Fund seeks to stop enforcement of Derivative Beneficiaries Act

The NMI Retirement Fund has asked the Superior Court for a temporary restraining order to stop Gov. Benigno R. Fitial and Lt. Gov. Eloy S. Inos from enforcing the controversial Public Law 17-51 that allows Fund beneficiaries to sue on behalf of the pension program if the board refuses to bring such action.

The Fund, through counsel Carolyn M. Kern, also asked the court to stop the Superior Court’s clerk of court from accepting any lawsuit filed pursuant to Public Law 17-51, also known as the Derivative Beneficiaries Act.

Associate Judge Kenneth L. Govendo conducted an emergency hearing yesterday on the TRO request and ordered the parties to return to court today, Tuesday, at 9am for closing arguments.

The Fund questioned the constitutionality of the Act and asserted that issuing the TRO will ensure that assets are invested to maximize the length of time that their benefit payments will continue.

The Office of the Attorney General, as counsel for Fitial, Inos, and the Superior Courts’ clerk of court, opposed the motion for temporary injunction.

Assistant attorney general Michael A. Stanker argued that Public Law 17-51 does not harm the Fund but actually endows it and its beneficiaries additional benefits.

“While the practical effect of the law is that the Fund’s agents have quit, all the board needs to do to remedy this situation is hire new agents,” Stanker said.

Three retirees—Mariano Taitano, Roman F. Tudela, and Patricia Guerrero—through counsel Michael Dotts, also opposed as intervenors to the Fund’s request for a TRO.

Dotts argued that there is no justification for the court to restrain Public Law 17-51, which he described as a “lawfully enacted law.”

Dotts said there is evidence that the Fund has other managers besides those who have quit.

“There is no evidence that none of the other managers who did not cancel their contracts could not or would not agree to manage the money of those who did,” Dotts said.

In Fund’s TRO request, Kern said the Fund has already suffered irreparable harm when its investment consultant, actuary, and at least two money managers terminated and or suspended their contracts with the Fund.

“Even more irreparable harm will be suffered when additional money managers and other service providers, such as the Fund’s external auditors and the custodian holding the Fund’s assets, follow suit and terminate their contracts,” Kern said.

Kern said the hardship the Fund will face if a TRO is not issued is immeasurable but will clearly be evident when the Fund runs out of money and is no longer to able to make pension payments.

At yesterday’s hearing, Kern called to the witness stand Fund administrator Richard Villagomez, who basically explained to the court the impact when service providers (money managers and consultants) quit as a result of the signing of the derivative beneficiaries law.

After cross-examining Villagomez, Govendo expressed appreciation to the administrator for “being candid as always” in his testimony.

Govendo encouraged the parties to hold talks to come up with a compromise such as a new bill or “something else.”

Dotts said court should help the parties reach a compromise.