Guam Port Authority Board Decides To Appeal $14 Million Arbitration Award

Port Authority accused of breaching lease with Guam YTK came

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, Jan. 19, 2017) – The Port Authority of Guam’s board of directors Thursday voted to appeal the Superior Court of Guam’s latest order to pay former tenant Guam YTK Corporation a $14 million arbitration award.

Port legal counsel Mike Phillips briefed the directors during the meeting, advising them to appeal the case to the Supreme Court of Guam.

“The next step, if we were to appeal, would be to go to the Supreme Court,” Phillips said, adding: “I’ve spoken with the attorney general of Guam on a number of occasions and I believe she’s also in support of this appeal.”

In April 2016, an arbitration panel ruled the Port should pay a $14 million award to Guam YTK on the grounds the agency breached its 45-year lease agreement with the failed fisheries business on the Port’s Hotel Wharf.

Guam YTK planned to use the Hotel Wharf to develop a $13.5 million fisheries facility, but the Port ended the lease because the company didn’t use the facility and also hadn’t been making its lease payments, according to Pacific Daily News files.

The Port argued Guam law requires the Legislature to approve any lease of Port-owned property if the lease term exceeds five years. No legislative approval was given on any lease extension beyond the initial five years.

Guam YTK argued the lease agreement was valid regardless of the Legislature’s non-consent. The lease was signed in 2001 under former Gov. Carl Gutierrez.

The Port appealed the arbitrators’ ruling to the Superior Court in September 2016. Judge Anita Sukola heard arguments from both parties. Last month, she ruled in favor of the Guam YTK, upholding the arbitrator’s decision and ordering the Port to pay the $14 million.

Pushing for appeal

Phillips said there are number of reasons for the appeal.

Phillips said Sukola previously had ruled that the lease was invalid. When the case was later brought before the Supreme Court, it ordered the two parties to go into arbitration, which led to last April’s decision and award.

“The Supreme Court, in their initial opinion, which sent this matter down to the arbitration panel, I believe was very careful not to reverse Judge Sukola’s decision that the contract was illegal. They could’ve but they didn’t, so it went back down to the panel.”

Phillips said Port will keep racking up legal fees by continuing to fight the legal battle, but said the price of taking the case to the Supreme Court is insignificant to the $14 million the Port stands to lose.

“Financially, I think when you have an award in probably excess of $14 million, the added cost to go to the Supreme Court is really negligible compared to what I think the plaintiffs are asking, which is to just roll over and cut them a check,” Phillips said.

Phillips said Attorney General Elizabeth Barrett-Anderson is likely to file an amicus brief, or a friend-of-the-court filing, which states her office’s support of the Port and its efforts to get the $14 million award overturned. Phillips said he hopes the Legislature also does so.

“It’s a real constitutional question of what can people do, what can government officials do to get around a very clear legislative mandate and prohibition,” he said. “I think you have a fair chance of prevailing on appeal."

The three-person board — Vice Chairman Oscar Calvo, Board Secretary Melania Mendiola and Maria Taitano — voted in favor of appealing the case.

Pacific Daily News
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