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The Honolulu Advertiser
Posted on: Thursday, March 4, 2010

Saipan hotel investors file amended complaint against Carlsmith Ball

By Gaynor Dumat-ol Daleno
Pacific Daily News

Members of three Saipan families who were minority shareholders of Saipan Hotel Corp. and Pacific Development Inc. filed an amended complaint in the Northern Marianas Superior Court against their former law firm, Honolulu-based Carlsmith Ball.

The lawsuit alleges the local shareholders' shares in the Hafa Adai Beach Hotel essentially lost value in a transaction that allegedly benefitted a large Japanese company.
In a statement, the Carlsmith Ball law firm expressed its disappointment with the plaintiffs' filing of the new complaint.
"The law firm has served the community of Saipan for the past 24 years and has come to know the Tenorio, Guerrero and Borja families. Carlsmith respects each of them," according to the law firm.
"Carlsmith strongly denies that it was involved in any wrongdoing. It intends to litigate this case aggressively and expects to prevail at trial," according to the law firm.
The suit, an amended version of what was initially filed in July 2009, asks for general and punitive damages of more than $25 million.
"We basically lost everything with respect to the hotel and Carlsmith is responsible," one of the plaintiffs, Herman T. Guerrero, said in a statement.
The hotel sold in 2004.
The amended complaint also alleges that Carlsmith Ball structured a lease agreement that allegedly deprived local landholders of the full value of their property. The plaintiffs settled a related lawsuit against Kinki Nippon Tourist Ltd. in 2009, but Carlsmith Ball was "carved out" of the settlement by the parties, according to the plaintiffs in a statement.
The lawsuit alleges that Carlsmith's "concealed loyalty was to KNT itself." Carlsmith had advised KNT in 2002 on a Northern Marianas constitutional issue on land ownership, according to the lawsuit.
Carlsmith knew by July 2004 that KNT had been negotiating with Morgan Stanley for the acquisition of the hotel, but withheld the information from the minority shareholders of the hotel, the lawsuit alleges.
"The Carlsmith law firm believes that the place to try this case is in a court of law and not in the media," according to the law firm.
"There is a difference between what is written in a lawsuit and what can be proven to be fact. Carlsmith will have its opportunity in court to prove that these allegations are untrue and that its conduct was proper and professional."
The plaintiffs include Jesus T. Guerrero and Herman T. Guerrero as trustees of the Guerrero Family Trust, Carmen Deleon Guerrero Borja and Annie T. Sablan, Clarence Tenorio and Norman Tenorio as trustees of the Jose C. Tenorio Trust, and Juan S. Tenorio as administrator of the Estate of Santiago C. Tenorio, Juan T. Guerrero, Jesus T. Guerrero, and Brenda Y. Tenorio and Lynette F. Tenorio as trustees of the AJT Trust.