The lawsuit is also asking the court for declaratory judgment on the deed of assignment between CUC and the CNMI government, breach of contract, punitive damages, prejudgment interests, attorneys’ fees, and for other costs and relief.
As of April 29, 2011, CUC was delinquent in its employer contributions to the Retirement Fund in the amount of $3,175,225, according to the complaint, filed by attorneys Christopher M. Timmons and Carolyn M. Kern.
In addition, CUC should be required to pay $740,462 as statutory penalty through the end of fiscal year 2010, and $527,716 for economic damages, the seven-page complaint stated.
The complaint, which included a copy of a memorandum of understanding between the CNMI government and CUC, is asking the court for a “declaratory judgment that assignment of debt is void.”
On March 14, 2011, at a time when CUC led the Fund to believe it was negotiating in good faith to resolve this matter, CUC attempted to assign its Retirement Fund obligations to the CNMI government, in exchange for a release of certain obligations the CNMI government owed to CUC, the complaint stated.
“Neither CUC nor the CNMI government sought the Fund’s consent, approval, participation, or input with respect to the attempted assignment,” the complaint added.
According to the MOU, the CNMI government agreed to assume “all of CUC’s liability for the payment of employer contributions…on behalf of CUC employees who were members of the [Fund] that had not been paid through Dec. 31, 2010.”
CUC “agrees to offset the sum of $100,000 per month, or a sum of 25 percent of the then current monthly amount of unpaid utility obligations incurred through Dec. 31, 2010, whichever is less, from the past due utility obligations provided by CUC to the government of the CNMI until the entire obligation of the government of the CNMI to CUC incurred for utility charges through Dec. 31, 2010 has been extinguished,” the MOU stated.
In separate actions before the court, the complaint said, the CNMI government “asserted that…it is not subject to execution judgments without specific appropriation from the Legislature, which if true renders the CNMI government arguably ‘judgment proof.’ ”
But CUC, as a public corporation, is not subject to the provisions of CNMI law asserted by the government, and accordingly CUC is not ‘judgment proof,’ ” the complaint argued.
“The attempted assignment of an obligation from a debtor that is subject to this honorable court’s power to enforce judgments, to a debtor who has made and is continuing to make arguments before this honorable court that it is not answerable to judgments rendered against it, constitutes an actionable fraud on creditors that should be set aside and punished,” the complaint pointed out.
Variety tried but failed to get a comment from CUC.
