Judge denies motion to dismiss suit vs Riviera owner

Superior Court Associate Judge Joseph N. Camacho has denied Hotel Riviera Saipan owner’s motion to dismiss the lawsuit filed against the company by the alleged leaseholder of the parcels of land on which lies the now defunct hotel in Finasisu.

Camacho determined that PRC, the alleged leaseholder of the land, has asserted a cognizable legal theory for a breach of contract claim and alleged facts that are enough to overcome a motion to dismiss.

Camacho said PRC is the real party in interest because PRC is the contracting party, with the rights and ability to sue under the contract.

The owner of Hotel Riviera, Chang Shin Resort Saipan Corp., has failed to show that PRC is not the real party in interest, the judge said.

The case stems from the lease of a property in Finasisu, upon which lies the Hotel Riviera Saipan. The original lawsuit was brought in 2012 by PRC, former governor Pedro P. Tenorio, and his wife, Sophia.

The contracts at issue were three leases involving four parcels of property upon which the hotel was built.

Last January, PRC filed its first amended complaint against Chang Shin Resort Saipan Corp., owner of Hotel Riviera, alleging that Hotel Riviera breached the lease agreement by failing to pay rent, failing to maintain the premises, and failing to pay taxes on the property.

PRC sought to have Hotel Riviera removed from the property and a judgment to recover the property. PRC also sought monetary damages.

According to court records, Jose A. Manalo leased the Riviera property to Chung Doo Young in 1988. The lease was to expire in 2043.

Young then assigned the ground lease to Lee Soung Man in 1990. After a few months, Man assigned the lease to Shin Eui In.

According to an additional to description of property dated Sept. 26, 2006, Hotel Riviera acquired the ground lease from In at some point after December 1990, but apparently did not record its interest.

The fee simple interest in the Riviera property was passed by warranty deed from Manalo to Betty H. Johnson in January 2008. After a few months, Johnson executed a quitclaim deed transferring her fee simple interest to GLA LLC.

GLC LLC then executed a warranty deed transferring the property to PRC in April 2009.

In March 2014, PRC entered into a contract with Manalo that assigned Manalo’s rights to the Riviera property from Manalo to PRC.

As to the terms and fulfillment of the lease, PRC alleges that Hotel Riviera failed to pay rent by the tenth of each month.

Hotel Riviera failed to pay taxes, which resulted in the property being encumbered by tax liens.

Hotel Riviera also permitted the property to become damaged, overgrown, and otherwise unclean and unsanitary.

Last January, Hotel Riviera, through counsel Mark Scoggins, moved to dismiss the lawsuit.

Hotel Riviera argues that dismissal is proper because PRC has failed to state a claim for which relief can be granted.

Hotel Riviera contends that PRC is not the real party in interest and that PRC, as a limited liability company, is not permitted to hold a real interest in land under Article 12 of the NMI Constitution.

Hotel Riviera also noted that the real party in interest is Bridge Capital LLC because Bridge Capital funded the purchase of the property, makes all decisions regarding the property, and is funding the litigation over the property.

Scoggins said PRC’s rights are merely a legal fiction that Bridge Capital is attempting to hide behind.

In its opposition, PRC, through counsels Brian Flaherty and Robert T. Torres, argues that it legally has a right to the property and the issue is not one of constitutional challenge.

PRC asserts, among other things, that PRC cannot bring a challenge under Article 12 because Hotel Riviera lacks standing; the six-year statute of limitations has lapsed; and the controversy is one of landlord-tenant.

In denying the motion, Camacho said the facts show an enforceable contract between the parties; that Hotel Riviera breached the terms of the lease agreement; and that Hotel Riviera’s breach of the lease agreement damaged PRC.

Camacho said PRC will bear the burden of proving the enforceability and validity of these claims at trial.

However, Camacho said, at this stage of the proceedings, PRC has alleged sufficient facts to overcome a motion to dismiss.

The judge said PRC as an LLC has the right to enter into contracts, hold interest in property, and sue under CNMI laws.

Camacho said Hotel Riviera has made no showing that failure to include Bridge in the current litigation would subject Hotel Riviera to the risk of additional litigation, deprive Hotel Riviera of finality of judgment, or deprive Hotel Riviera any evidence of defenses.

Without more, Camacho said, the court finds PRC to be the real property in interest and may bring the suit in its own name pursuant to NMI Rules of Civil Procedure.