Arbitration Awards Business $12.7 Million From Guam Port Authority

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Pacific Islands Development Program, East-West Center With Support From Center for Pacific Islands Studies, University of Hawai‘i

Calvo family-related business owed for breach of contract

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, April 19, 2016) – A Calvo family-related business that failed for years to pay rent on Hotel Wharf could get a $12.7 million payday from its former landlord — the Port Authority of Guam.

An arbitration panel recently awarded Guam YTK Corp. $12.7 million and the company’s law firm, Calvo Fisher and Jacob, $1.25 million, documents show.

Port Authority would have to pay the award if it stands court review.

A status hearing on the case in the Superior Court of Guam, which was scheduled for April 14, was taken off the calendar. No new date was immediately available.

The award also attaches a 10 percent interest rate if a delayed payment occurs on the $12.7 million, documents show.

Port Authority should fight against paying the award, Sen. Tom Ada said Monday.

Port Authority has more pressing priorities, such as saving money for a crane, and doesn’t have a spare $12 million in its pocket, Ada said.

The cost of food and other goods that are shipped into the island through the Port Authority’s seaport could go up if the arbitration panel’s award in favor of Guam YTK is paid, Ada said.

Ada said when he heard about the award, his reaction was: "Something’s not right."

Ada, whose infrastructure committee has oversight over the Port Authority, remembers that the agency had terminated Guam YTK’s lease agreement after the business failed to make rent payment for years.

Guam YTK also failed to develop a fisheries facility on Hotel Wharf, which was part of its agreement with Port Authority, documents show.

Port Authority contends it invalidated the lease in 2008.

Lease still valid

However, the arbitration panel that issued the award in Guam YTK’s favor stated that Guam YTK still had a valid lease.

Before the arbitration, Guam YTK sought $7.7 million worth of damages for alleged breach of contract, court documents show.

"It was undisputed that YTK failed to pay rent to (Port Authority) for several years, however, testimony and evidence was also presented that YTK may have been entitled to reduction in rents, or off-sets and credits subject to reconciliation of its accounts with (Port Authority)," according to the arbitration panel’s decision.

Attorneys Cesar Cabot, Cynthia Ecube and Mitchell Thompson are the three on the arbitration panel who decided in favor of YTK, documents show.

Port Authority legal counsel Mike Phillips said he’s bound by the confidentiality of the arbitration process, so he couldn’t confirm if an award has been issued, or for how much.

A management representative of Guam YTK’s office was off island and unavailable for comment Monday.

Ada was able to confirm the arbitration award from two other sources independent of the Pacific Daily News’ sources.

Documents show that FOL International LLC owns 99,997 of the shares of Guam YTK.

Leonard P. Calvo, Jay Lather and Joe John Mantanona are the minority shareholders, according to documents at the Guam Department of Revenue and Taxation.

Leonardo Calvo is a vice president of Calvo Enterprises Inc., which is described in federal court documents in an unrelated case as a business owned by Gov. Eddie Calvo’s family.

FOL International, in turn, is owned and managed by E.C. Development Group LLC and Pacific Combat Extreme LLC.

EC Development is a property development company whose officers and board directors are: President and Director Eduardo A. Calvo; Vice President and Director John T. Calvo, Leonard P. Calvo, director and secretary; Joseph G. Calvo, director and treasurer; and Carmen T. Calvo, director.

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Comments

The Y2K lease, with the fatal Ed Ching-drafted indemnity provision, was approved by the Attorney General in 2001. That means that the Y2K lease was approved by an AG appointed by Carl T. C.--either John Tarantino or Robert Kono. If the Courts confirm the arbitration award, Carl T.C.'s appointee as AG's approval of this "lessee friendly" (Champ Calvo's description, not mine) lease will result in the People of Guam being stuck with a bill for $14 M. Nice work, Carlistas.

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