Court asked to prevent Settlement Fund from suing Commonwealth

Gov. Ralph DLG Torres and the CNMI government, through the Office of the Attorney General, asked the federal court on Tuesday to prevent the NMI Settlement Fund from prosecuting the Commonwealth in Superior Court.

Lillian A. Tenorio, the deputy attorney general, insists that the settlement agreement in Betty Johnson’s class action against the CNMI government and the NMI Retirement Fund makes it clear that the Commonwealth is forever relieved of additional suits or complaints from the Settlement Fund, unless related to enforcing the settlement deal.

A final settlement in Johnson’s case was reached among the parties, including the NMI Retirement Fund and the Commonwealth, in August 2013.

Despite that, the Settlement Fund, now substituted in place of the NMI Retirement Fund, filed a complaint in the Superior Court on April 10, 2019, that sought to recover unpaid pension obligations against the Commonwealth.

This action, Tenorio said, is prohibited by the terms of Johnson’s settlement agreement.

Accusing the Commonwealth of not paying its pension obligations, the Settlement Fund suit alleges breach of contract, violation of the Commonwealth Constitution, violation of a CNMI statute, violation of the federal contracts clause, and for “void assignment of debt.”

Tenorio said filing the complaint against the Commonwealth is prohibited by Section 29 of the Johnson settlement agreement. She said the settlement was intended to be a full and final agreement, where “each and every claim that has been alleged, or could have been alleged, in the Johnson action, shall be settled and compromised.”

Early this year, the NMI Settlement Fund asked the Superior Court to temporarily stay or suspend the proceedings in its lawsuit against the Commonwealth Utilities Corp. and the CNMI government over CUC’s alleged $4.4 million liability with the Retirement Fund.

The NMI Settlement Fund, through counsel Nicole M. Torres-Ripple, said a three-month stay is warranted because the questions raised in CUC’s and CNMI government’s motion to dismiss the lawsuit require interpretation of the settlement agreement in Johnson’s class action in federal court.

In 2013, the U.S. District Court for the NMI gave final approval to the global settlement agreement in Johnson’s class action against the CNMI government and the NMI Retirement Fund.

With the final approval, all Retirement Fund assets were transferred to the Settlement Fund and administered by a court-appointed trustee.

In the Settlement Fund’s emergency motion for temporary stay, Torres-Ripple said the District Court has continuing and exclusive jurisdiction over the interpretation and enforcement of the settlement agreement in Johnson’s lawsuit.

Torres-Ripple said a stay is necessary to give the Settlement Fund enough time to request the District Court’s determination on issues raised by CUC and the CNMI government relating to the interpretation and enforcement of the settlement agreement.

Last June, the NMI Settlement Fund trustee, through counsel Torres-Ripple, asked the District Court to issue an order enforcing the Johnson settlement agreement and finding that the claims asserted in the Superior Court case were not resolved by the settlement deal.

The NMI Settlement Fund filed the two motions in the Superior Court and in the District Court after CUC and the CNMI government, in their motion to dismiss the Settlement Fund’s lawsuit, argued for the first time that the Johnson settlement agreement resolved CUC’s liabilities in the Superior Court lawsuit.

In CUC’s motion to dismiss the lawsuit, CUC counsel Jose Mafnas Jr. asserted that the CNMI government absorbed all liabilities owed the NMI Settlement Fund as of Aug. 6, 2013, through the settlement agreement in the Johnson class action.