Court junks suit vs hotel

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Posted on Nov 03 2005
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The Superior Court dismissed Wednesday the lawsuit by the Guerrero and Tenorio shareholders of Hafa Adai Hotel against the former prospective buyers of the hotel.

But even though Associate Judge Juan T. Lizama partially dismissed the suit, it remains pending against the other defendants in the case—the companies owning the hotel and their majority shareholders.

However, the judge ruled that the dismissal of the case in favor of defendants Morgan Stanley Japan, Ltd. and Marianas Holdings, LLC could be re-filed if the Guerrero and Tenorio shareholders wish to do so.

Businessman Juan T. Guerrero, Jesus T. Guerrero, Carmen Guerrero Borja, Guerrero Family Trust, Jose C. Tenorio Trust, AJT Trust, and the estate of Santiago C. Tenorio have filed the civil action against Saipan Hotel Corp., which operates the Hafa Adai Hotel, and its parent company, Pacific Development, Inc. The suit also impleaded Kinki Nippon Tourist, Inc., PDI’s majority shareholder, and SHC board secretary Pedro J.L. Igitol as co-defendants.

The Guerrero and Tenorio shareholders filed the suit sometime in late 2004 to prevent any action that would divest SHC of its ownership of the Hafa Adai Hotel. The court noted that KNT sold the hotel to another entity other than Morgan Stanley and Marianas Holdings after the filing of the suit.

SHC, a CNMI corporation formed in 1967 by CNMI residents, does business as the Hafa Adai Hotel. SHC is a subsidiary of PDI, which owns 79 percent of SHC’s common voting stock. The plaintiffs own the remaining 21 percent as minority shareholders. KNT, meanwhile, owns 100 percent of SHC’s preferred, non-voting stock, and manages the hotel.

KNT also owns 60 percent of the voting stock of PDI, the largest asset of which is the SHC stock. The minority shareholders own the remaining 40 percent of PDI.

Among several causes of action, the suit accused the defendants of diluting the plaintiffs’ shares in SHC and PDI. But Lizama said the plaintiffs did not point out that Morgan Stanley and Marianas Holdings were organized under CNMI laws. The judge said the cause of action does not apply to Morgan Stanley, a company registered in Japan and the Cayman Islands, and Marianas Holdings, a Delaware company.

But the court said that Morgan Stanley and Marianas Holdings could be held liable for alleged participation in the purported commission of tort by their co-defendants.

But the judge went ahead in dismissing the suit against Morgan Stanley and Marianas Holdings, saying that the complaint relative to those defendants contained mere conclusory allegations.

The judge clarified that the plaintiffs could refile the suit against Morgan Stanley and Marianas Holdings if they produce sufficient facts to support their claim.

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