IN THE SUPERIOR COURT OF GUAM 2
3 MAEDA PACIFIC CORPORATION, )
,I
)
4 Plaintiff, ) CIVIL CASE NO. CV0135-04 5 )
vs. ) DECISION AND ORDER 6 )
GOVERNMENT OF GUAM and GUAM )
7 HOUSING CORPORATION, )
8 )
Defendants. )
9 ) 10
II INTRODUCTION
12 This matter came before the Honorable Judge Michael J. Bordallo on September 28, 2011
13 by reassignment. The Plaintiff filed a motion to approve settlement and the parties stipulated t
14 submit the matter on the briefs and without oral argument on July 13,2011. Attorney Lawrenc
15 J. Teker represented the Plaintiff, Assistant Attorney General Philip D. Issac appeared on behal
16 of Defendant Government of Guam, and Attorney Cynthia V. Ecube represented Defendan
17 Guam Housing Corporation. Having considered the parties' briefs and the applicable law, th
18 Court now issues the following Decision and Order granting Plaintiff's motion to appro v
19 settlement.
20 BACKGROUND
21 In this public contract matter, Plaintiff Maeda Pacific Corporation ("Maeda") seek
22 payment for infrastructure construction of the Lada Estates public housing project agains
23 Defendants Government of Guam ("Government") and Guam Housing Corporation ("GHC"),
24 autonomous agency of the Government.
25 In 1991, the Guam Legislature passed an act to develop and sell the Lada Estates
26 affordable housing. See Guam Pub. L. No. 20-225. Pursuant to the act, the Governor transferr
27 approximately forty-six (46) acres of government land to the GHC by grant deed on June 24
28 1991. Id. at 2 see a/so (Plaintiff's Reply Memorandum, Exhibit "1 ", JuI. 28,2011.)
Maeda won the public bid to construct the Lada Estates' infrastructure and signed 2 contract with the Defendants in August of 1997. (Declaration of Jose P. Morcilla Jr., "Exhibi 3 2", Mar. 5,2004.) Maeda completed construction of the Lada Estates infrastructure pursuant t 4 the contract and obtained a certificate of substantial completion from the Department of Publi 5 Works on July 24, 1998. Id. at "Exhibit 5". Thereafter, GHC could not find a contractor to buil 6 the Lada Estates homes despite legislative attempts to revive the project. See e.g. Public La 7 Nos. 24-8'1: 14 and 25-116:5. The Lada Estates project was not finished and Maeda was not pai 8 for its performance of the infrastructure contract. 9 Maeda filed a government claim in 2002 and the present civil action in 2004. On Marc \0 8,2011, the Court granted summary judgment of Maeda's claims against the Government for th II costs of off-site infrastructure construction. (Decision and Order, Mar. 8, 2011.) On March 21 12 2011, Maeda and GHC filed the present motion to settle Maed3's remaining claim against GH J3 for the costs of on-site infrastructure construction, alleged to be more than seven (7) millio 14 dollars. The settlement proposes for GHC to convey the Lada Estates property to Maeda vi 15 grant deed with a condition that Maeda build and sell affordable housing units within six (6 16 years and pursuant to Public Law Nos. 20-225,24-81,25-116 and 30-390 under the penalty 0 17 reverter to GHC. (Motion to Approve Settlement, Exhibit 1, Oct. 11,2010.) The agreement w 18 executed with the understanding that it shall be submitted to the Superior Court for approval an 19 for dismissal with prejudice of the claim against GHC with the parties to bear their own cos 20 and fees. Id. 21 On July 20, 2011, the Government filed an opposition to the motion to appro v 22 settlement for the following reasons: 1) the Court has no jurisdiction to approve this governmen 23 land transfer without legislative approval; and 2) the settlement is in violation of procuremen 24 law insofar as it effectively awards the home construction contract to Maeda. 25 DISCUSSION 26 I. Standing 27 Standing is a threshold jurisdictional matter that must be addressed before the merits of 28 dispute. Guam Imaging Consultants, Inc. v. Guam Mem'/ Hosp. Auth., 2004 Guam 15, n 17 j 19. Although Guam law does not address the issue of standing to object to a settlement, "th 2 view of other courts is that a non-settling defendant, in general, lacks standing to object to 3 partial settlement." Waller v. Financial Corp. of America, 828 F.2d 579, 582 (9th Cir. 1987 4 (citing In re Viatron Computer Systems Corp. Litigation, 614 F.2d 11, 14 (l st Cir. 1980); In r 5 Beef Industry, 607 F.2d 167, 172 (5th Cir. 1979». This rule encourages the voluntary settlemen 6 of lawsuits. Id. at 583. 7 In this case, Maeda built the Lada Estates infrastructure and filed claims against th 8 Government and GHC for payment. The claim against the Government for the off-site costs wa 9 successful on summary judgment, and Maeda now seeks to settle its claim against GHC for th 10 on-site costs. The Government is a non-settling defendant who generally lacks standing to objec II to the partial settlement between Maeda and GHC pursuant to the reasoning of the Federa 12 Circuit Courts of Appeal. 