Century sues ex-Speaker Guerrero, others to enforce lease agreement

The Century Insurance Co. Limited has sued former Speaker Pedro R. Guerrero and other persons to enforce a lease agreement on an 11,294-square meter lot on Saipan.

Century Insurance sued Pedro Guerrero, who was then the vice president and general manager of a construction company, Guerrero Brothers Inc. Also named as co-defendants were Herman R. Guerrero, Pilar M. Guerrero, Lucy P. Guerrero, and Connie G. Kenny. Most of the defendants owned GBI.

Century Insurance, through counsel Steven Pixley, asked the Superior Court to enforce specific performance of their agreement by executing the 55-year lease for the land. The plaintiff also demanded monetary damages, attorney’s fees and court costs.

Pixley stated in the complaint that on Nov. 12, 1993, Century Insurance executed a conditional contract entitled “agreement to lease” real property with the defendants.

Under the agreement, the defendants agreed to execute a lease agreement in favor of Century Insurance for the property if certain conditions arose.

Pixley said the lease agreement was executed during the ongoing business transactions between plaintiff, defendants and GBI for the construction of the Tinian high school.

Pixley said the defendants executed the agreement to ensure that GBI could obtain payment and performance bonding coverage on the school project.

Century Insurance issued payment and performance bonds in the amount of $3.85 million.

The defendants agreed to execute a 55-year lease in favor of Century Insurance upon the occurrence of the following conditions:

– That GBI defaults on the Public School System project.

– That PSS issues a permanent stop order to GBI for work on the project.

– That plaintiff completes construction of the project.

Pixley said that in February 1997, PSS issued to GBI a cure notice and notice of intention to terminate its contract with GBI for defaulting on the project. On April 7, 1997, PSS terminated the contract with GBI and prohibited it from doing any further work on the project.

GBI appealed the default termination.

In 1999, Judge Perry Bond of the U.S. Interior Board Of Contract Appeals ordered PSS to convert GBI’s termination for default into a “termination for convenience.”

The conversion of the termination for default to a termination for convenience was a term used in a settlement agreement reached in the resolution of a civil action filed in Superior Court in 1997. In that case, GBI had been a named defendant in an action initiated by the Commonwealth Development Authority relating to the project. GBI was also named a defendant in the second civil case filed in 2001 in Superior Court relating to the project, which is still pending.

The settlement agreement in the 1997 case was signed in 2001 by GBI and PSS.

Pixley said that, due to GBI’s termination for default, PSS formally requested that plaintiff assume the responsibility of completing the construction of the project.

Century Insurance, in fact, assumed the responsibility in 1997, Pixley said.

He said that in July 2005, Century Insurance presented to defendants for execution a 55-year lease agreement pertaining to the land.

“Following PSS’ termination for default, plaintiff’s performance of its obligation under the terms of the agreement to lease satisfied the condition precedent for defendants to execute a lease agreement for the lot in favor of plaintiff,” the lawyer said.

Pixley said that, through the voluntary agreement by the defendants to assign the lot to Century for 55 years if Century was required to complete the construction of the project, Century in fact completed the project.

“Under a quasi-contract theory of recovery, plaintiff is entitled to restitution of the value of services performed (i.e. the cost to complete the project),” he argued.