Manglona finds Pacific Gardenia owners liable to pay $2.4M to CDA

The Superior Court has found the owners of the Pacific Gardenia Hotel and Sunset Beach Bar liable to pay $2.4 million to the Commonwealth Development Authority for non-payment of loan, accrued interest and late charges.

Associate Judge Ramona V. Manglona ordered Ronald D. Sablan and his wife Maria Ana T. Sablan to pay CDA $1,679,060.14 plus interest and late charges over their $871,550.84 loan.

Manglona directed Sy’s Corp., Ronald Sablan, Maria Ana Sablan, and Jeanette D. Sablan, to jointly pay CDA $394,101.36 and $366,945.62 plus interest and late charges over the $197,130.92 and $263,000 loans, respectively.

Sy’s Corp., owns the Pacific Gardenia Hotel and Sunset Beach Bar. The Sablans are the shareholders of the corporation. Ronald Sablan served as its president.

The judge ordered that CDA’s mortgaged interest in the five parcels of land, all located in Chalan Kanoa, Saipan, shall be sold at a public auction.

The mortgaged chattels or other security or accounts shall be seized and sold by CDA. The proceeds of any sale shall be applied to the judgment, Manglona said.

CDA, Manglona said, may seek a deficiency judgment against Sy’s Corp. and the Sablans for any deficiency, which may remain after applying all of the proceeds of all sales.

Court records show that in 2001, CDA filed the lawsuit against the defendants Sy’s Corp. and the Sablans over the non-payment of loan. The agency filed an amended complaint in August 2003, seeking a monetary judgment against Sy’s Corp., Ronald and Maria Ana Sablan under three outstanding consolidated and revised loan accounts.

The amended complaint also demanded for a monetary judgment against Ronald, Maria Ana and Jeanette Sablans under the promissory notes and personal guaranty agreements.

CDA asked the court to foreclose upon five properties mortgaged by Ronald and Maria Sablan and Sy’s Corp. securing the three consolidated and revised loan accounts.

CDA included in the lawsuit as co-defendants LPP Mortgage Ltd. and the Department of Finance because they have claimed an interest in the mortgaged properties.

In Feb. 2004, CDA filed its motion for summary judgment, seeking a judgment in its favor, alleging that the Sablans defaulted by failing to make the required payments on those three outstanding loan accounts.

CDA conceded to Jeanette Sablan’s objection to CDA’s motion on the grounds that CDA cannot foreclose on her guaranty collateral mortgage dated Aug. 10, 1999.

Therefore, CDA’s motion against Jeanette Sablan remains only as to CDA’s enforcement of its agreements with Jeanette Sablan for her personal liability.

CDA also conceded to Finance’s objection to CDA’s motion in regards to three lots by agreeing that Finance’s nine tax liens are superior over CDA’s subsequently filed mortgages for the $263,000 loan to Sy’s Corp.

The remaining issues decided by the court in this case are CDA’s motion for summary judgment against the Sablans and Sy’s Corp. for money due; for foreclosure of the mortgaged properties with a determination of the priority of interests asserted by co-defendant LPP; and for an award of fees and costs against the Sablans only.

CDA moved for summary judgment claiming that it is entitled to all its claims, including a monetary judgment against the Sablans for failing to make the required payments on three verified loan accounts.

In her ruling issued on Thursday, Manglona said she finds that there is no genuine issue of material fact that Ronald and Maria Ana Sablan and Sy’s Corp. have defaulted on their CDA loans.

Therefore, Manglona said, CDA is entitled to a monetary judgment on all three outstanding verified loan accounts against Ronald and, Maria Ana Sablan, and Sy’s Corp.

The judge granted CDA’s motion for summary judgment for money due on the $871,550.84 loan, the $197,130.92 loan, and the $263,000 loan.

Manglona said CDA has satisfied the notice of default requirement in this case based on the legally permissible express agreement by the Sablans to waive the right to receive a proper notice of default as conferred upon them by the Real Estate Mortgage Law.

In connection to responding to the Sablans’ opposition to its motion based on this particular legal issue involving notices of default, CDA moved for an order awarding fees and costs.

But Manglona said CDA did not separately make this motion for sanctions from other motions or requests, and did not show that it served the motion pursuant to Rule 5 of the Civil Procedures without filing or presenting to the court unless certain conditions were satisfied.

Therefore, this Court will not address CDA’s improperly initiated motion for an order awarding fees and costs, and therefore denies it without prejudice, she said.

Jeanette Sablan argued that the Guaranty Collateral Mortgage that she executed to secure Sy’s indebtedness to CDA fails to comply with the Real Estate Mortgage Law’s requirement because it does not comply with the statute.

Jeanette Sablan said the statute requires a clause conspicuously located notifying the mortgagor that the mortgagor is entitled to a translation of the mortgage instrument in either Chamorro or Carolinian.

CDA conceded this point.

Accordingly, Manglona said, CDA’s motion to foreclose on the real property under the Guaranty Collateral Mortgage executed by Jeanette Sablan is denied.

On the LPP’s priority of liens issue, Manglona said the facts of this case do not give adequate cause to grant LPP’s request to divest CDA of its priority as senior lienor for CDA’s modifications made after the U.S. Small Business Administration’s liens were filed.

Therefore, this Court grants CDA’s motion for summary judgment to foreclose without denying priority to CDA’s senior interest as against LPP, the judge said.