Court denies sanctions on DFS Guam

By Doug Newhouse |

UPDATED: Guam’s Supreme Court has dismissed GIAA/Lotte’s call for sanctions on DFS Guam, but agreed to a GIAA/Lotte request for deletion of disputed statements.


This is the latest episode in the long running Supreme Court dispute between DFS Guam and the  A.B. Won Pat International Airport Authority, Guam/Lotte Duty Free Guam, following the award of the duty free airport concession to Lotte Duty Free in April 2013.


As part of this ongoing dispute, the court was called upon on to review ‘two narrow and straightforward questions of law’ and has now delivered its 19-pages of deliberation and reasoning.


In the court’s statement on the ruling in what is a complex case, the Guam Judiciary said: “Today (June 2, 2014), 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.


Guam International Airport.


“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.



Responding directly to the result, DFS told TRBusiness that it welcomed the Supreme Court of Guam’s decision in resolving the appeals: “The Supreme Court of Guam also rejected outright the GIAA’s attempt to sanction DFS for pursuing its rights in challenging Lotte’s and the GIAA’s wrongdoing,” said DFS.  

“DFS looks forward to the next stage of this case, which will involve a close examination of misconduct in connection with the airport concession contract that is so important to the people of Guam and the integrity of Guam Government.”

[The full case notes relate to the following reference for this case: THE A.B. WON PAT INTERNATIONAL AIRPORT AUTHORITY, GUAM and LOTTE DUTY FREE GUAM LLC, and THE TERRITORY OF GUAM, and DOES 1-10, INCLUSIVE, Defendants-Appellants. Supreme Court Case No.: CVA13-035 (consolidated with CVA13-036) Superior Court Case No.: CV0685-13].


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