MPLA sues Verizon, wants it evicted

Negotiations between Verizon and the Marianas Public Lands Authority have resulted in a deadlock, prompting the MPLA to file a civil suit against Micronesian Telecommunications Corp. and its new owner, Pacific Telecom Inc., seeking to evict the companies from their main Susupe offices and other facilities.

The MPLA and its board also asked the Superior Court for still unspecified damages for Verizon’s use of public lands where the telecom firm’s cables are buried. They sued Verizon for alleged violation of the Fiber Optic Act by charging interisland tolls since it began providing services between Saipan, Tinian and Rota over the fiber optic cables in 1997. Verizon only phased out interisland tolls when PTI took over MTC on Sept. 20 this year.

In a 50-page complaint, the MPLA and its board enumerated 18 causes of action seeking compensatory and punitive damages against MTC and PTI. The suit accused Verizon of breaching its leases of public lands that include the 5,728-square meter Susupe facility. The MPLA contends that Verizon failed to remit to it the total rental amount due under the lease, which expired on June 30, 2000.

The complaint stated that Verizon and the MPLA entered into a 15-year lease agreement for the Susupe land in 1980, which entails an option for the telecom firm to extend the lease for one additional term of five years. Verizon opted to extend the lease by five years as allowed by the lease agreement.

MPLA attorneys Matthew Gregory and Ramon Quichocho said, though, that Verizon was a holdover tenant from July 1, 2000 to June 30, 2005. They said that the lease could not be extended for more than 15 years without the approval of three-fourths of the members of the CNMI Legislature. No new lease has been executed between the MPLA and Verizon regarding the Susupe public land.

“The Susupe lease is constitutionally expired because MTC has occupied the Susupe premises for over 25 years without obtaining the approval of MPLA for an extension or renewal and the approval of the Commonwealth Legislature for an extension,” the MPLA attorneys said, adding that Verizon has been occupying the Susupe facility illegally.

The attorneys also enumerated four other land leases that were allegedly breached by Verizon. The leases pertain to public lands in As Gonno, Garapan and Kagman, each measuring 929 square meters, and a 2,090 square meter lot in Sinapalu, Rota. The MPLA and Verizon executed the lease agreements on the first three properties in 1990, while they agreed on the Sinapalu lease in 1992. All the leases have a term of 25 years and entail an option for Verizon to extend the term for an additional 15 years.

MPLA’s attorneys pointed out that those leases provided that Verizon should pay the public agency any surplus resulting from subtracting the minimum annual rental from 3 percent of the gross receipts within 45 days from the end of the quarter, in addition to the guaranteed minimum annual rental. Gross receipts relate to any revenue derived by Verizon from its services in connection with the use of the leased public lands.

“Defendants had no intention of honoring its promises to pay a percentage of its gross revenues at the time said promises were made,” the MPLA attorneys said. “MTC was required to furnish financial statements and schedules of gross receipts indicating sources and deductions in support of the gross rental receipts requirement, but [it] has wholly failed, refused, and neglected to account or pay over to [the MPLA] the proceeds of such account.”

The lease agreements also required MPLA’s approval to any lease assignment. The attorneys said the MPLA had no consent to the assignment of the leases from MTC to PTI, when the latter company acquired the former’s outstanding stocks last Sept. 20.

The MPLA also wants Verizon to pay for public lands easement for buried cables, from which no payment has allegedly been made by the telecom firm to the public corporation since the 1980s.

The MPLA noted that Verizon’s telecom franchise had required it to pay $2.50 in per-telephone-pole charge beginning Oct. 22, 1976, in addition to franchise fees. When Verizon began burying cables underground, it avoided those charges.

“Since MTC buried its cables, MTC has not paid MPLA…for the use of Northern Marianas descent public lands to bury [its] cables,” the attorneys said. “Defendants knew that the public lands belong to the Northern Marianas descent and that defendants did not have permission from [the MPLA and its board] to use [them].”

The MPLA also sued Verizon for alleged violation of the Fiber Optic Act of 1996. The law allowed Verizon to install and operate a fiber optic cable subject to certain conditions. One of those conditions requires Verizon to provide interisland services on a “non-discriminatory basis,” which allegedly mandates the telecom firm not to charge interisland tolls.

The attorneys said Verizon only reduced the interisland toll rate from 25 cents per minute to 15 cents on May 15, 1997 and removed the charges only upon PTI’s recent takeover of the telecom firm. They said the CNMI government has given MTC a notice of violation since Aug. 22, 1997.

“More than 30 days have lapsed since written notice was provided to MTC of its violation of the terms of the right-of-way, but MTC has only removed or cured such breach on or about Sept. 20, 2005,” they said.

Before the filing of the lawsuit, MTC and PTI had been negotiating with the MPLA regarding the unsettled issues. The MPLA reportedly demanded the payment of $2.1 million from Verizon, but the company apparently refused to make that payment. The MPLA did not say how much was Verizon’s settlement offer, if any.

The suit came about even as PTI announced the inclusion of former CNMI Chief Justice Jose Dela Cruz in Verizon’s negotiating panel.