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Local bill to earmark $400K repayment by Luta Mermaid is vetoed
OAG: Luta Mermaid LLC agrees to repay $400K to settle suit in 2019, but no payment has been made until now
File photo show the M/V Luta docked at a harbor on Rota. (FERDIE DE LA TORRE)
Gov. Ralph DLG Torres has vetoed a Senate local bill that seeks to earmark the $400,000 repayment by Luta Mermaid LLC and local poker fees in order to provide funds for the Rota Interisland Medical Referral patients, medical subsistence program, and Rota Municipal Scholarship.
Torres informed Senate President Jude U. Hofschneider (R-Tinian) and Rota Legislative Delegation co-chairpersons Sen. Teresita A. Santos (Ind-Rota) and Rep. Donald M. Manglona (Ind-Rota) last Dec. 29 about his decision to veto Senate Local Bill 22-4.
The governor said that, according to the Department of Finance and the Office of the Attorney General, although the defendants in the Luta Mermaid litigation have agreed to repay the settlement amount of $400,000, no payment has been made to the Commonwealth yet.
He said the OAG has also informed him that an order to show cause motion will be filed shortly to enforce the settlement terms in the lawsuit.
“Because this funding is not readily available and there is no additional information offered by the delegation with regard to when such payments will be made, I find the earmarking of these funds to be irresponsible at this time,” Torres said.
The CNMI government sued in 2017 the then-owners of cargo ship M/V Luta for allegedly refusing to return the $400,000 in public funds that were loaned to them for the vessel’s operations.
Torres strongly encouraged the delegation to earmark and appropriate these funds for the Rota Interisland Medical Referral patients, medical subsistence program, and the Rota Municipal scholarship as soon as they become available.
Senate Local Bill 22-04, authored by Sen. Paul A. Manglona (Ind-Rota), seeks to reserve the $400,000 payment by Luta Mermaid LLC in a special account for the Rota Legislative Delegation to appropriate to provide funding for the Rota Interisland Medical Referral and Rota Medical Subsistence program.
Manglona stated in the bill that the Rota Legislative Delegation Resolution 19-3 authorized the Finance secretary to make an advance payment of not more than $400,000 to Luta Mermaid LLC to finance fuel, lubrication, and the maiden voyage costs from Louisiana to Rota.
The senator said the resolution also provides that Luta Mermaid LLC agrees to a repayment plan of the $400,000 within one year.
He said that in the July 23, 2019, settlement agreement between the CNMI and Luta Mermaid LLC, a repayment plan for the $400,000 was agreed upon by all parties.
The government, through the OAG, had sued Luta Mermaid LLC and its shareholders for unjust enrichment, conversion, and other claims. In 2019, the OAG announced that it reached a settlement with Luta Mermaid LLC, which includes the entry of judgment for the full $400,000 jointly against the individual principals of M/V Luta.
