Judge concerned about case’s Article 12 implications

An executor of an estate that owns parcels of land in western Garapan where Tony Roma’s and Capricciosa’s restaurants are located wants the Superior Court to approve a new lease agreement under the estate with Triple J Saipan Inc.

Associate Judge Joseph N. Camacho is, however, concerned that the proposed lease may violate Article 12 restrictions. That article of the NMI Constitution restricts long-term interests in real property to persons of NMI descent.

Camacho

Camacho has concerns that Triple J, which owns Tony Roma’s and Capricciosa’s, is using different corporations to circumvent Article 12, which limits leases to 55 years, including renewal.

The old land lease expires next year.

Camacho ordered Triple J lawyer James Stump to submit a brief on or before last Tuesday on the issue if a lease on real property can be extended by the same/subsidiary company and its Article 12 implications.

Many original land leases are close to expiring such as hotels, golf courses, commercial buildings, and other businesses on Saipan.

Last June 20, Probio Dela Cruz Cabrera Jr., executor of the estate of Probio M. Cabrera (deceased), filed a motion to approve the lease agreement on the Garapan properties.

Probio Dela Cruz Cabrera, through lawyer, Vincent DLG Torres Jr., said this new lease agreement with Triple J is in the best interest of the heirs because it will financially benefit them.

In Triple J Saipan’s support of Cabrera’s motion to approve the lease filed Tuesday, Stump said Article 12 defines a long-term interest in real property to include a freehold or leasehold interest of more than 55 years.

Stump argued that Article 12 restrictions are inapplicable in this case as the proposed lease does not take effect until the present lease expires and that the proposed lease is with parties that have no common ownership interests.

Currently, Stump said, there is an existing lease on the property, which was established on April 2, 1980, between Probio M. Cabrera and a Mr. Jerry W. Crowe with an expiration date of March 31, 2020.

Stump said that on Oct. 5, 1983, the Crowe lease was assigned to Town House Inc., which was subsequently recorded with the Office of the Commonwealth Recorder on Oct. 20, 1983.

Stump said Town House Inc. is a corporation formed under the CNMI laws whose shareholders, directors and officers are identified in its annual corporate report filed with the Commonwealth Registrar of Corporations on March 1, 2019.

The annual corporate report identified the shareholders as Trenton Brian Conner, Silvestre C. Palacios, estate of Freddy V. Hofschneider, Romano Matsumoto, Jose P. San Nicolas, Mariano Sablan, Robert P. Lazaro, Alfonso Reyes, Jones & Guerrero Co. Inc., and Seymour Saipan Inc.

Listed as directors are Elaine Cruz Jones, Ramona L.E. Jones, Henry Sy Sr., Elizabeth Sy, Noli Cadag, Sylvestre Palacios, and Teresita Sy Coson.

Henry Sy Sr., a Filipino business magnate and philanthropist, was named by Forbes magazine as the richest person in the Philippines for 11 straight years until his death in January 2019. Elizabeth Sy and Teresita Sy Coson are among his six children.

Listed as officers are Elaine Cruz Jones, Henry Sy Sr., Noli C. Cadag, Ramona L.E. Jones, and Elizabeth Sy.

Stump said that on July 22, 1994, Town House signed a sublease with Comete Saipan Inc. for use of the property during the entire remainder of the term of the Town House lease.

The Comete sublease was recorded on Sept. 1, 1994, with the Office of the Commonwealth Recorder.

Stump said the most recent annual corporation report for Comete identifies its shareholders as LVMH Moet Hennesy and Louis Vuitton Inc.; and its directors as Lamont James Beighley, Martin Matthews, and Ron Cannoles. Listed as Comete’s officers are Lamont James Beighley, Martin Matthews, Hideki Maedomari, Chung Kun Ng, William J. Blair, David Suzuki, and Ron Cannoles.

Stump said that on Nov. 6, 2003, Comete entered into a five-year sublease of the property with WDI Saipan Inc., a CNMI corporation. The sublease started on Feb. 1, 2004 with two automatically exercised five-year options to extend the sublease.

Under this sublease, if both five-year options are exercised, the total term of the sublease would run through Jan. 31, 2019, he said.

Stump said the WDI sub-subleased property was subsequently developed by WDI for use as Tony Roma’s and Capricciosa’s restaurants.

Stump said that on June 30, 2010, Triple J purchased all of the shares of WDI and merged the company into Triple J and assumed the operation of two restaurants and the sublease interests in the property.

Stump said Triple J’s 2018 annual report identified its shareholders as Robert H. Jones, Margaret A. Jones, Triple J Auto Distributors Inc., the three Jones children, and irrevocable trust.

Listed as directors and officers are Robert H. Jones, Margaret A. Jones, Jeffrey B. Jones, Robert Daniel Murrell, Jay B. Jones, and Michael S. Sablan.

Stump said that last May 22, Triple J. entered into a proposed lease with the executor of the estate of Probio Cabrera for the establishment of a lease for the property.

Stump said the lease would be commencing on the date of the expiration of the existing lease between the estate and Town House Inc. and running for an initial term of 10 years followed by nine options to extend the lease for a total possible term of 55 years.

Stump said under the proposed lease structure, the monthly rent paid to the estate of Cabrera will increase from the current rate of $1,064 to an initial rate of $15,000, which will be subsequently increased every five years by 5%.The proposed lease was submitted to the court for approval last June 20.

Stump said the plain language of the Article 12 restrictions prohibit the establishment of leasehold interests in real property by parties not of NMI descent that exceed a term of 55 years.

In this case, Stump said, the “parties” to the existing lease were Probio Cabrera and Jerry M. Crowe for a 40-year term that expires on March 19, 2020.

Stump said the Crowe lease is still the underlying control leasehold interest and has not been extended.

Stump said the original lessee, Jerry Crowe, is not a party to the proposed lease and has not had any involvement of any manner in this proposed transaction and thus does not violate the Article 12 restrictions.