Port GM initiates talks on $17M dispute

WHARF: The principal co-owner of Guam YTK Corp., Eduardo "Champ" Calvo, has acknowledged that “very informal discussions” have been held with the management of the Port Authority of Guam about the possibility of mediating the YTK dispute. The dispute arises from a botched agreement to develop Hotel Wharf. Post file photo

The principal co-owner of Guam YTK Corp. has acknowledged that “very informal discussions” have been held with the management of the Port Authority of Guam about the possibility of mediating the YTK dispute.

Attorney Eduardo "Champ" Calvo told The Guam Daily Post in a telephone interview that “the discussions have been very informal” and “just general and casual.”

“Mediation may be in the cards,” Calvo said, “but it depends on whether or not the board wants to go forward with trying to mediate the outstanding judgment, which is on appeal right now.”


He emphasized that no mediation has begun, and none can begin until the Port Authority board approves mediation to end the long-running dispute.

$17.1 million

Newly appointed Port Authority General Manager Rory Respicio said the mediation proposal will be on the agenda at the Port Authority board meeting today. He said he will ask the board to give him the authority "to look into any possibility of determining if it’s in the port’s best interest to continue litigation.”

Respicio said he reached out “informally” to the principal owner of YTK “to see if there was any opportunity to stave off a $17.1 million judgment that’s ticking at the rate of $900,000 a year in interest.”

Respicio said his contacting Calvo “in no way obligated” the Port Authority and “in no way spoke for the members of the Port Authority of Guam.”

Background

In December 2001, the Port Authority signed a 45-year lease with YTK, which was supposed to build a multimillion-dollar fisheries facility on the Port Authority-owned Hotel Wharf. The lease was submitted to the Legislature for approval, but senators never acted on it. YTK never built the planned fishing facility.

In July 2008, the Port Authority notified YTK that the lease was terminated. The original owners of YTK sold their interest to a group of investors, primarily EC Development, whose principal owner is Calvo. The company proceeded to file a lawsuit alleging the Port Authority had breached the contract by terminating the lease prior to its expiration in 2046.

In April 2016, an arbitration panel ruled in favor of YTK and calculated the damages based on the lease's value over 45 years. The panel decided the damages amounted to $12.7 million.

Coupled with attorneys' fees, the final amount came to about $14 million, plus 10 percent interest every year the balance went unpaid. The damage award now amounts to $17.1 million, Respicio stated.

'Highly inappropriate'

Port Authority of Guam former General Manager Joanne Brown countered that the damage award never should have been calculated on the basis of a 45-year lease. “The law is very clear ... the Port (Authority) cannot enter into a lease beyond five years without legislative approval,” she said.

Brown accused YTK of trying to gain financially from something it never truly invested in.

“All anyone has to do is go out and look at Hotel Wharf to see what investment was made by YTK to meet their commitment to any upgrades and improvements of a fisheries facility," she said.

“There is no investment there."

Brown also said any contact between Port Authority management and YTK without prior approval from the Port Authority board is “highly unethical.”

She said the Port Authority board has authorized management and legal counsel to appeal the YTK judgment to the Supreme Court of Guam, where a decision is now pending. Brown pointed out that the Guam Legislature filed a "friend of the court" brief in support of the Port Authority’s position, and then-Attorney General Elizabeth Barrett-Anderson also backed the appeal.


“For (Respicio) behind the scenes in a few short weeks to be engaged in any kind of plans to mediate this matter is highly, highly, highly inappropriate,” said Brown, adding the Port Authority board "has not authorized or sanctioned” any discussion of mediation.

Mediation on the agenda

“I will have to ask the board whether that’s still their position,” said Respicio.

The issue will be discussed by the board today in executive session because it’s an ongoing legal matter, he said. The vote will be taken publicly after that discussion.

Respicio, in response to Brown's comments, said, "The former general manager can say and do whatever she wants, but she’s long gone and she’s not going to be the one left holding the bag."

If the Supreme Court should uphold the decision by the arbitration panel and the judgment by the Superior Court, Respicio said, "It would mean that tariffs could increase and it’s going to impact every single container that comes through the Port Authority."

At what price?

If not $17.1 million, then at what price would YTK be willing to settle?

“I can tell you that from Day 1 we have always tried to resolve this issue amicably, reasonably and in the mutual best interest of both the Port (Authority) and YTK,” Calvo said. “Maybe now, with the change of administration and change of leadership, maybe it’s something the Port (Authority) is willing to do.”

But he declined to speculate on a settlement amount.

“First of all, there’s no offer. And second, I’m not going to commit one way or the other when there’s nothing that's out there to even consider," Calvo stated. “We’re open. If the Port (Authority) wants to try to resolve this, I think that would be the prudent thing to do.”