CNMI Utility Can Sue Government For Unpaid Bills: Court

admin's picture

Supreme Court affirms Judge’s ruling, trial date to be set soon

SAIPAN, CNMI (Saipan Tribune, Jan. 2, 2015) – The CNMI Supreme Court has affirmed Superior Court Associate Judge Joseph N. Camacho’s ruling that the Commonwealth Utilities Corp. can sue the CNMI government for unpaid utility bills.

The high court basically disagreed with the government’s argument that a writ of mandamus is proper because Camacho erred by concluding that CUC has the capacity to sue the Commonwealth.

According to the Supreme Court’s opinion entered by Chief Justice Alexandro C. Castro, Associate Justice John A. Manglona, and Justice Pro Tem Timothy H. Bellas on Tuesday, Camacho’s decision permitting CUC to sue was rational and thus they cannot grant the writ because Camacho did not commit a clear error.

With the high court’s ruling, the Superior Court will set a status conference on Jan. 7, 2015, to set a trial date.

In its petition for writ of mandamus, the government through assistant attorney general David Lochabay, asked the high court to direct the trial court to vacate its order denying the government’s motion to dismiss for lack of capacity and grant a motion to dismiss for lack of capacity.

Mandamus refers to a discretionary writ that compels a government official or agency to perform a legally required, ministerial public duty.

The government argued that a writ of mandamus is proper because the trial court erred by concluding CUC has capacity to sue the government.

In his ruling, Camacho said the CNMI Legislature explicitly granted CUC the power to bring lawsuits, and specifically mandated that CUC bill government consumers for utility services.

Camacho made the determination in his order denying the CNMI government’s motion to dismiss for lack of capacity CUC’s lawsuit against the government.

In separate lawsuits filed last December, CUC, through counsel Michael White, also sued the Public School System and the CNMI government to collect utility billings.

White said PSS and the CNMI government are indebted to CUC, for utility services in the principal sum of $5,936,931.55 and $1,241,137 respectively together with pre-judgment interest.

The CNMI government, through assistant attorney general David Lochabay, moved to dismiss the lawsuit. He argued that CUC, as a governmental entity, lacks capacity to sue the CNMI government, CUC’s creator.

CUC, through White, argued that the Legislature designed CUC to be a separate, autonomous entity, with the power to recover the expenses of utility production from utility consumers, including the government.

In his ruling, Judge Camacho said under the express mandate of the Legislature in the Commonwealth Code, CUC has the capacity to bring this claim for non-payment of utilities against the Commonwealth.

In the high court’s opinion, the justices said the Commonwealth points to three errors Camacho allegedly made.

The justices said the government argued that Camacho ignored the arm-of-the-state doctrine, disregarded the total effect of the executive orders that allegedly removed CUC’s independent nature, and defining political subdivision too narrowly.

The justices, however, pointed out that they do not engage with these contentions because, even if they agree with the government’s position that the common law controls and CUC is a state entity, there is a rational argument that CUC has capacity to sue the Commonwealth.

The justices said the Commonwealth arguably created a contract by requiring CUC to bill the government for utilities, and at the same time "collect fees…from all customers."

The justices said a legitimate argument can be made that this is a contract: CUC provides utilities to the Commonwealth and, in exchange, the Commonwealth pays CUC.

Citing precedent, the justices said because arguably there is a contract, a court could fairly conclude CUC has a proprietary interest in the payment for utilities provided.

Rate this article: 
No votes yet

Add new comment