Gov’t loses battle over Hillblom trust funds

The CNMI government lost a legal battle over interests earned from Hillblom trust funds as the U.S. District Judge Alex R. Munson yesterday ruled that a law allowing local courts to keep the money is unconstitutional.

It is now facing penalty of at least $5,000 to pay attorney’s fees and litigation costs to James E. Hollman who sued the Commonwealth in his capacity as guardian for Vo Minh Tan, one of the beneficiaries of the late business tycoon’s multi-million dollar estate.

The plaintiff has until Friday, June 16, to determine how much award he will seek against the government, while the CNMI has until June 22 to file written objections to his demand.

Based on his ruling, Judge Munson said provisions of Public Law 11-105 — pertaining to establishment of a special court account where interests generated from trust funds and estate the Superior Court temporarily holds — are violations of both the U.S. and CNMI Constitutions.

The Fifth Amendment under the U.S. Constitution and Article 1 Section 5 of the CNMI Constitution guarantee that a person cannot be deprived of life, liberty or property without due process of law and that private property may not be taken for a public use without just compensation.

Judge Munson said Section 3 of PL 11-105 provides taking of property of the plaintiff without due process of law as all interest earned on money deposited into the Superior Court for his benefit as part of the Hillblom probate proceedings was to be retained by the local court.

Citing a similar case in 1980, he ruled that the legislature nor the courts by judicial decree may characterize private money held temporarily by a court as “public money” with the intent to make some more money off it.

“Indeed, to enact a law allowing courts to take property for their own use from litigants appearing before them would be a betrayal of the very trust which society places in courts as neutral, independent [fora] for the resolution of the disputes,” said Judge Munson.

The lawsuit was filed in April by lawyer Bruce L. Jorgensen on behalf of his client after Superior Court Judge Pro-Tem Alex Castro ordered Mr. Hollman to defend claim on the interests earned from the Hillblom account.

The plaintiff had asked payment of all interests accrued on some $833,334 deposited by the judiciary which had been deprived on his ward because of PL 11-105. The law was signed by the governor in October 1999.

While the House of Representatives attempted last week to correct the questionable provisions by repealing them, the Senate failed to act on a bill before the deadline last June 4 under the 10-day grace period granted by Judge Munson.

Attorney General Herb D. Soll sought the immediate repeal to avoid penalty against the government, which he estimated to reach at least $5,000 in attorney’s fees and other costs.