CNMI accused of bad faith

Accusing it of acting in bad faith and of breaching the settlement agreement, the CNMI government came under fire from the lawyer of the NMI Settlement Fund, who slammed the government for refusing to recognize the Settlement Fund’s right to proceed on claims against the government to recover unpaid employer contributions.

Such action of the Commonwealth, including disavowing the settlement agreement in the Betty Johnson class action, is a clear breach and is tantamount to bad faith, said Nicole M. Torres-Ripple, counsel of the NMI Settlement Fund.

Torres-Ripple raised these accusations in NMI Settlement Fund’s opposition to the CNMI’s motion to enforce and cross motion to enforce Johnson’s settlement agreement filed Wednesday before the U.S. District Court for the NMI.

Torres-Ripple asked the District Court to deny the CNMI’s motion to enforce the settlement agreement, and grant the Settlement Fund’s cross-motion to enforce the settlement deal.

She said the Retirement Fund claims are assets of the Retirement Fund that have been assigned and transferred to the Settlement Fund.

Torres-Ripple said the settlement agreement in Johnson’s class action expressly carved out the Retirement Fund claims from release and assigned and transferred such claims to the Settlement Fund as “assets of the CNMI Fund.”

Torres-Ripple said the trustee accepted the assignment and transfer of the Retirement Fund claims on behalf of the Settlement Fund for the purpose of collecting the unpaid employer contributions.

Torres-Ripple said by assigning and transferring the Retirement Fund claims to the Settlement Fund, the settlement agreement in Johnson’s class action conferred on the Settlement Fund the right to pursue the Retirement Fund claims, including the right to pursue the claims against the CNMI.

As such, Torres-Ripple said, the Settlement Fund substituted in for the Retirement Fund as the plaintiff in the Superior Court action, and the CNMI stipulated to the assignment and transfer of all of the Retirement Fund’s rights, title to and interest in the Retirement Fund claims to the Settlement Fund pursuant to the settlement agreement.

According to court records, the NMI Retirement Fund sued the Commonwealth Utilities Corp. in Superior Court in 2011 to collect unpaid wages contributions. The NMI Retirement Fund sought a judgment in the total amount of $4.4 million, calculated as of April 2011.

In 2013, the District Court gave final approval to the global settlement agreement in Johnson’s class action against the CNMI government and the NMI Retirement Fund.

With the final approval, all Retirement Fund assets were transferred to the Settlement Fund, administered by a court-appointed trustee.

In 2017, the Retirement Fund, CUC, the CNMI, and Settlement Fund stipulated to the substitution of the Settlement Fund as the plaintiff in the Superior Court lawsuit pursuant to the Johnson settlement deal.

In April 2019, the Settlement Fund filed its first amended complaint in the Superior Court and added the CNMI as CUC’s co-defendant.

The Settlement Fund’s amended complaint charges the Commonwealth with breach of contract, violating the CNMI Constitution, violating a CNMI statute, and violating the federal contracts clause—all for not paying its pension obligations—and for “void assignment of debt.”

In CUC’s motion to dismiss the lawsuit, CUC counsel Jose Mafnas Jr. asserted that the CNMI government absorbed all liabilities owed to the NMI Settlement Fund as of Aug. 6, 2013, through Johnson’s settlement agreement.

In May 2019, the CNMI filed a motion to dismiss the Settlement Fund’s complaint and joined CUC’s motion to dismiss the case, arguing that because the Johnson settlement deal assigned all liabilities to the CNMI, the Settlement Fund has nothing to collect.

Last June, the NMI Settlement Fund trustee, through Torres-Ripple, asked the District Court to enforce the Johnson settlement agreement and find that the claims asserted in the Superior Court case were not resolved by that settlement deal.

In response, the NMI Settlement Fund asked the Superior Court to temporarily stay or suspend the proceedings in the lawsuit. Torres-Ripple said a three-month stay is warranted because the questions raised in CUC’s and the CNMI government’s motion to dismiss the lawsuit require interpretation of the settlement agreement in Johnson’s class action.

The Superior Court granted the Settlement Fund’s motion for stay in July 2019.

Following the Superior Court’s stay order, the CNMI asserted that a provision in the settlement agreement restricts the Settlement Fund from filing claims against the CNMI for CUC’s unpaid contributions and that only CUC should be a party in the Superior Court case.

In the NMI Settlement Fund’s opposition to the CNMI’s motion to enforce and cross motion to enforce settlement filed Wednesday, Torres-Ripple said the Settlement Fund has the right to pursue the claims against the CNMI in the Superior Court action being the assignee of the Retirement Fund claims.

Torres-Ripple said the CNMI was a party to the settlement agreement and, having agreed that the Retirement Fund claims would not be released and would instead be assigned and transferred to the Settlement Fund, it cannot take the position that the Settlement Fund cannot pursue these claims against the CNMI.

Gov. Ralph DLG Torres and the CNMI government, through the Office of the Attorney General, recently asked the federal court to stop the NMI Settlement Fund from any further action in the Superior Court.

Deputy attorney general Lillian A. Tenorio asserted that it is explicit that the settlement agreement in Johnson’s class action against the CNMI government and the NMI Retirement Fund forever relieved the Commonwealth of additional suits or complaints from the Settlement Fund unrelated to the enforcement of the settlement deal.