‘Order finding PPA void should preclude SDLLC suit in fed court’

The decision of Superior Court Associate Judge David A. Wiseman to declare as void ab initio (from the beginning) the power purchase agreement then-governor Benigno R. Fitial inked with Saipan Development LLC should preclude SDLLC’s lawsuit in federal court, according to the Commonwealth Utilities Corp.
CUC counsel Deborah E. Fisher noted since CUC filed its motion to dismiss SDLLC’s lawsuit in federal court, Wiseman issued a decision on Feb. 4, 2014, ruling that the agreement was facially invalid and the subsequent PPA at issue was void from the start.

Fisher cited Wiseman’s order in CUC’s reply to SDLLC’s opposition to CUC’s motion to dismiss SDLLC’s lawsuit in federal court.

SDLLC, the Delaware-based contractor of the controversial $190.8-million PPA, filed a lawsuit in federal court against CUC over the voided agreement.

The CNMI Senate, Rep. Janet U. Maratita (IR-Saipan), and Sen. Ray A. Yumul (IR-Saipan) sued Fitial, Attorney General Joey San Nicolas, CUC, and SDLLC in Superior Court over the PPA and sought a preliminary injunction to stop it.

In CUC’s reply to SDLLC’s opposition to the motion to dismiss, Fisher cited precedent that states “federal courts have consistently accorded preclusive effect to issues decided by state court, thereby promoting comity between state and federal courts.”

Fisher said the U.S. District Court for the NMI should apply principles of issue preclusion and comity, and consider Wiseman’s order preclusive.

Citing the Rooker-Feldman doctrine, Fisher said that if “claims raised in a federal court action are ‘inextricably intertwined’ with the state court’s decision such that the adjudication of the federal claims would undercut the state ruling or require the district court to interpret the application of state laws or procedural rules, then the federal complaint must be dismissed for lack of subject matter jurisdiction.”

Fisher said any ruling awarding damages on a void-from-the-start contract would violate not only the theories of issue preclusion and comity, but the Rooker-Feldman doctrine.

The CUC counsel also stated that even if the federal court did not consider the Superior Court’s decision, the contract was void from the beginning, and cannot be a basis to amend the complaint.

Fisher also pointed out that SDLLC’s claim that Fitial signed the PPA as part of a state of emergency pursuant to an executive order fails to address the fact that the EO provided no authority for the former governor to violate CUC’s or the CNMI’s procurement regulations.

Fisher said the contract did violate procurement regulations, as Wiseman found.

Even if it could be argued that Fitial could suspend procurement regulations by an executive order, he did not do so with the EO, Fisher said. She pointed out that the EO only allows for CUC to enter into renewable energy contracts and possibly take other actions without oversight from the Commonwealth Public Utilities Commission.

“In no way, however, did the EO suspend the underlying procurement laws and regulations,” she asserted.

In addition, Fisher said, the EO indicates that Fitial assumed the powers of the board of directors and executive director of CUC.

“But, neither the board nor the executive director has the power to ignore procurement regulations or CNMI laws—and therefore neither did the governor,” she added.

In SDLLC’s opposition to the motion to dismiss, SDLLC counsel William Fitzgerald said that Fitial’s EO excuses CUC from complying with procurement regulations and that this means that the PPA was valid.