Federal court denies IPI motion for stay

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DESPITE the defendant guaranteeing a proposed lien on its leasehold interests, the federal court on Thursday denied the motion of Imperial Pacific International for stay pending appeal in the lawsuit of Pacific Rim Land Development LLC, which sued the casino investor for breach of contract and promissory note.

In an eight-page order, District Court for the NMI Chief Judge Ramona V. Manglona stated that she denied the motion for stay “because IPI has not posted a bond or demonstrated that its offered security will adequately protect Pacific Rim’s rights as judgment creditor.”

IPI cannot post a bond, but stated that it is willing to provide other security in the form of $9 million in property leasehold interests.

“IPI has offered no argument as to why the court should waive the normal full bond amount in favor of this alternative security,” Judge Manglona said.

IPI is appealing to the U.S.  Ninth Circuit Court of Appeals the previous decision and order of Judge Manglona who found IPI in breach of promissory note with its former contractor, Pacific Rim.

Attorney Michael Dotts, who represents IPI, has requested the federal court for a delay in the execution of the judgment in the case pending the appeal of the casino investor.

Dotts also proposed the IPI leasehold interest in real property as security bond to secure payment of the judgment amounting to $6.8 million, including the principal amount, attorney’s fees and costs.

Pacific Rim attorney Colin Thompson said the motion of IPI to stay was another attempt to delay payment.

In her order Thursday, Judge Manglona stated that “the burden is on IPI to show why it should not be required to file the full supersedeas [or appeal] bond and that the other security it has identified will protect the judgment creditor’s rights.”

She said, “It is not on Pacific Rim to demonstrate why IPI’s offer of mortgage interests is inadequate.”

She said Pacific Rim raised legitimate concerns about the alternative security, particularly the valuation of the property.

Judge Manglona also agreed with Pacific Rim, which stated that the $9 million in leasehold interests would not adequately protect its rights under court rule.

“First, IPI has offered no evidence to support its valuation of the property, other than stating that it is based on the amount IPI paid for the leasehold interests and that it believes it entered into good deals,” the judge said.

“Next, it admits that one of the properties offered is not free and clear of encumbrances, but fails to explain how that impacts the overall value of its offer,” she added.

“Finally, and most fatally, IPI rejects the idea that it has the burden to show that the security it offers will maintain its value.”

Regarding the IPI appeal, the judge said, “IPI does not argue that this court misapplied the law or made any other specific error in reaching its decisions. Nor has it argued that this appeal involves novel or difficult questions of law.”

As to irreparable harm, IPI has provided that it is in financial distress, the judge said.

However, she added, “although IPI’s financial distress may support a finding of harm to it, the precariousness of its financial health also supports a finding that Pacific Rim would be substantially injured if it must delay enforcement of its judgment.”

As to public interest, the judge said IPI “argues that because it employs many individuals in Saipan, the financial repercussions it will suffer without a stay will spill over into the community.”

But the judge said IPI has “offered no evidence that it will not have to lay off employees even if granted a stay, as its financial woes clearly predate the judgment in this case.”

Moreover, the judge “rejects the implication that IPI should be able to avoid the legal consequences of its actions due to its size.”

She added, “IPI is trying to dictate which employees to pay to complete its project while disregarding its legal obligations to a contractor for services rendered.”

The judge said, “The public interest lies with the uniform application of the law to all members of this community.”

The federal court, however, had not issued the Pacific Rim request for a writ of execution that would direct the U.S. Marshals Service to seize money owned or controlled by IPI from the Bank of Saipan, City Trust Bank, Bank of Guam, and First Hawaiian Bank to satisfy the previous court order.

Asked for comment, IPI attorney Michael Dotts said: 

"The next move is for IPI to ask the Ninth Circuit to grant the stay. The rules require a defendant to ask the lower court first, before asking the appeals court. IPI has satisfied the rule and will file its motion to the Ninth Circuit for a stay early next week.

"Judge Manglona raised some good points in her order. Namely, that there is no guarantee that the property will not lose value while the appeal is pending. The appeal could take several years. However, we think the harm that will befall IPI and its employees outweigh the risk of the possible loss of value of the property while the appeal is pursued. Hopefully, the Ninth Circuit will agree."

(With Emmanuel T. Erediano)

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