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CDA awarded $800K in Tinian school case
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Posted on Aug 29 2008
A jury yesterday found the Public School System owes the Commonwealth Development Authority $804,000 stemming from a lawsuit over the building of Tinian High School.
Earlier in the week, the same jury found Guerrero Brothers, Inc. owed Century Insurance Co. Ltd. $170,960.49.
“When you walk out with positive money, that’s great,” said Steve Pixley, lawyer for CIC.
It was a very complex case, and the jury did a great job looking at the facts, he added.
In 1993, PSS entitled GBI $3.85 million for completion of Tinian High School. To fund the project, GBI applied for a loan from CDA, which refused to give the loan. Instead, CDA decided to guaranty a loan GBI received from the Bank of Saipan. The Bank of Saipan agreed to a $500,000 revolving line of credit and a $300,000 loan. CDA and two of GBI’s directors guaranteed the line of credit and loan, according to court documents.
On Dec. 17, 1993, CDA and the Bank of Saipan executed a guaranty of the loans in the amount of $800,000.
As GBI fell behind schedule on the project and realized it would not meet the January 1995 deadline, PSS gave GBI a seven-month extension to finish the project. To cover the expenses from the extension, GBI asked the Bank of Saipan to increase the line of credit from $500,000 to $1.3 million in May 1995. The bank refused without CDA’s guaranty. A new guaranty was reached covering the $1.3 million loan that would expire on Jan. 7, 1996.
GBI then asked for another extension, which PSS granted. GBI received another guaranty from the bank given CDA’s guaranty. The third guaranty expired on July 8, 1996.
More than three months after the third guaranty’s expiration, the Bank of Saipan demanded the money. GBI sent the bank a letter, saying the bank should receive the outstanding debt from CDA, its “guarantor,” according to court documents.
On Nov. 27,1996, the Bank of Saipan acknowledged receipt of more than $1 million from CDA. The bank also retained a 10 percent interest in the debt. CDA sent a notice of default to GBI, stating that guaranties secured by the mortgages were in default. When CDA attempted to collect the money, GBI argued the guaranties expired and were not enforceable, according to court documents.
