Dismissal of Fund’s claim denied

The Superior Court has denied the CNMI government’s motion to dismiss one of the NMI Retirement Fund’s causes of action in the lawsuit that seeks to compel the Finance Department to give the Fund the $119.6 million it is owed.

Associate Judge Juan T. Lizama ruled that as the pleadings and arguments stand right now, the Fund has alleged its claims with enough particularity to withstand a motion to dismiss. He said the government has not disproved any of the facts presented in the Fund’s lawsuit.

The Fund has shown enough facts through its pleadings that support a legal theory which would entitle the agency to relief, said Lizama in the order he issued Tuesday.

The decision relates to the government’s motion to dismiss the 11th cause of action in the lawsuit. That cause of action asked the court to issue a judgment or a writ of mandamus ordering Finance Secretary Eloy Inos to give the Fund the money it is owed.

As of Aug. 1, 2006, the CNMI government reportedly owed the Fund $119.6 million.

In 2006, the Fund sued the government, Gov. Benigno R. Fitial, Department of Finance, and Inos for the government’s alleged failure to remit the required payments.

According to court records, on Dec. 17, 2001, the CNMI government and the Fund signed a memorandum of agreement whereby the government was to make regular bi-weekly payments to the Fund in the amount of $500,000 as employer contributions.

In return, the Fund agreed to refrain from taking any formal actions against CNMI to recover all sums due.

The Fund’s agreement not to pursue legal action was contingent upon the government’s continued payments of both regular employer contributions and the monthly $500,000 payment to settle arrears.

On Jan. 11, 2006, the Fund, through the chairman of the Fund’s board of trustees, sent Fitial a letter informing him of the government’s failure to remit employer contributions for the previous three pay periods.

The government remitted the monthly payment of $500,000 on Jan. 13, 2006. It made five more payments, with the final payments on March 30, 2006.

On April 28, 2006, the Fund’s administrator wrote Inos a demand letter concerning the government’s failure to remit employer contributions that to date exceeded $85 million. On May 2, 2006, the Fund sent Finance another demand letter.

Fitial then signed into law Public Law 15-5, which suspended employer contributions to the Fund as of March 2006 until the end of fiscal year 2007.

In its motion, the Fund requested many things from the court. Its 11th cause of action sought a court order compelling Finance and Inos to pay the Fund for unpaid employer contributions and the payments due under a 2001 MOU between the Fund and the government.

The cause of action demanded payments due for 10 years of violations of the law, requiring allocation of 30 percent of the hotel occupancy tax and 20 percent of the alcoholic container excise tax.

The action also sought payments due for 13 years of violations of law requiring that the costs of retirement bonuses shall be borne by the employees’ hiring authority, and where such funds are not available by the Fund, subject to reimbursement through appropriation.

In addition, the action demanded payments due for 17 years of violations of the law requiring the government to make contributions to the Fund for the special retirement annuities of governors and lieutenant governors.

The government asserted that there is no legal duty because Finance must follow legislative appropriations. It argued that disbursing funds for purposes not contained within the appropriations act is illegal. It also asserted that the Fund has an adequate remedy at law: money damages from the government.

In his order, Lizama said that if the Fund in this case could not prove any of the facts in support of a claim that would entitle it to relief, then dismissal of this cause of action would be proper.

“Because defendants brought the motion to dismiss, any allegations of material fact in the complaint are deemed to be true and construed in the light most favorable to the non moving party [Fund],” Lizama said.