Supreme Court Grants GIAA/Lotte Request for Deletion of Disputed Statements, But Rejects Bid for Sanctions Against DFS

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Guam – In the case of  DFS Guam v GIAA/Lotte,  the Guam Supreme Court has reversed the lower court and ordered the trial court to delete disputed statements, but  the high court upheld the lower court’s decision not to impose sanctions against DFS for bringing the lawsuit against Lotte and the Airport Authority.

The statement in dispute was made by Superior Court Judge Michael Bordallo who on July 19 last year dismissed DFS’s complaint because he concluded that the Superior Court  “lacked subject matter jurisdiction” because “DFS had failed to exhaust its administrative remedies.”

READ the decision in DFS v GIAA/Lotte HERE

But after reaching that conclusion Judge Bordallo also stated:

“The court’s review of the arguments, assertions, rules and revelations made by the parties reveals an apparent administrative duty to impose the automatic stay
mandated by Section 5425 of Title 5 of the Guam code. At the hearing the Parties conceded to the timeliness of the Plaintiff’s last two protests. However such an
action is not before this court. Neither is the question of whether a party, entitled to an automatic stay pursuant to 5425, may avail itself of the courts to enforce the stay by way of writ.”

The Airport Authority and Lotte separately filed a motion to reconsider, and a motion to delete that language. But the trial court denied the Airport Authority’s motion for reconsideration and Lotte’s motion for correction of the language.

However in its decision, the Guam Supreme Court said it was “clear error for the trial court to make statements regarding the merits of the dispute” after the court had already “determined it did not have jurisdiction to hear the case.”

The Guam Supreme Court “reversed and ordered the trial court to delete the disputed statements from its order.”

Lotte and the Airport Authority also argued that the trial court should have imposed sanctions against DFS, because its argument for jurisdiction was frivolous.

The Supreme Court disagreed concluding that “trial courts are afforded broad discretion in deciding whether to sanction.  The court examined DFS’s argument for jurisdiction as well as the trial court’s order denying sanctions and found no abuse of discretion.”

The opinion was authored by Presiding Justice F. Philip Carbullido and joined by Justice Katherine A. Maraman and Justice Pro Tempore Alberto Tolentino.

READ the release from the Guam Judiciary below:

FOR IMMEDIATE RELEASE – June 2, 2014 – Today, the Supreme Court of Guam, in an opinion authored by Presiding Justice F. Philip Carbullido and joined by Justice Katherine A. Maraman and Justice Pro Tempore Alberto Tolentino, reversed in part and affirmed in part in DFS Guam L.P. v. A.B. Won Pat International Airport Authority, Guam and Lotte Duty Free Guam LLC, 2014 Guam 12.

In a contract dispute involving DFS Guam L.P., Lotte Duty Free Guam LLC, and the A.B. Won Pat International Airport Authority (“Airport Authority”), the Superior Court dismissed for lack of subject matter jurisdiction.  The court found that DFS Guam had not exhausted its administrative remedies as it was required to do before seeking judicial review.  After finding that it had no jurisdiction, the trial court made statements pertaining to the timeliness of DFS’s administrative complaints.  Finally, the trial court denied Lotte and the Airport Authority’s motion for sanctions against DFS.  

Lotte and the Airport Authority appealed the trial court statements regarding timeliness as well as the denial of their motion for sanctions.  Lotte and the Airport Authority argued that the trial court had no authority to make the statements, because it lacked subject matter jurisdiction to address the merits of the case.  The Supreme Court agreed.  The court held that once the trial court determined it did not have jurisdiction to hear the case, it was clear error for the trial court to make statements regarding the merits of the dispute.  Following this holding, the court reversed and ordered the trial court to delete the disputed statements from its order.

Lotte and the Airport Authority also argued that the trial court should have imposed sanctions against DFS, because its argument for jurisdiction was frivolous.  The Supreme Court disagreed.  The court noted that trial courts are afforded broad discretion in deciding whether to sanction.  The court examined DFS’s argument for jurisdiction as well as the trial court’s order denying sanctions and found no abuse of discretion.  

Accordingly, the Supreme Court affirmed the trial court’s denial of sanctions.