GWA on verge of losing treatment plant; Calvo law firm hired to appeal court decision

Guam Waterworks Authority – and its fiduciary responsibilities to the success of the Guam military buildup – has found itself in a bigger vat of sewer than its Northern District Wastewater Treatment Plant at Ukudu, Dededo. According to a court ruling, not only does a private company have an ownership interest in the land, where the NDWWTP sits, GWA might not have any right to use or occupy that land at all.

“There is an issue of fact whether [GWA has] a right to use and occupy Lot 10184-7,” Judge Elyze Iriarte wrote in her November 30, 2021 decision and order denying all of GWA and the government of Guam’s motions in the single-most important court dispute affecting the military buildup on Guam. Lot 10184-7 is the land at the Harmon Annex in Ukudu (along the road to Two Lovers Point), where the NDWWTP sits and is operated by GWA.

The expansion and operation of the NDWWTP has been so significant to the military buildup, it remains the only civilian infrastructure project associated with the buildup funded by the government of Japan, as part of the security agreement between Japan and the U.S. that brought about the buildup on Guam.

According to land records, which Ms. Iriarte recognized and cited in her 26-page decision, Core Tech International (CTI) purchased that property, among several others surrounding it, from Younex in 2014.

The decision is part of an ongoing case before Ms. Iriarte’s court – GovGuam and GWA v. CTI. Former Guam Department of Land Management director Michael Borja brought the suit in December 2018, seeking to quiet title on the NDWWTP land in favor of GWA by amending a certificate of title that showed Younex owned the property (CTI then acquired the property after auction upon foreclosure, as conveyed in a May 4, 2014 mortgagee’s deed). A quiet title action is defined by Cornell Law as, “A special legal proceeding to determine ownership of real property. A party with a claim of ownership to land can file an action to quiet title, which serves as a sort of lawsuit against anyone and everyone else who has a claim to the land.”

CTI, which before the case did not make an issue out of GWA operating the NDWWTP on its property, counterclaimed in the suit. The company is seeking declaratory judgment that it owns the property, inverse condemnation for both the lack of just compensation and the devaluation of CTI’s surrounding properties caused by the plant, and for GWA’s encroachment onto the lot adjoining the plant.

Judge: GWA misses the mark

Over the course of the case, both GovGuam (represented by the Office of the Attorney General) and GWA have filed motions for summary judgment, claiming among other things that CTI does not own the property and, therefore, has no standing to bring its counterclaims.

Judge Iriarte vehemently disagreed.

“The Court first turns to Counterclaim Defendants’ arguments regarding Core Tech’s ownership interest in the property. GWA argues that Younex did not have any ownership interest in Lot 10184 when Core Tech foreclosed on the mortgage. On that basis, GWA contends that Core tech did not acquire any property rights at the subsequent foreclosure sale. This argument, however, misses the mark.

“The mortgage that Core Tech owned and held encumbered the property that Younex conveyed to HL Corp. and HL Corp. took the property subject to that encumbrance. Younex remained obligated under the Mortgage and defaulted on its obligation. As a result, Core Tech judicially foreclosed on the property when it filed the Notice of Sale Under Mortgage. A foreclosure sale of the property was then held, pursuant to the power of sale in the Mortgage, to satisfy Younex’s obligation to Core Tech. Core Tech obtained its interest in the property when it placed the winning bid at the foreclosure sale. The Mortgagee’s Deed memorializes Core Tech’s property interest from the foreclosure sale.

“Based on the power of sale in the Mortgage, the Notice of Sale Under Mortgage, and the Mortgagee’s Deed, the Court finds that Core Tech holds an ownership interest in the property and. has standing to bring its claim. Accordingly, the Court DENIES GWA’s Motion for Summary Judgement on this basis.”

