Guam Court Finds Port Authority Must Pay $14 Million Arbitration Award

Authority owes former tenant Guam YTK Corp. for breach of lease terms

By Steve Limtiaco

HAGÅTÑA, Guam (Pacific Daily News, Dec. 29, 2016) – The Port Authority of Guam is required to pay at least $14 million to former tenant Guam YTK Corporation after a Superior Court of Guam judge on Thursday rejected the Port’s request to throw out the arbitration award, which was decided by a panel of attorneys early this year.

Judge Anita Sukola on Thursday issued a decision and order, denying the Port’s request to vacate the arbitration award, and also confirming the award to Guam YTK.

The Port's attorney said he will recommend that Port management appeal the decision to the Supreme Court of Guam.

The company is being paid the market value for the balance of its 45-year lease of Hotel Wharf, despite the Port’s arguments that the lease was invalid after the first five years because longer leases of government property, by law, require legislative approval.

Guam YTK had entered into a lease agreement to use the Port's Hotel Wharf to develop a $13.5 million fisheries facility, but the Port Authority ended the lease and took back the wharf after Guam YTK failed to develop the facility and stopped making lease payments. The company has argued the Port Authority made it difficult to develop the property.

The lease dispute went to court-ordered arbitration early this year, before a panel of three attorneys, who decided the company should be paid $14 million, including attorney fees. The amount owed accrues interest.

The lease requires that disputes be settled through binding arbitration.

Sukola in September heard oral arguments on the request to vacate the arbitration award.

Gov. Eddie Calvo's first cousins, attorney Eduardo "Champ" Calvo and his siblings, are the co-owners of Guam YTK. They bought the company just before the Calvo administration began.

In her decision and order, Sukola said she deferred in large part to the decision of the arbitration panel.

With respect to the Port’s argument that the lease was invalid after five years, Sukola said the law regarding leases is ambiguous and is subject to various interpretations.

She said the court is not in a position to provide its own interpretation of the law, and must defer to the judgment of the arbitration panel.

“The court finds that the arbitration panel applied the terms of the lease agreement to the facts of the case based on the evidence provided,” the judge wrote. “Defendant has failed to present any clear evidence that the arbitration panel issued their award arbitrarily without any consideration for the facts presented to it.”

The Office of the Attorney General had submitted a friend of the court brief, asking the court to reject the arbitration award, but Sukola said she could not consider the attorney general's arguments because they were entirely new, and had not been raised by parties in the case.

Attorney Genevieve Rapadas, with the law firm of Calvo, Fisher and Jacob, which represents Guam YTK in the case, said the law firm Thursday afternoon was reviewing the judge’s decision and deciding the next step.

“Guam YTK is very pleased with the decision of the court,” she said, noting the dispute has lasted 10 years. “We are pleased and happy there was a decision in our favor.”

Port attorney Mike Phillips said he is surprised and disappointed with the decision, which he said allowed an illegal contract to be upheld. He said he will strongly recommend that the decision be appealed to the island's Supreme Court.

"At what point do two parties that are clearly scamming the government of Guam get away with it?" Phillips said. "There's no way in the world anyone can allow this type of action to stand."

Phillips said lawmakers put a cap on the length of time government property can be leased. "We still feel very strongly you need to follow that, otherwise there really is no rule of law," he said.

Pacific Daily News
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