IPI lawyer: Mechanic’s lien could shut down casino

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ATTORNEY David Banes said Pacific Rim Development LLC’s mechanic’s lien against Imperial Pacific International could shut down the casino.

In a motion to reschedule the probable cause hearing, Banes told the federal court that the Department of Public Lands has indicated to him that “if a mechanic’s lien is placed on IPI’s leasehold interest, DPL’s position is that the lien constitutes a default of the public land lease and DPL would move to terminate the lease.”

Banes added: “This could potentially lead to the shutdown of the casino, with hundreds of workers losing their jobs, and sending a far-reaching ripple effect through the entire CNMI’s economy, which relies almost exclusively on tourism.”

Noting that another contractor, USA Fanter, has sued IPI and is demanding $2 million, Banes said, “All the pending legal proceedings are already stretching the time and economic resources of IPI and its counsel to the limit.”

District Court for the NMI Chief Judge Ramona V. Manglona has determined that IPI was entitled to present counterclaims and set a probable cause hearing for Feb. 11, 2020.

But as he was just recently retained by IPI to handle the lawsuit, Banes said he needs more time to prepare for the hearing.

“The interests that will be at stake at the Feb. 11, 2020 probable cause hearing, and the parties’ mediation, are extraordinary and go far beyond the already significant $5 million plus demanded by Pacific Rim,” Banes said.

He added that his law firm has been diligently investigating and gathering evidence for IPI’s counterclaims, including without limiting, interviewing potential witnesses, and reviewing the parties’ communication and construction records, which he said are voluminous.

“Without disclosing in detail IPI’s counterclaims (as they are in the process of being investigated), one of them relates to the qualifications of workers hired by Pacific Rim and billed to IPI. However, hundreds of workers were hired by Pacific Rim to work on the IPI project. The undersigned’s office has been coordinating with a private investigator regarding locating and interviewing potential witnesses, but the investigator has reported back that the search turned out to be difficult, and more time is needed,” Banes said.

“Due to the sheer number of potential witnesses and volume of records involved in a construction project of the scale involved in this case, the need to search for and locate certain witnesses, and eventually the need to arrange for the translation of Chinese documents…for the hearing, substantially more time is required so that IPI can fairly investigate and prepare its counterclaims, and to prepare for mediation.”

IPI, prior to a Dec. 26, 2019 hearing, served a subpoena on Pacific Rim requesting certain documents.

Banes said rather than providing all the documents requested by the subpoena, Pacific Rim filed a motion to quash the subpoena.

“The documents requested by IPI’s subpoena are relevant and material to IPI’s counterclaims. (As part of the meet-and-confer between the parties, without any waiver of rights by either party, staff from the undersigned’s counsel inspected certain records of Pacific Rim on Jan. 30, 2020. This inspection was limited to attorneys’ eyes only, no notes and no copy.) They are voluminous, and according to Pacific Rim (as stated in its motion to quash), a significant portion of them are located on Guam.”

The Pacific Rim motion will need to be briefed by the parties and addressed by the court before the issues related to the subpoena can be fully resolved, Banes added.

Pacific Rim, through attorney Colin Thompson, filed a second amended complaint against IPI, alleging breach of contract and breach of promissory note after the original lawsuit was dismissed by Judge Manglona on Dec. 3, 2019.

After a hearing on Pacific Rim’s second amended application for mechanic’s lien on Thursday, the judge continued the court proceeding for Feb. 11, 2020 at 9 a.m.

Pacific Rim sued IPI for breach of contract for allegedly refusing to pay for services in the amount of $5.65 million after Pacific Rim substantially completed or completed the agreed-upon construction work for IPI’s casino-resort project on Sept. 30, 2018.

Pacific Rim also filed an application for a mechanic’s lien on both the IPI hotel-casino project and the land that it occupies.

A mechanic’s lien refers to a security interest in the title to property for the benefit of those who have supplied labor or materials that improved the property.

IPI, in response to the lawsuit, said Pacific Rim intentionally overstated the costs it incurred in the construction of the IPI hotel/casino in Garapan.

Pacific Rim fraudulently obtained from IPI a promissory note, which is therefore unenforceable, the casino investor added.

November 2020 pssnewsletter

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