Riviera land lease terminated

The defunct Hotel Riviera Saipan in Fina Sisu has been closed since 2012. The Superior Court has terminated the 55-year land lease and ordered the owner of the hotel to vacate the premises for failure to pay rent. (Ferdie de la Torre)

The Superior Court has terminated the 55-year ground lease to one of four lots in Fina Sisu where the defunct 134-room Hotel Riviera Saipan is erected.

The land lease was terminated due to the hotel owner’s non-payment of rent in the amount of $176,802 and not maintaining the property since 2012.

In a 131-page order issued Tuesday, Associate Judge Joseph N. Camacho determined that Globuil Resort Saipan, the owner of Hotel Riviera, has materially breached the ground lease and that termination is the appropriate remedy.

Camacho said Globuil Holdings or Globuil Resort should be removed from the land and possession should be restored to PRC LLC.

PRC holds the fee simple and underlying lease for approximately one-half of the property. The lease ends on Dec. 29, 2043. The Tenorio family holds the other half of the land where the buildings sit.

PRC LLC’s sole member is Allen Perez. Changsin Resort Saipan Corp., the former owner of the hotel changed. its corporate name to Globuil Resort Saipan Corp. prior to the trial.

The trial was held from March 12 to 15, 2018. Robert T. Torres served as counsel for PRC, which filed the lawsuit in 2012 for breach of contract and other claims.

Globuil Resort Saipan, formally known as Chang Shin Resort Saipan Corp., was represented by Mark Scoggins.

Camacho said PRC, which leased the land to Globuil, is entitled to recover the land.

Camacho said PRC did not lease a hotel to Globuil, therefore, if PRC chooses to remove the hotel, fixtures, etc. then PRC is entitled to reasonable cost of removing the hotel, fixtures, etc. from the land.

Camacho said if PRC does not initiate removal of the hotel, fixtures, etc. within one year of this order, then PRC receives and accepts the property “as is.”

The judge said he made this decision as there was nothing in the ground lease that required Globuil to give back any developed structure such as a fully functional multi-million dollar hotel on the property to PRC at the end of the lease.

Camacho said PRC is entitled to indemnification from Globuil Resort for its attorney’s fees and expenses of litigation pursuant to ground lease.

As the prevailing party, he said, PRC is entitled to recover attorneys’ fees and costs from Globuil Resort.

He directed PRC to submit within 10 days from entry of judgment in this case, a bill of its litigation costs, court costs, and attorney’s fees expended in this matter.

Camacho said Globuil Resort shall have seven days following service of the bill costs and motion for fees to respond to PRC’s submissions, following which the matter may either be set for hearing or decided by the court.

Camacho ordered PRC counsel Torres to submit a proposed judgment for the court which shall include the actual amount of rent, attorney fees, and costs owed as of the date of this order.

Camacho said he retains jurisdiction to enforce this order.

According to the court’s findings, Mr. Kyung Duk Park, who purchased all of the shares of Globuil Resort in February 2013, served as president and an officer of Globuil Resort from February 2013 to 2015.

In 2014 to 2015, Park transferred his shares of Globuil Resort to Globuil Holdings, a company organized in the Republic of Korea. He provided testimony at trial.

In 2007, Hotel Riviera’s operations were a growing concern as its leasehold interest depreciated at a cost value of $10.7 million and a per-room value of $79,851.

Up until 2012, the condition of the hotel and its amenities were good, clean, kept-up, and nice.

This changed for the worse starting in February through May 2012. In February or March, electrical power at the hotel transferred from CUC power to the hotel’s generator due to unpaid electrical bills and was periodically shut off.

By April 2012, maintenance of the hotel’s swimming pool had ceased to a point where it was unusable by tenants and guests.

The manager of the hotel, a certain Ms. Lee, also disappeared in April 2012. The generator stopped providing electricity to the hotel entirely on May 5, 2012.

In June 2012, the hotel was closed. All of the hotel’s staff was gone and all of the tenants had moved out. In their wake, 24-hour security services from an independent contractor were instituted for the hotel. This service continued up to the date of trial.

According to Akhil Mollick, the president of Mollik Enterprises, which has provided the security services since June 2012, the hotel has only been cleaned once since 2012—by a Korean company sometime “way back before” and prior to Typhoon Soudelor in 2015.

Mollik Enterprises conducted a limited cleaning in January of 2018 under its manpower services.

In 2013, an inspection by the Commonwealth Healthcare Corp. Bureau of Environmental Health found conditions at the hotel to be unsanitary and demonstrating poor maintenance.

This inspection found the hotel abandoned, not operating, without guests, overgrown with knee-high grass, and with green algae buildup in the non-circulating swimming pool.

In 2015, Soudelor damaged the hotel’s buildings and made conditions at the hotel even worse, breaking windows and causing 15 percent of roof tiles to fall from the rooftop.

Up to 2018, the hotel was never re-opened. There is no power or water at the hotel. The swimming pool is not working and looks liked a pond until the Mollick cleaning in January 2018.

Camacho finds that the property was not maintained in a clean condition from June of 2012 to the Mollick cleaning in January 2018.

Camacho said if Globuil refuses to voluntarily vacate the property within 30 days of this order, PRC may inform the court to consider as part of the entry of judgment issued pursuant to this decision, for the court to instruct the clerk of court to issue a writ describing the lot and commanding the officer to whom the writ is directed to remove all persons from the premises, and put PRC in possession.

Camacho said PRC has not failed to perform its obligations under the covenant of good faith and fair dealing implied into the ground lease and finds in favor of PRC as to this breach of contract claim by Global Resort.

He said as a result of Globuil Resort’s failure to pay the full amount of rent due under the ground lease, PRC suffered resulting damages in the amount of $176,802 as of the date of trial.

This amount, Camacho said, includes the resulting damages in the amount of $128,802 from Globuil Resort’s failure to make timely monthly rental payments.

He said Globuil Resort’s failure to perform the covenants of ground lease has resulted in damages to PRC.