DPL chief files $10.5M counterclaims vs Mariana Resort, Club 88, BSI

Department of Public Lands Secretary Marianne C. Teregeyo has filed a $10.5-million counterclaims and cross claims against Saipan Entertainment LLC, Kan Pacific Saipan Ltd., and Imperial Pacific International (CNMI) LLC.

Saipan Entertainment owns the e-gaming facility Club 88 Mariana located at Mariana Resort & Spa in Marpi. Kan Pacific owns Mariana Resort & Spa. Imperial Pacific is doing business as Best Sunshine International, Ltd.

Saipan Entertainment sued Kan Pacific and Imperial Pacific for allegedly not informing the company of Best Sunshine’s negotiation to purchase the Mariana Resort.

Teregeyo was also named as co-defendant.

Last month, Superior Court Associate Judge Teresa Kim-Tenorio dismissed Saipan Entertainment’s breach of contract claim against Kan Pacific.

Teregeyo has filed counterclaims and cross-claims against Saipan Entertainment, Kan Pacific, and Imperial Pacific for declaratory judgment; and malicious prosecution against Saipan Entertainment.

Teregeyo has filed counterclaims for breach of contract against Kan Pacific, Saipan Entertainment, and Imperial Pacific.

Teregeyo has filed counterclaims for anticipatory repudiation and restraint of trade in violation of the Sherman Act and Clayton Act against Kan Pacific and Imperial Pacific.

The Sherman Act provides that every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce is declared illegal.

A private right of action for violation of the Sherman Act is created by the Clayton Act.

Teregeyo, through counsel assistant attorney general Christopher M. Timmons, asked the Superior Court to hold Kan Pacific and Imperial Pacific jointly liable to pay her $10.5 million for allegedly colluding to restrain trade in violation of Commonwealth and federal law.

Timmons asked the court to declare that the resort lease as amended or superseded by the Dec. 16, 1977 lease and subsequent amendments impose an obligation upon Kan Pacific to obtain DPL’s prior written consent to any assignment or lease of the Mariana Resort and Spa premises.

The resort lease refers to Kan Pacific’s lease of public lands from the CNMI government on Dec. 15, 1977.

The following day, Dec. 16, Kan Pacific and the CNMI government executed a replacement lease that afforded the Commonwealth additional protection, including without limitation, the requirement that Kan Pacific obtain the Commonwealth’s consent prior to any sublease or assignment of its rights under the lease.

Teregeyo requested the court to declare that Saipan Entertainment’s sublease with Saipan Entertainment for a portion of the Mariana Resort and Spa premises executed on Nov. 18, 2013, is void.

Teregeyo asked the court to issue an injunctive relief restraining Kan Pacific and Imperial Pacific from colluding to withhold or rig bids in violation of Commonwealth and federal law.

The DPL secretary also filed her answer and affirmative defenses to Saipan Entertainment’s lawsuit.

Saipan Entertainment sued Kan Pacific for breach of contract, unjust enrichment, and fraudulent nondisclosure.

Saipan Entertainment sued DPL and Teregeyo in order to enjoin the CNMI government from consenting to any assignment of the resort lease or the resort property until the controversy surrounding the validity of the resort lease is resolved.

Saipan Entertainment sued Imperial Pacific for intentional interference with contract.

Last month, Superior Court Associate Judge Teresa Kim-Tenorio dismissed Saipan Entertainment’s claim for breach of contract against Kan Pacific.

In Teregeyo’s counterclaims and cross-claims, Timmons said despite DPL’s assurances to Saipan Entertainment that it would not unreasonably withhold its consent, Saipan Entertainment maliciously sued DPL for declaratory judgment relating to an issue that was rendered moot.

Timmons said as a result of Saipan Entertainment’s malicious prosecution, DPL has been forced to expend resources defending this lawsuit.

Timmons said as a result of Kan Pacific’s failure to obtain DPL’s prior consent before executing the Kan Pacific/Saipan Entertainment sublease agreement, DPL has been forced to expend resources defending this lawsuit.

Timmons said by assigning its interest to Imperial Pacific and giving Imperial Pacific the right to close Mariana Resort and Spa prior to expiration of the lease, Kan Pacific breached the implied covenant of good faith and fair dealing.

Timmons said this is so because the assignment and leaseback terms authorize Imperial Pacific to cease revenue-generating activities on the premises as early as December 2016.

He asserted that the assignment and leaseback constitutes a collusive agreement, which operates to restrain and prevent Kan Pacific from bidding in response to the request for proposals.

“DPL is damaged because with the obvious and natural competitor removed, Imperial Pacific International (CNMI) LLC will not need to submit a responsive and competitive response to the RFP, and DPL will obtain less favorable terms for a new lease of the premises,” Timmons said.

Timmons said the assignment and leaseback documents grant Imperial Pacific a possessory interest in public land contrary to the lease agreement.

On Dec. 11, 2015, Kan Pacific and Best Sunshine entered into an agreement, by which $3.5 million bought Kan Pacific’s agreement not to participate in DPL’s RFP for Mariana Resort and Space.

This Dec. 11, 2015, agreement purports to be an assignment and leaseback of the Mariana Resort and Spa.

Timmons said upon information and belief, Imperial Pacific has not obtained insurance over the premises.

Timmons said by removing the natural competitor for a new lease over the Mariana Resort and Spa premises, Imperial Pacific will be able to submit a less competitive (or even non-responsive) bid in response to the RFP.