OAG: Settlement Fund a distraction to the actual issue

The Office of the Attorney General argues that the NMI Settlement Fund is only distracting the Superior Court from the actual issue in dispute relating to the lawsuit filed by the Public School System and Education Commissioner Dr. Alfred Ada for its share of the CNMI’s annual budget.

The issue before the Superior Court is whether PSS has established that the appropriations listed in PSS and Ada’s complaint constitute general rather than special revenue, said assistant attorney general John P. Lowrey, who is counsel for Gov. Ralph DLG Torres and Finance Secretary David Atalig.

In Torres and Atalig’s reply to the NMI Settlement Fund’s opposition to Ada and PSS’ motion for summary judgment, Lowrey said PSS contends that a factual inquiry is not required for the court to rule that these revenues are general rather than special.

Lowrey said Torres and Atalig contend that PSS failed to meet its burden on summary judgment because it presented no facts establishing its entitlement to judgment.

Lowrey said the Settlement Fund as an intervenor “curiously makes no contention regarding this issue” at all, and instead “takes no position” on the sole issue before the court.

Not only is the Settlement Fund’s opposition unhelpful, he said, but it also misconstrues both the complaint and PSS’ motion for summary judgment, and only serves to distract the court from the actual issue in dispute.

Accordingly, Lowrey said, the court should disregard the Settlement Fund’s opposition.

Lowrey asked the court to find that PSS failed to establish through undisputed facts that the revenues listed in its motion are general, and therefore deny its motion for summary judgment.

He said the Settlement Fund misconstrues this case as one concerned with payment of debt obligations.

He noted that the Settlement Fund mistakenly uses terms and concepts like “priority” and “judgment creditor,” which are typically reserve for tax, bankruptcy, or collection cases.

Lowrey pointed out that because the Settlement Fund sees this as a debt collection matter, it argues that it is owed money under the Betty Johnson class action’s settlement agreement and it should be paid before PSS. Tthe settlement agreement in Johnson’s class action, however, is not in dispute here, he said.

Lowrey pointed out that, as a party to the Johnson settlement agreement, the Settlement Fund can enforce (and is enforcing) its rights in the appropriate forum, and that this is not that forum.

“This case is not about payments out of the Commonwealth’s coffers, but about the classification of revenues coming in,” he said.

In particular, Lowrey said, it is about revenue categorization and the methodology for classifying some revenues as special and others as general—the very issue on which the Settlement Fund takes no position.

Lowrey said issue before this court is whether the standard of the CNMI Supreme Court in a certified question petition requires a factual inquiry into the source of revenue and purpose of the fund, and whether PSS has made this factual showing. Lowrey said the Settlement Fund offers nothing to assist the court with that inquiry, and instead makes confusing arguments that, if accepted, would mislead the court. He said it is clear that the Settlement Fund does not fully grasp the issues at the heart of this case and at the heart of the motion for summary judgment before the court.

Lowrey said the Settlement Fund spends approximately a quarter of its brief arguing about a phantom amended complaint that was never filed and is not before the court. “As the adage goes, if intervenor does not have a dog in the fight, it should get out the ring,” he said.

He said because PSS fails to provide any undisputed material facts establishing that the revenues in the complaint constitutes general revenue, the court should deny PSS’ motion for summary judgment.

PSS and Ada, through Tiberius Mocanu, are suing Torres and Atalig to guarantee for PSS an annual budget of not less than 25% of the Commonwealth’s general revenue. PSS and Ada alleged that Torres and Atalig is in violation of the NMI Constitution because every allotment and disbursement made pursuant to Public Law 21-08, which established the Commonwealth government budget for fiscal year 2020, is unconstitutional. That law appropriated $37,718,904 to PSS, which is approximately 16% of the budget.

The Settlement Fund moved to intervene in the lawsuit. Superior Court Associate Judge Joseph N. Camacho granted the motion.