World Resort faces another battle—against own lawyers

Faced with legal battles on several fronts, the owner of Saipan World Resort got a breather yesterday when it obtained a favorable ruling from the federal court in its case against its own attorneys who withdrew from a previous case.

Two months ago, World Corp. was found liable by a federal jury to pay $136,665 in damages to a terminated executive. With some legal issues still pending in court as well as the forthcoming retrial in April, the hotel owner has been tangled in a battle with its own attorneys who had withdrawn from the case.

But yesterday, World Corp. obtained a favorable ruling from the federal court against its Guam-based attorneys, David J. Lujan and Ignacio C. Aguigui.

U.S. District Court for the NMI Chief Judge Alex R. Munson reconsidered his earlier order issued on Jan. 19,2006 that granted the withdrawal of Lujan and Aguigui from the case. But Munson allowed World Corp.’s third counsel, acting Attorney General Matthew Gregory, to withdraw from the case.

Yu Suk Chung, through counsel Colin Thompson, had sued World Corp. in 2004 for breach of written and oral contract, fraudulent misrepresentation, wrongful discharge, and intentional or negligent infliction of emotional distress.

In December 2005, the jury found that Chung was able to prove—via a preponderance of evidence—all the elements of his breach of contract claim against World Corp.

There was no decision on the fraudulent misrepresentation claim because the jurors were not unanimous in their verdict.

Thompson and former attorney general Robert T. Torres represented Chung in the trial. Attorneys Lujan, Aguigui, and Gregory served as counsel for World Corp.

On Jan. 17, 2006, Lujan, Aguigui, and Gregory filed in court a notice to withdraw and an emergency motion for an order discharging them as counsel and staying the proceedings.

According to Lujan and Aguigui, their agreement to represent World Corp. ended in early December 2005 when the verdict came out. They said that since then, despite continued discussions and negotiations with World Corp., no further agreements have been reached between them and the corporation to govern their continued representation.

Lujan and Aguigui added that they are unable to continue their representation of World Corp. “in the absence of an engagement agreement to govern such representation.”

Gregory underscored the need to withdraw from the case, citing that he was appointed as the acting Attorney General by Gov. Benigno Fitial and therefore unable to continue representing World Corp.

World Corp. objected to the withdrawal.

On Jan. 19, 2006, the federal court granted, without a hearing, the lawyers’ motion to withdraw.

World Corp. decided to tap attorney Mark B. Hanson and Bruce Berline to assist the corporation in requesting the court to reconsider its Jan. 19 order.

Hanson asserted that World Corp. is not in breach of any obligation to the Lujan firm. He said there has been no verdict on the fraudulent misrepresentation charges so the case in which Lujan’s firm agreed to represent World Corp. is ongoing.

Arguably, Hanson said, even if there was a full verdict, the scope of the Lujan fee agreement covers post-trial motions and any other proceedings short of an appeal without additional expense to World Corp.

Hanson added that the withdrawal of Lujan and Aguigui in light of the pending motions and the fact that a retrial is approaching, and the fact that World Corp. has already paid for the representation, “is not possible under the Model Rules of Professional Conduct, the Restatement of the Law Governing lawyers and basic principals of contact law.”

Judge Munson heard the motion for reconsideration yesterday.

Munson denied the motion for reconsideration of the court’s order granting Gregory’s motion to withdraw as counsel. But the judge said upon reconsideration, he is denying without prejudice Lujan’s and Aguigui’s motion to withdraw as counsel.

Munson said the court has the inherent power to reconsider its decision if the court is presented with newly discovered evidence, the court committed clear error or the initial decision was manifestly unjust, or if there is an intervening change in controlling law.

In this case, Munson said, the court was presented with newly discovered evidence that World Corp. had objected to its attorneys’ motion to withdraw and had asked its attorneys to request a hearing.

Furthermore, the judge noted, while the court was told that the fee agreement had terminated at the December verdict, the court was not apprised of the dispute between Word Corp. and the attorneys over whether the engagement agreement had in fact been terminated.

“Had these facts been disclosed during the pendency of the motion to withdraw, the court may not have found that there was good cause to support the motion to withdraw,” Munson said.