HAGÅTÑA (The Guam Daily Post) — The development company that built the Medical Arts Center, leased by the Guam Regional Medical City, is now suing the hospital for allegedly failing to pay over $4.4 million worth of rent and other fees.
GRMC is not commenting on the lawsuit, according to GRMC communications and social media specialist Kimberly Grace Teves.
CW Holdings LLC, a partnership between principals Michael Wirges of Sterling Design and attorney Cesar Cabot, broke ground on the 50,000 square foot, three-story building in 2017, Guam Daily Post files show. Initially billed at $25 million, the property is directly adjacent to GRMC and meant to house clinics, a pharmacy, and a number of other outpatient and wellness services.
The keys for the facility were handed over to GRMC in February of last year, with the agreement that the hospital would pay the developer $1.3 million annually to rent the second and third floors of the building, documents filed by CW Holdings in the Superior Court of Guam state.
CW Holdings alleges in its suit that, though GRMC has put down $1.8 million towards its rental payments already, the hospital has yet to pay a security deposit, additional rental charges, and various other costs stipulated in its lease agreement for the Medical Arts Center.
After serving two default notices to hospital leadership this year, the developer moved to terminate the lease agreement in August and is now seeking payment of the money GRMC allegedly owes along with an additional $34.4 million in damages. That $34.4 million sum is the estimated amount of rent GRMC would have otherwise paid for the duration of its 30 year lease on the building—a sum the hospital is on the hook for as a condition of its lease contract, according to CW Holdings.
The suit filed by the development company states that it “regularly provided account statements to defendant, which invoices all amounts that become due and owing pursuant to the lease.”
A rental notice was provided to GRMC on July 5, and a notice of default provided to former GRMC CEO Alan Funtanilla and Senior Vice President Teodorico Constantino on July 21, according to court documents.
Following two years at the hospital’s helm, Funtanilla resigned from his post on July 19 of this year, Post files show. His resignation came two days after CVC Capital Partners Asia V, a $4.5 billion investment fund, became the majority shareholder of GRMC’s parent company in the Philippines.
In any case, court documents state CW Holdings served a second notice of default to Constantino on Aug. 4. Constantino is identified as the acting CEO at that time.
“Defendant has failed to pay for said contractual obligations and the … damages notwithstanding plaintiff’s regular invoices and demands for payment,” the suit filed by the developer states.
“As such, defendant(s) failure and refusal to tender the amounts due and owing to plaintiff under the lease constitutes a breach of the express terms of the lease.”
Additionally, CW Holdings alleges that the hospital has failed to acquire a number of different insurance policies it was contractually required to obtain as a condition of leasing the Medical Arts Center, to include commercial liability insurance, insurance against loss or damage to the building, and workers compensation insurance.
“Tenant may be in breach thereof as well, putting plaintiff at risk of liability,” the lawsuit continues.
Besides the $34.4 million in damages that are being sought, here’s what CW Holdings alleges the hospital owes:
$1.74 million in prepaid rent, equal to 18 months worth of base rent for the Medical Arts Center.
$1.63 million for an unpaid security deposit.
Nearly $53,000 worth of common area fees.
$73,500 for a sky bridge design which GRMC allegedly backpedaled on after CW Holdings commissioned the design.
Late charges to be established at trial.
Interest equal to 1% of unpaid rent as of July 31.
The suit was filed on Aug. 30, and a subsequent summons provided to the hospital provided them 20 days to respond to CW Holdings. No response was available at the Superior Court of Guam records section as of Sept. 14.
Guam Regional Medical City is seen on Aug. 11, 2023, in Dededo.
