High Court reverses ruling allowing kin to redeem auctioned lot

The CNMI Supreme Court has reversed a Superior Court ruling that allowed a relative of former Pacific Gardenia owner Ronald D. Sablan the right to redeem from buyers a piece of Sablan’s land that was sold pursuant to a court order.

The high court vacated then Superior Court associate judge Ramona V. Manglona’s judgment that the assignment was a valid transfer of Ronald Sablan’s redemption rights, granting Antonio A. Sablan the right to redeem as a successor in interest.

The high tribunal also reversed Manglona’s finding that Del A. Benson, Karen Benson, and Carlene Atalig Mitchell, the buyers of the foreclosed property at the auction, did not have standing to sue.

The high court remanded the case to the Superior Court for a determination regarding the application of equitable tolling to the time period for redemption and for further proceedings on the claim of fraud.

Justice pro tem Herbert D. Soll penned the High Court’s opinion; justice pro tem Edward Manibusan concurred. Former chief justice Miguel S. Demapan heard the oral argument but retired from the Judiciary prior to the issuance of the judgment.

The justices ruled that the trial court erred in finding that Antonio Sablan was Ronald Sablan’s successor in interest and erred by finding the right to redeem is an alienable property right.

The justices also determined that the Bensons and Mitchell are proper plaintiffs and have standing to assert a claim of fraud and fraudulent conveyance.

The justices, in a footnote of their opinion, stressed that their finding does not speak to the merits-if any-of the underlying fraud claim, which will be for the trial court to decide.

According to court records, Ronald Sablan and his wife, Maria Ana T. Sablan, jointly obtained a $60,605.82 loan from Pacific Financial Corp. in 1992, secured by a mortgage on the couple’s property in Chalan Kanoa and in Fina Sisu, Saipan.

In 1993, the Sablan couple executed and recorded a 55-year lease of a portion of the Fina Sisu property to Sy’s Corp.

In 1998, the Sablan couple executed three more mortgages with the Bank of Saipan to secure loans totaling $946,476.34.

In 2003, the CNMI recorded additional tax liens against Sy’s Corp. that totaled $2,287,055.91.

By April 2001, the Sablan couple was in default on the 1992 mortgage with PFC.

PFC filed a lawsuit to recover $69,205.73 in unpaid principal, interest on $57,816.08 of the principal from April 16, 2001, and for the sale of the property to satisfy the debt.

In 2002, PFC assigned all of its interest under the 1992 promissory note and mortgage to Pacific Asset Management Corp.

The court granted PFC’s motion for judgment by default.

Pursuant to the default judgment, the property was placed on the market for sale. The property was sold on June 5, 2007, for $80,000. The purchasers were the Bensons, who intended to take a 55-year lease of the property, and Mitchell, who planned to acquire the title in fee. The court approved the sale.

In July 2007, Ronald Sablan executed an assignment of redemption rights, purporting to convey his right to redemption to his relative, Antonio Sablan, who lives in Guam. Antonio Sablan petitioned the court for approval of his exercise of redemption and tendered the proposed redemption price of $81,200 from the clerk of the court.

The Bensons and Mitchell opposed the petition, contending that the assignment is invalid and contrary to law.

In January 2008, then Superior Court Judge Manglona concluded that Ronald Sablan as judgment debtor “may assign his interest and that the assignment in this case is valid.” Manglona ruled that the right of a mortgagor to redeem the mortgaged property following a foreclosure sale is purely statutory.

The Bensons and Mitchell, through counsel F. Matthew Smith, appealed to the Supreme Court to reverse that ruling. Smith raised two issues: (1) whether the trial court erred in holding that Antonio Sablan was a “successor in interest” and (2) whether the purchasers have standing to assert fraudulent conveyance.

In reversing the trial court’s ruling, the justices said they hold that the right to redeem is not an alienable property right but a personal privilege that may not be separated from the underlying ownership in the real property. Thus, the justices said, the successor in interest must hold the same rights in the property as the judgment debtor.

Since Antonio Sablan did not have the legal title to the lot, the justices ruled that he was not a successor in interest.

Should the trial court find that the assignment was fraudulent, this pronouncement would adjudicate the legal rights of the Bensons and Mitchell, the justices said.