Duty Free Shoppers Ltd. v. Sablan

ORDER DENYING DEFENDANT SABLAN'S MOTION FOR SUMMARY JUDGMENT

PROCEDURAL POSTURE

Defendant Sabían has moved to dismiss plaintiff's action for specific performance. Although Sabían does not indicate the specific section of Com.R.Civ.Pro, Rule 12 he is proceeding under, motions to dismiss are generally used to test the sufficiency of the complaint. However, Sablan's present motion goes beyond the sufficiency of the complaint, In this motion, Sabían argues that the option agreement and proposed lease between plaintiff and himself is in violation of Article XII of the Northern Marianas Constitution. As such, Sabían is essentially urging this court to find that he is entitled to prevail as a matter of law. Therefore, since the *625option agreement and lease, which are matters outside the scope of the pleadings, must» be considered and because Sablan's present motion seeks to determine plaintiff's interest as a matter of law, the court will regard this motion as one for summary judgment. Carter v. Stanton, 405 U.S. 669, 671, 92 S.Ct. 1232, 1234 (1972).

SUMMARY JUDGMENT STANDARD

A summary judgment will be granted only if there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Com.R.Civ.Pro. Rule 56; Anderson v. Liberty Lobby, Inc., 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

There is no dispute between the parties as to the terms of the option agreement and lease. The matter is submitted solely on the legal interpretation of those documents in relation to governing law. Thus, the court turns its attention to whether Sabían is entitled to judgment in summary fashion.

ISSUES

1. WHETHER A ONE YEAR QPTION TO LEASE PROPERTY FOR 55 YEARS VIOLATES ARTICLE XIJ

Sablan's first contention is that the option agreement violates Article XII by giving plaintiff an interest in property in excess of 55 years. Sabían maintains that the one year period in which plaintiff could exercise its option to lease was in itself equivalent to a leasehold interest, and therefore the *626plaintiff has a 56 year lease.1/ This exhortation strikes the court as idle persiflage.2/

Sabían bases his assertation on Wabol v. Muna, 2 CR 963 (DNMI App. 1987, app. pending 9th Cir.). In Wabol the court found that a 30 year lease with an option -to renew for an additional 20 years violated the provision of Article XII prohibiting persons not of NMI descent from obtaining leaseholds in excess of 40 (now 55) years.

However, Wabol is clearly not determinative here. In Wabol the lessee had an option to extend its existing leasehold. If the lessee exercised the option to renew, it would extend beyond the permitted 40 years. In this case, plaintiff had an option to lease Sablan's property in the future. Plaintiff and Sabían entered into a contract whereby plaintiff paid Sabían not to lease or otherwise alienate his property for a one year period. This option did not give plaintiff any right to enter or otherwise use the property; all rights of ownership and possession remained with Sabían, Plaintiff did not acquire any possessory interest in the property itself. Richardson v. Hardwick, 106 U.S. 252, 254, 1. S.Ct. 213, 215 (1882) (where one *627has, by contract, the option of purchasing an interest in land, the contract itself’ does not,vest him with any interest or estate in the land); Olsen Oil Co. v. Fidler, 199 F.2d 868, 871 (10th Cir. 1952) (an option does not constitute a vested interest in the land itself); Bobo v. Bigbee, 548 P.2d 224, 229 (Okl. 1976) (an option to convey real estate does not transfer any interest in the real property); In re Continental Properties, Inc., 15 BR 732, 736 (D.Hawaii 1981) (the optionee has no equitable interest in the land).

In sum, an option to lease in the future is not a transfer or acquisition of property and therefore the option period cannot be added to the length of the proposed lease for purposes of determining whether a long-term interest in land has been conveyed in violation of Article XII.3/

2. WHETHER THE REVERSIONARY INTEREST IN THE LEASE VIOLATES THE CNMI CONSTITUTION

Paragraph 42 of the lease provides plaintiff with a lien on Sablan's reversionary interest to secure Sablan's performance of his obligation to purchase any permanent improvements constructed by plaintiff during the term of the *628lease. Sabían maintains that it is highly unlikely that he will be able to purchase the multimillion dollar improvements contemplated by plaintiff and, therefore, it is probable that he will lose the property by default. Therefore, it is argued the effect is to give plaintiff an interest in the land exceeding the permissible limit.

The fatal problem to Sablan's argument is its entirely speculative nature. For the court to consider Sablan's claim of illegality based on Article XII of the Constitution, there must be a justiciable controversy regarding plaintiff's lien on Sablan's reversionary interest. Flast v. Cohen, 392 U.S. 83, 95, 88 S.Ct. 1942, 1950 (1968). Without a justiciable controversy, this court is without jurisdiction to entertain Sablan's motion.4/

In order to consider Sablan's motion, the court must assume: (a) the plaintiff places improvements on the land5/ and (b) that if any improvements are placed thereon, Sabían would be unable to pay the appraised value of the structures 55 years hence. There comes to mind just a few events that could occur in *629the next 55 years which would obviate the necessity for implementation of paragraph 42. The property could be condemned by the government; an^ structures/improvements could be destroyed; the law relating to the alienation of land could change; the parties may change the terms of the lease; or the lease could be terminated either voluntarily or involuntarily.

Courts will not decide cases on the basis of assumed or hypothetical facts. Associated Press v. NLRB, 301 U.S. 103, 131, 57 S.Ct. 650, 655 (1937). See also, Socialist Labor Party v. Gilligan, 406 U.S. 583, 588, 92 S.Ct. 1716, 1719 (1972) (court should not decide constitutional question unless it is "presented with the clarity needed for effective adjudication"); Rescue Army v.Municipal Court, 331 U.S. 549, 584, 67 S.Ct. 1409, 1427 (1947) (court should not decide constitutional question unless it is presented in "clean-cut and concrete form").

The parties may strive to have the court render what is tantamount to an advisory opinion so that they will have an idea what may happen 55 years from now. However, it is not incumbent on the court to use the proverbial crystal ball. The landowner and the lessee are the ones that agreed to paragraph 42 with all its uncertainties and this court must decline the invitation to prepare a road map for which there may be no travelers.

Based on the foregoing, Sabían*s motion for summary judgment is DENIED.

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