CNMI COURT FINDS GOVERNOR REMISS ON PAYMENTS

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$120 million overdue to government retirement fund

By Ferdie de la Torre

SAIPAN, CNMI (Saipan Tribune, Nov. 13, 2008) - Superior Court Associate Judge Kenneth L. Govendo yesterday found the CNMI government and Gov. Benigno R. Fitial liable in the lawsuit filed by the Retirement Fund over the government’s failure to remit the required employer contributions, now reportedly reaching over US$119.6 million.

Govendo said the sole issue remaining to be determined is the amount of damages owed the Fund.

The judge granted the Fund’s request for default judgment after the Attorney General’s Office, as counsel for Fitial and the government, waited nearly two years to answer the complaint.

Govendo found no adequate reason for the delay and ordered the defendants’ answer to the complaint be stricken from the record.

"Based on the record, testimony and evidence proffered during the October 17, 2008, default judgment hearing, the court take .notice that the defendants have admitted liability and have accepted as true the factual allegations of the complaint," Govendo said.

He said the matter represents an issue of vital importance that will have far reaching consequences for every family in the Commonwealth.

"For the Commonwealth to say that it was unable to answer a lawsuit potentially worth upwards of 91 million dollars due to the ‘press of other business’ is both absurd and reprehensible," the judge stressed.

Govendo set the evidentiary hearing on the issue of damages for June 8, 9, 10, and 12, 2009, at 9am.

The Fund filed the lawsuit against the government, Fitial, Department of Finance, and Finance Secretary Eloy Inos in 2006 over the government’s failure to remit required payments. On Oct. 3, 2006, the Fund filed a first amended complaint. On Oct. 23, 2006, the defendants filed a motion to dismiss the four causes of action in the lawsuit. The motion extended the defendants’ time to file an answer by 10 days following the court’s ruling on the motion. On May 6, 2008, then Superior Court Associate Judge Juan T. Lizama denied defendants’ motion to dismiss.

The government at that time had until May 16, 2008, to file its answer. The AGO filed the answer on June 24, 2008.

In his order granting default judgment, Govendo said the answer obviously was filed beyond the 10-day deadline and in fact was 39 days beyond the deadline.

Govendo said that when asked to explain the delay, assistant attorney general Anthony Welch said, "I messed up. It was me if you need to sanction someone it should be me, it was my fault."

Govendo said he is appalled by this inexcusable lapse on the part of the Commonwealth as the government was put on notice in August 2006 that an answer was going to have to be filed.

The judge said Welch also stated both in court on October 17, 2008, and in his motion to extend time to answer that he was too preoccupied with the Commonwealth Utilities Corp. and other responsibilities to address the Fund’s complaint.

"The court finds this excuse unacceptable. Surely, regardless of the press of other business, the Attorney General’s Office can be expected to find the resources to answer a multimillion dollar lawsuit within the time limit prescribed by law," he said.

Govendo said that to accept this excuse from an office that appears to be permanently under the "press of other business" and to not declare a default against the Commonwealth would set a precedent that the Commonwealth is free to disregard the rules of civil procedure.

With the default judgment and the answer stricken, Govendor said it is deemed that the defendants have admitted liability and agree with the facts as presented in the complaint.

However, he said, this admission, as a matter of law is moot because the defendants have previously made repeated admissions of liability.

Govendo said that at the October 17, 2008, hearing, Welch had stated, "What the Executive Branch can admit to, and it will make the following admission to this court, is that we owe a sum of money to the Retirement Fund. The amount is in dispute."

Govendo said the defendants have clearly and incontrovertibly admitted liability in this matter.

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