THE closing arguments in the legal battle between David Hood of Bright Star LLC and property owner Hideaki Sawada over a proposed boutique hotel will be heard in Superior Court today, Wednesday, Jan. 29, at 10 a.m.
The six jurors, along with two alternates, are expected to deliberate following the closing statements from the parties.
The dispute stemmed from a 2016 lease for the second floor of the May Ten Building in Garapan owned by Sawada where Hood planned to develop an 18-room boutique hotel.
Central to the dispute is the interpretation of a handwritten clause by Hood in the lease that stated:“Lease is subject to a successful Permit & Construction Bid. Bright Star LLC can cancel the lease anytime until these items are complete and approved by Bright Star LLC.”
The jury will be tasked with resolving whether the clause served as a “condition precedent,” delaying Hood’s obligations — including paying rent — until the conditions were met, or as a cancellation clause, making the lease immediately enforceable but granting Hood the right to terminate it until the specified conditions were satisfied.
Allegations
Sawada, represented by attorneys Colin Thompson and Janet King, stated in his complaint that Hood breached the lease agreement by failing to pay rent, delaying the project’s progress, and causing significant financial harm.
Sawada also asserted that the lease became enforceable upon signing, and Hood’s failure to meet his obligations resulted in unpaid rent, lost financial opportunities, and harm caused by Hood’s inaction. He also claimed that Hood acted in bad faith by creating delays and making excuses to avoid fulfilling his contractual responsibilities.
In his testimony, Sawada said he held the property for Hood.
Represented by attorneys Stephen Nutting and Bob O’Connor, Hood denied breaching the lease.
Hood said the handwritten clause effectively “froze” the lease obligations until the required permits and a viable construction bid were secured.
He said the clause established a condition precedent, and the lease was not fully enforceable until the conditions were satisfied.
Hood maintained that his actions were consistent with the lease’s terms and that any delays stemmed from contingencies outside his control.
In his testimony, Hood said, “Sawada failed to fulfill his own responsibilities under the agreement, contributing to the project’s delays.”
“He [Sawada] did not have to hold the property for me,” Hood added.
Sawada said Hood’s refusal to pay rent and failure to finalize contractor bids or obtain permits caused him, Sawada, to suffer significant financial damages.
Hood said his intent in adding the handwritten clause was to protect himself from financial risk until he could determine whether the project was viable and affordable.
During the jury trial that started on Jan. 21, the jurors were presented with several pieces of evidence including emails and the lease agreement.
Last week, Herman B. Cabrera told jurors that he was contracted by Hood to design a boutique hotel on top of an existing apartment building in Garapan.
Cabrera, the principal of Herman B. Cabera & Associates architectural firm, said he was also contracted to do the permitting and construction management after a contractor had been selected.
He said the delay in the building permit was due to Hood not approving any of the sealed bids or selecting any of the contractors who submitted a bid.
Asked whether he applied for a building permit with the Department of Public Works on behalf of Bright Star, Cabrera said, “No.”
DPW Secretary Ray N. Yumul also testified regarding the application process for a building permit. Yumul said there was no new application received for a building permit by his office regarding a proposed boutique hotel.
Earlier, a CNMI Zoning board employee, Walter Zachrias, testified that their office issued a zoning permit for the construction of a boutique hotel in an existing building in Garapan.
Superior Court Presiding Judge Roberto C. Naraja is presiding over the jury trial.
According to a lawyer, the case has “significant implications for lease agreements and contract disputes in the CNMI, particularly those involving ambiguous terms or handwritten amendments.”