13 However, an exception is made to allow a non-settling defendant to object, "where it ca 14 demonstrate that it will sustain some formal legal prejudice as a result of the settlement.' 15 Waller, 828 F.2d at 583 (citing Quad/Graphics Inc. v. Fass, 724 F.2d 1230, 1233 (7th Cir 16 1983». Under this exception, a party suffers plain legal prejudice and has standing to object t 17 any settlement that strips it of a legal claim or infringes upon a contractual right. Id. See als 18 Agretti v. ANR Freight System, Inc., 982 F.2d 242, 247 (7th Cir. 1992). For example, Guam la 19 provides that a joint-tortfeasor may be prevented from entering a settlement agreement whic 20 bars claims of contribution by non-settling parties. See 7 GCA §§ 24605 and 24606. A part 21 does not suffer plain legal prejudice and does not have standing to object to a settlement whic 22 causes factual prejudice, such as the prospect of a second lawsuit. Quad/Graphics, 724 F.2d a 23 1233. 24 In this case, the Government opposes Maeda and GHC's settlement based upo 25 assertions that Legislative approval or procurement procedures are necessary. The Governmen 26 does not allege that it suffers any legal prejudice by the settlement, and the settlement does no 27 strip the Government of a cause of action or infringe upon a contractual right of the Governmen 28 in this matter. The Government may suffer the prospect of a second lawsuit or proceed in against the performance of the settlement, but this factual prejudice does not confer standing t 2 object to a settlement agreement. See Quad/Graphics, 724 F.2d at 1233. The Government doe 3 not suffer plain legal prejudice and it does not have standing to object to the settlement as a non 4 settling party. For this reason, the Court shall not consider the objections of the Government. 5 II. Judicial Approval of Settlement 6 Guam law does not exact a standard for settlement approval, and a court should no 7 ordinarily become involved in the settlement of a civil dispute between private parties. See Us. 8 v. City of Miami, Fla., 614 F.2d 1322, 1330 (8th Cir. 1980). Indeed, the Guam Housin 9 Corporation has the power, "to settle and adjust claims held ... by other persons or parties agains 10 [it]," without judicial approval. 12 GCA § 4104(k). However, where important public interest 11 are involved, judicial review may be appropriate. See e.g. City of Miami, 614 F.2d at 133 12 (citing examples in federal law where judicial approval of settlement is required). \3 In this case, Maeda and GHC move the Court to review and approve their settle men 14 agreement. Assuming arguendo that the settlement between Maeda and GHC, as an autonomou 15 agency of the Government, involves important public interests, the Court shall address the merit 16 of the motion for approval. 17 Where a court is required to approve a settlement agreement, it must generally determin 18 whether the agreement is adequate, fair, reasonable or equitable. See City of Miami, 614 F.2d a 19 1330-1331. The judicial review of a settlement agreement is an exceptional situation, and "tria 20 judges have been told that absent fraud, collusion, or the like they should be hesitant to substitut 21 their judgment for that of experienced counsel." Id. citing Cotton v. Hinton, 559 F.2d 1326 (5t 22 Cir. 1977). 23 The parties do not raise allegations of fraud or collusion in this case, and the Court i 24 inclined to rely upon the allegations of experienced counsel that the agreement is adequate and i 25 the public interest. Viewing the proposed settlement agreement as a whole, it appears to provid 26 an adequate, fair and reasonable compromise. The settlement gives Maeda the Lada Estates t 27 develop and sell, releases GHC from its liability for the costs of on-site infrastructure, an 28 attempts to provide affordable housing pursuant to public law and within six (6) years unde penalty of reverter. The agreement is the result of an arms-length negotiation betwee 2 competent and experienced counsels, and it aims to resolve the underlying problem b 3 completing the Lada Estates affordable housing project. For all of these reasons, the motion t 4 approve settlement agreement shall be granted. 5 It is noteworthy that these proceedings have called attention to the possible problems tha 6 GHC may encounter in the performance of the settlement agreement. The Government allege 7 that GHC cannot convey the Lada Estates property to Maeda without legislative or procuremen 8 approval. The Government does not allege that such approval cannot be obtained, and the Cou 9 does not find that the settlement agreement is impossible to perform. However, Maeda and GH IO have been notified of the quality of their bargain and of the quality of the land title conveyanc II which they intend to make. 12 III 13 III 14 III 15 CONCLUSION 16 Based upon the foregoing, Plaintiff Maeda Pacific Corporation's Motion to Approv I7 Settlement is hereby GRANTED. 18
19 SO ORDERED this -h day of January, 2012.
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