required to perform the contract in a way that does not impair CPA’s rights to enjoy the benefit of the bargain.
CPA said SMA breached the agreement by making the conscious and deliberate act of not paying any amount due to CPA for SMA’s use of CPA’s airports.
“This failure to pay any amount due to CPA for SMA’s use of CPA’s airports directly undermines the intent and purpose of the AUA. SMA has further breached the implied covenant of good faith and fair dealing because it has wrongfully concluded that CPA has materially breached the terms of the AUA and has used that conclusion as a pretext to avoid its own performance of paying for its use of CPA’s airports. SMA’s breach has thwarted CPA’s reasonable contractual expectations,” CPA stated.
Regarding SMA’s claim that not all provisions of the agreement are applicable to SMA because it uses aircraft with fewer than nine passenger seats, and that it is not required to pay fees because SMA does not use them, CPA said: “SMA’s complaint fails to state a claim upon which relief can be granted because the allegations only provide the legal conclusion that not all provisions of the AUA are applicable to SMA and that SMA is not required to pay fees for services or facilities it does not use and is not required to be provided to SMA.”
According to CPA, SMA’s “complaint fails to state a claim upon which relief can be granted because it fails to identify a contractual duty and a breach of that duty. Specifically, the complaint does not identify the fees and charges that are not applicable nor does the complaint identify the fees and charges that were wrongfully assessed.”
Aside from $3,924,679.56, CPA said SMA also owes $27,995 in damages which CPA incurred in the form or additional costs, loss of revenue and hindered operations.
In addition, as a result of SMA’s breach of rules and regulations, CPA said it incurred direct damages in the amount of $59,795.23.
CPA Chairwoman Kimberlyn King-Hinds, in an interview, told Variety that from June 1, 2021 through Dec. 31, 2021, when CPA waived payment of its fees except for the passenger facility charge fees, SMA didn’t adjust its rates and made no payments to CPA.
