Rota Resort owner denies abandoning resort

The owner of Rota Resort & Country Club insists he has not abandoned the resort and is, in fact, planning to transform it into a world-class golfing destination that’s close to Asia.

In line with this, Rota Resort LLC and its owner, Hee Kyun Cho, through counsel Colin M. Thompson, are appealing to Public Lands Secretary Teresita A. Santos to reverse the decision of the Department of Public Lands’ Administrative Hearing Office dated Dec. 5, 2023.

In that decision, administrative hearing officer Ramon S. Dela Cruz denied Rota Resort’s appeal of DPL’s termination of its lease agreement over approximately 150 hectares of public land on Rota.

Dela Cruz had ruled that Rota Resort LLC’s failure to pay rent to DPL as required by the lease agreement was inexcusable, and so was Rota Resort’s failure to use the premises for 90 consecutive days. His ruling described this as effectively abandoning the leased premises.

DPL said that, based on its records, Rota Resort LLC owes DPL $101,277 in lease and interest fees for the period beginning July 1, 2020 to Nov. 30, 2020.

In Rota Resort’s and Cho’s appeal to Santos last Jan. 4, a copy of which was obtained by Saipan Tribune yesterday, Thompson said Dela Cruz erred in several ways.

Thompson said Dela Cruz erred in concluding that the force majeure clause does not apply to payment of rent or abandonment. Force majeure refers to an unforeseeable circumstance that hinders a party from fulfilling its part in a contract.

Thompson said Dela Cruz erred in determining that Rota Resort is no entitled to the benefit of the force majeure clause because it failed to establish the duration of the COVID-19 pandemic and that Rota Resort was required to pay DPL no later than Feb. 6, 2023, and could terminate the contract for default on March 8, 2023.

Thompson said Rota Resort definitively established that the pandemic was the proximate cause “in whole or in part” of Rota Resort’s failure to perform under the contract and Dela Cruz erred in deciding otherwise.

He said Dela Cruz erred in determining that the failure to notify DPL of the pandemic was a material breach of the provisions of Article 11 because DPL obviously had actual notice of the pandemic.

Thompson said Dela Cruz also erred in finding that the Rota Resort has been abandoned since July 2022 because the lease is “ambiguous” as to what constitutes abandonment.

The lawyer said Rota Resort is disappointed that Dela Cruz’s 23-page decision fails to address any of Rota Resort’s arguments regarding lease agreement or the continuing desire of Cho to invest on Rota.

“Indeed, the [Administrative Hearing Office] adopted the Office of the Attorney General’s proposed findings of fact and conclusions of law almost verbatim,” Thompson said.

He said as set forth in Rota Resort’s 22-page argument to AHO, Cho has worked with DPL for over 10 years and demonstrated his commitment to improving the property and to building a successful and prosperous business.

Thompson said Cho continued to pay his 70-person staff and successfully maintained the resort for 28 months into the pandemic.

“Mr. Choi maintains a vision for Rota as a world-class destination. He has not abandoned the Rota Resort or the people of Rota in any normal sense of the word,” he said.

Until DPL issued the termination letter dated March 8, 2023, DPL never even informed Cho that it had a “substantially different” interpretation of the land lease agreement and the force majeure clause, Thompson said.

Santos, as then acting DPL secretary, executed the DPL notice of termination and notice of violations on March 8, 2023.

Prior to the pandemic, Rota Resort paid its rent on time and had no problems with DPL.

Thompson said by letter to DPL dated May 22, 2020, Rota Resort indicated that, as a result of COVID-19, it was functionally closed—in the sense that it had no meaningful number of customers at the time—due to the lack of tourists.

He said Rota Resort missed its first rental payment to DPL in the quarter beginning July 2020.

Thompson said that, according to Cho, the resort continued to employ its 70 employees for two and a half years the pandemic started and lost approximately $100,000 a month.

He said Rota Resort could not pay its rent with a loan it received in May 2020 because the loan came with a condition that its employees had to be paid first.

The lawyer noted that the Rota Office of DPL’s July 2022 inspection report indicates that the resort was closed as a result of the pandemic and a “total lack of tourists” but noted that the hotel was “pretty well-maintained” at the time.

Thompson said approximately 16 months prior to DPL’s July 2022 inspection report, in December 2020, the Rota District Office of DPL issued the resort a notice of violations for failing to pay rent, breaching other terms of the lease, and alleging abandoning the premises.

He said Cho referred this letter indicating “malicious intent against him” to his then-lawyer, Robert T. Torres. Thompson said Torres responded promptly and raised the applicability of the force majeure clause due to the pandemic.

He said DPL, however, never responded to Torres’ letter and only addressed the issues when it terminated the lease more than two years later, on March 8, 2023.

Thompson said Rota Resort employed 70 people prior to the pandemic, including 25% to 30% local employees. He said Cho invested close to $50 million in the Rota Resort but has mostly lost money on it.

Thompson said Cho intentionally avoided direct communications with DPL after his lawyer agreed to handle the notice of violations, to avoid making any mistakes with respect to the legal process.

“Mr. Cho believes that tourists will come back to Rota eventually, and plans to renovate it, if DPL does not terminate his lease. He further plans to market the Rota Resort very aggressively,” Thompson said.

Colin M. Thompson