Dotts: CNMI govt still owes Pellegrino estate over $4M

The CNMI government still owes the estate of Anthony Pellegrino over $4 million and, with no provision for paying court judgments, the budget is in violation of the Commonwealth Constitution, according to Pellegrino estate counsel Michael Dotts yesterday.

In an interview, Dotts said the CNMI Constitution requires a balanced budget.

“Balanced budget does not mean you just spend all the money you have. Balanced budget means you have to take into account all your debts,” he said.

Pellegrino

Dotts pointed out that all these court judgments against the government are debts of the CNMI.

“They think they passed the budget, but they have not passed a balanced budget because there is no provision for paying judgments,” he said.

That means the budget is right now in violation of the Constitution.

“So there could be an action to try to, I guess, undo the budget because it’s not a balanced budget,” he said, adding that he believes the amount owed Pellegrino is not in this budget so they’re not getting any payment.

In 2013, then-attorney general Joey Patrick San Nicolas disclosed that the government’s outstanding and unpaid judgments and settlements have reached more than $27 million, excluding accruing interests. It was reported at that time that of the $27 million, over $5.9 million represents the amount the Department of Lands and Natural Resources owes Marine Revitalization Corp. and Pellegrino.

In 2010, the government’s debt to Pellegrino and his MRC had ballooned to $8.5 million.

The government’s debt, however, was reduced to $5 million after the CNMI Supreme Court took away about $3 million in interest. The high court ruled that judgments against the CNMI don’t accrue interest.

Pellegrino established MRC to build the $3.5 million Outer Cove Marina in the mid-1990’s. MRC and the government’s dispute began in 2001 after DLNR not only failed to bar commercial vessels from renting slip space at Smiling Cove but also actively solicited commercial lessees.

In 2005, DLNR agreed to a court judgment ordering it to pay $5.6 million to Pellegrino or MRC. DLNR did not comply with the order, resulting in three judgments in favor or MRC.

Pellegrino passed away in June 2013. A probate has opened for Pellegrino in the Superior Court.

Dotts said yesterday that one of the assets of Pellegrino’s estate is the judgment against the CNMI.

“We’re still hoping to collect on that judgment,” he said.

Dotts said the reason why the judgment is now only over $4 million is because the CNMI Supreme Court had decided that judgments against the government don’t earn interests.

“So if you get a judgment against the government, and they don’t pay you and if it is a normal breach of contract judgment it doesn’t earn interest,” he said.

Dotts said the government’s debt that reached over $8 million is now down to over $4 million because the interest was wiped out.

Dotts said the case went up to the CNMI Supreme Court because Superior Court Associate Judge David A. Wiseman had issued an order in aid of judgment and Pellegrino and MRC were collecting on themselves by selling tax credits.

The Supreme Court reversed the lower court and ruled that that judgment to Pellegrino and MRC must be paid by legislative appropriation.

“You sue the government, you go through all the process, you get a judgment and the government can ignore you and doesn’t have any increase in liability,” Dotts said.

On collection efforts, Dotts said they are talking with the government about a tax credit program as the governor could do a tax credit program.
Otherwise, he said, payment requires a legislative appropriation.