CUC asked to explain why it broke off talks

The Superior Court has ordered the Commonwealth Utilities Corp. to explain why CUC should stop negotiating with the government over disputed utility bills.

In an Oct. 14 order, Superior Court judge David A. Wiseman told CUC “to show cause why its motion to dismiss should not be withdrawn, why it should not continue to negotiate in good faith, and why it should not be otherwise sanctioned.”

A hearing on the order was scheduled for Oct. 28, at 1:30pm.

Wiseman issued the order upon the request of the Attorney General’s Office, which represents the Department of Finance in its lawsuit against CUC.

In a motion, assistant attorneys general Justin J. Wolosz and James R. Stump said CUC violated an agreement with the government, as well as a court order, when it filed a motion to dismiss Finance’s lawsuit.

“CUC—unilaterally and without warning—filed a motion to dismiss on Oct. 6, 2004. Despite its obligation to negotiate until Dec. 1, 2004, [CUC] now claims that the negotiations have not been fruitful and it suggests that the parties are at an impasse. Neither is correct,” the AGO said.

The attorneys maintained that CUC’s motion to dismiss violated the provisions and spirit of its Aug. 11 agreement with the government and the court’s Aug. 17 order approving the agreement. Both documents provide that the parties will continue their good faith negotiations, the AGO noted.

“CUC’s motion to dismiss is inconsistent with the parties’ [Aug. 11] stipulation, inconsistent with the court’s order approving stipulation, and inconsistent with the fundamental agreement between the parties: to stay this litigation while they attempt to negotiate a resolution. The CNMI [government] relied upon [its] understanding as to these issues when they agreed to enter the stipulation,” the AGO said.

It added, “If CUC had made any indication that it intended to continue litigating this case with a motion to dismiss or otherwise, the CNMI [government] would not have agreed to the [Aug. 11] stipulation (or made the significant payments under its terms), and may have already amended the complaint. It is not fair for CUC to take advantage of this reliance and move to dismiss at a time when the agreement and order provides that the parties should be sitting down and attempting to negotiate a resolution.”

The litigation stemmed from CUC’s April 2004 notice informing Department of Finance of its plan to disconnect utility services to various government agencies if it did not receive payment on the utility bills.

Finance responded by filing a lawsuit against CUC and seeking a court order to stop the disconnection. The Superior Court granted the temporary restraining order on April 23.

The TRO was supposed to lapse on June 1, but CUC and the government reached an agreement on Aug. 11 to extend the TRO until Nov. 30. As part of the agreement, the CNMI would make monthly payments of $650,000.

According to Finance secretary Fermin Atalig, the government has been making payments on time.

On Oct. 6, CUC’s legal counsel, Kay Delafield, filed a motion asking the court to dismiss Finance’s lawsuit and dissolve the TRO.

Delafield said CUC had not contested the TRO because of its interest in working out an agreement with Finance for payment of the government’s utility bills, now reportedly amounting $18.3 million. She added that Finance has had nearly six months to address its failure to pay and to work out a plan or to demonstrate the validity of its arguments regarding the government’s utility bills. However, the matter has not moved toward resolution.