The judge’s decision and order, already forceful in its plain reading, was punctuated with a rudimentary lesson and reminder to the lawyers for the OAG and GWA about one of the most commonly-used amendments to the U.S. Constitution:

“The final clause of the Fifth Amendment provides: ‘[N]or shall private property be taken for public use, without just compensation.’ U.S. Const. amend. V. This right has been extended to Guam through the Organic Act. See 48 U.S.C.A. §1421b(f) (‘Private property shall not be taken for public use without just compensation.’). ‘The Takings Clause is a limitation on governmental power, and is intended to prevent the government from forcing some people alone to bear public burdens, which in all fairness and justice, should be borne by the public as a whole.’ Cepeda v. Gov’t of Guam, 2005 Guam 11 ¶ 20. As its language indicates, the Takings Clause does not prohibit the taking of private property, but instead prohibits taking without just compensation.”

She then went on to describe how inane the government and GWA’s arguments that CTI did not have any standing to claim inverse condemnation were.

Bordallo, proven wrong by judge’s order, now silent

Miguel Bordallo

On September 7, 2021, at the onset of Kandit’ coverage of this Ukudu land scam perpetrated by the government against CTI, Kandit asked GWA general manager Miguel Bordallo “Why wouldn’t GWA/CCU simply pay CoreTech for the cost of condemnation of the land, rather than engage in this protracted litigation that ended up costing GovGuam the property based on the reversionary clause of the deed?”

The following day, Mr. Bordallo answered, in part, “Coretech has not ever and does not now own the land upon which the NDWWTP exists and is not entitled to any payment for it.”

Following Judge Iriarte’s decision and order proving Mr. Bordallo wrong in a court of law, Kandit revisited Mr. Bordallo’s statement and asked him Wednesday whether his agency has, as mandated by bond covenants, disclosed the major issues incidental to the judge’s decision and order.

GWA has, over the past two decades, floated hundreds of millions of dollars in revenue bonds to a plethora of bondholders, or what GWA would consider its creditors. These creditors loaned GWA money on conditions placed into bond covenants through each bond’s indenture.

One such section of the covenant found in the indentures is the following language: “Subject to any rights of the United States of America, [GWA] shall keep the System and all parts thereof free from judgments, from mechanics’ and materialmen’s liens and from all liens and claims of whatsoever nature or character, to the end that the security provided pursuant to this Indenture may at all times be maintained and preserved, and the [GWA] shall keep the System and the Revenues free from any liability which might hamper the Authority in conducting its business or operating the System.”

Kandit asked Mr. Bordallo:

  1. Have you informed your creditors (bondholders) of this decision and order, as is required under the bonds covenants?
  2. Has the bond trustee taken any action against GWA?
  3. Has bond counsel advised whether this order and decision may result in a deleterious affect on the credit of GWA or the government of Guam as a whole?

Mr. Bordallo has not answered any of Kandit’s questions as of the publication of this story.

GWA seeks Supreme Court intervention before Iriarte provides crucial declaratory judgment

The disclosure of the now-stronger CTI claim and the possibility creditors will construe the Iriarte decision as a judgment or lien (she declared CTI’s ownership interest in the NDWWTP land and questioned whether GWA has any legal right to even use or occupy that land) has weighed so heavily on the water agency that it has retained the law firm of Calvo, Fisher and Jacob to appeal Ms. Iriarte’s decision and order to the Guam Supreme Court.

On December 31, 2021, Mr. Bordallo verified a Petition for Permission to File an Interlocutory Appeal before the Guam Supreme Court prepared by attorney Rodney Jacob of the Calvo firm; and on January 3, Calvo, Fisher, and Jacob LLP entered its appearance by filing an appeal of the judge’s November order. The move is extraordinary, in that GovGuam and GWA v. CTI has yet to be decided in full by Ms. Iriarte in the Superior Court of Guam.

In its eleventh-hour pitch to salvage its thus-far inadequate and wasteful legal pleadings, GWA wants the Supreme Court to reverse Ms. Iriarte’s orders on the allegation that the judge misapplied the law in determining that CTI has an ownership interest in the NDWWTP land, and that the judge erroneously applied the statute of limitations.

The firm’s 19-page petition reserves the same curt and unyielding stance Mr. Bordallo portrayed in his September responses to Kandit. Among these, was the declaration, “Coretech missed the statute of limitations for actions against the GWA and Government of Guam for inverse condemnation.”

Ms. Iriarte, in her November decision and order, was just as curt: “Core Tech has not violated the statute of limitations.”

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