IPI supports motion to dismiss breach of contract case filed by Kan Pacific

Imperial Pacific International (CNMI), Ltd. has submitted a memorandum of law that supports a motion to dismiss a breach of contract lawsuit filed by Kan Pacific Saipan against IPI at the Superior Court last May 5.

The memorandum, through counsel Juan T. Lizama, goes into detail about past dealings with Kan Pacific, the events that led to the lawsuit filed by Kan Pacific, and how the case requires the Department of Public Lands to be involved, as the government agency is a significant third-party beneficiary in the dispute.

According to court documents, Kan Pacific first signed a 40-year lease for 146 hectares of land from DPL on Dec. 15, 1977, and signed the lease again on Dec. 16, 1977, which was a revised lease that now included a provision that requires DPL’s consent or approval for any transfer of property rights or subleases Kan Pacific wishes to do with the land.

Further, the memorandum states that around October-December 2015 the media reported on negotiations that were occurring between Kan Pacific and IPI, and soon after news articles were published revealing that a deal was “signed.” The memorandum maintains that during this time negotiations were simply to ensure that IPI was in the best possible position to secure the next lease from DPL, and the “deal” was an agreement between Kan Pacific and IPI to transfer the lease to IPI.

Soon after, Saipan Entertainment filed a lawsuit contesting the legality of the “deal,” alleging that DPL did not consent to the negotiations. The aforementioned “deal” was then nullified.

A new agreement between Kan Pacific and IPI in 2016—which the court documents claim “essentially transferred all assets and operations from Kan Pacific to IPI and required Kan Pacific to encourage present employees to join IPI”—was reached. In total, a $17.5-million payment from IPI would be made to Kan Pacific, with an initial payment of $12.5 million and the remaining paid in instalments of $200,000 per year for the next 25 years, beginning June 2017. The new agreement also ordered a $16-million payment from Kan Pacific to DPL, which now made DPL a significant third-party beneficiary to the 2016 agreement.

IPI eventually did not win their bid for DPL’s new lease of the land, as IPI was unable to meet the requirements imposed by DPL. After three annual payments from IPI to Kan Pacific, IPI did not make a payment in 2020, which resulted in the breach of contract lawsuit that is being disputed by the memorandum.

Through the facts presented in the memorandum, IPI supports a motion to dismiss the breach of contract case, because DPL is a crucial enough party that leaving them out of the lawsuit will “impair or impede the person’s ability to protect the interest,” the “person” in question being IPI. Furthermore, IPI maintains that they will not be able to adequately defend their alleged claim to the 146 hectares of land unless what DPL knew about the Kan Pacific-IPI agreement in 2016 and just how liable DPL is to both parties is made known to the court.

The memorandum, and IPI’s motion to dismiss its case against IPI, still awaits further review.