Guam Attorney General Challenges $14 Million Arbitration Decision Against Port

Barrett-Anderson ‘shocked to be left out of process; to explore legal recourse

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, June 2, 2016) – Guam’s elected attorney general was kept out of the loop on the Port Authority of Guam’s years-long legal battle that recently resulted in an arbitration panel’s $14 million decision against the Port.

“I am not aware, and no one in my litigation staff has informed me, that we were noticed about it, that we were asked to provide our briefing on it, either at the trial court, or at the Supreme Court of Guam,” Attorney General Elizabeth Barrett-Anderson said Thursday.

“I’m astonished, and I have to say very upset — very upset because as attorney general for Guam, it is my responsibility to ensure that matters involving government policy and direction, legal matters involving the territory come to my purview and attention, so that I can protect … the people of Guam and the government of Guam,” Barrett-Anderson said.

She said she’ll work with the Port and review what the agency and its legal counsel have done that led up to the $14 million arbitration award, and to find a legal avenue to get the arbitration award set aside.

A series of recent Pacific Daily News stories alerted the AG’s office on the $14 million award in favor of Guam YTK, a failed tuna transshipment business purchased a few years ago by some of the governor’s relatives at the start of the Calvo administration.

“I think it was a shocking thing to wake up and have a cup of coffee, and know that the government is liable for $14 million,” Barrett-Anderson said.

If the Port were to raise the fees for moving cargo through the island’s only civilian seaport to pay for the arbitration award, that cost could be borne by consumers, Sen. Tom Ada and others have said.

“We’re all concerned that the consumers of Guam are all going to pay for this out of their pockets because potentially the cost of goods could go up,” Barrett-Anderson said.

The $14 million arbitration award is nearly three times the Port’s net income in fiscal 2015, not counting tens of millions of dollars in federal aid for infrastructure upgrades at the seaport.

Hiring of private attorneys 

Barrett-Anderson said the Guam YTK issue puts a spotlight on autonomous agencies hiring their own private attorneys without coordinating with the AG’s office. She said she would work with Vice Speaker Benjamin Cruz and support his efforts to rein in the hiring of private attorneys by Guam’s autonomous agencies.

“The attorney general’s office litigators are there for the one purpose of defending” public funds, she said.

Barrett-Anderson said she would propose banning arbitration clauses in GovGuam contracts, because she doesn’t want an out-of-court panel to decide what could be a costly decision for GovGuam and the island’s taxpayers.

On the Guam YTK arbitration award, the attorney general acknowledged the legal path to convincing a court to set aside the $14 million Port liability is very narrow, but she would try.

Federal act

A Guam Supreme Court decision does state, in Government of Guam v. PacifiCare, that the Federal Arbitration Act, which applies to arbitration agreements in contracts involving commerce in the territories, including Guam, states certain grounds in which an arbitration award could be tossed out.

The local Supreme Court cites the Federal Arbitration Act, which outlines reasons to set aside an arbitration panel’s decision, including:

  • corruption or fraud that led up to the award;
  • “evident partiality or corruption in the arbitrators”;
  • misbehavior by the arbitrators; and
  • when arbitrators exceeded their powers.

Sen. Frank Blas Jr., community advocate Ken Leon-Guerrero and other members of the community have called on the attorney general to intervene and try to stop the Port from paying the $14 million.

Barrett-Anderson said she’s not intervening — she’s asserting the AG’s authority to rein in private counsels for government of Guam agencies, which have cost millions of dollars in past years.

Barrett-Anderson said her office would conduct “a full review of everything that’s happened” on the Guam YTK issue at the Port.

An arbitration panel of three attorneys in private practice issued a decision on April 4 that the Port should pay $12.7 million to Guam YTK and $1.3 million for legal fees and costs for the business’ attorneys.

Terminated, evicted

Yoshie and Tom Kamiyama owned the business in 2001 when it secured a lease from the Port to develop Hotel Wharf as a transshipment and auction house for sashimi-grade tuna for import to Japan and other international cities. After their 2001 lease agreement to use Hotel Wharf, the Kamiyamas struggled financially, court documents show. They were unable to develop the $13 million fisheries facility they promised to build under the development and lease agreement with the Port, and had fallen behind on years of lease payments.

In 2008, the Port terminated the lease and evicted Guam YTK — which bought the business from Yoshie and Tom Kamiyama — from Hotel Wharf.

Guam YTK argued it should be paid for the market value of the remainder of its 45-year lease because of Port actions that allegedly hindered its ability to develop the wharf.

Arbitration panel

Cesar Cabot has said he and the other arbitrators “were chosen by the parties … pursuant to the Guam arbitration rules and Guam law.”

He said the arbitration’s confidentiality process keeps him from discussing the merits of the arbitration panel’s decision.

“I take my role very seriously, and I don’t want to even give the appearance of bias or impropriety,” Cabot said in a previous interview.

The other arbitrators are:

  • Cynthia Ecube, a Calvo administration appointee to the Board of Equalization and a former senior law firm partner of Justice Philip Carbullido before Carbullido became justice who ruled in favor of Guam YTK; and
  • Mitchell Thompson, a private-practice attorney who’s the Port’s designee to the panel and a brother of a former Port legal counsel in a prior administration.

Two companies owned by cousins and other relatives of Gov. Eddie Calvo are the shareholders of FOL International, which owns Guam YTK, Department of Revenue and Taxation documents show. FOL also owns 40 percent of the subcontractor for the potential $100 million contract to renovate Simon Sanchez High School.

Mike Phillips, the Port’s attorney, was the legal counsel for then-gubernatorial candidate Eddie Calvo in an election contest filed by former Gov. Carl Gutierrez after the 2014 gubernatorial election. The Port paid Phillips $1.8 million in legal fees and costs between 2011 and 2015, Public Utilities Commission documents show.

Philips said Gov. Calvo doesn’t have any personal or financial interest in Guam YTK. The governor’s cousin, Eduardo “Champ” Calvo, legal counsel and co-owner of Guam YTK, also said the governor has kept a distance from anything related to Guam YTK and that the governor’s parents and siblings aren’t involved in Guam YTK.

Pacific Daily News
Copyright © 2016 Guam Pacific Daily News. All Rights Reserved

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