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Escrow company takes IPI, Pacific Rim, others to court 

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SECURITY Title Inc. has filed a complaint for interpleader in Superior Court to determine who should be entitled to the $2.48 million escrow account of Imperial Pacific International.

According to an online legal dictionary, an interpleader is “the procedure when two parties are involved in a lawsuit over the right to collect a debt from a third party, who admits the money is owed but does not know which person to pay. The debtor deposits the funds with the court (‘interpleads’), asks the court to dismiss him/her/it from the lawsuit, and lets the claimants fight over it in court.”

Security Title, through attorney G. Patrick Civille, named as defendants IPI, Pacific Rim Land Development LLC, Saipan Shrimp LLC, and H.S. Lee Construction Co. Inc.

A writ of execution in favor of Pacific Rim was recently issued by the federal court that directs the U.S. Marshals Service to seize the money of IPI from Security Title, Pacific American Title Inc. and four banks to satisfy a $6.9-million civil judgment.

Security Title is asking the court to enter an order directing the proper distribution of the cash bond and to restrain the defendants from instituting any actions or proceedings against the escrow company, Security Title, with respect to such claims for payments.

Security Title also asked the court to discharge the escrow company from any further participation in the proceedings, and to adjudge that Security Title has no further liability of any kind to IPI, Pacific Rim, Saipan Shrimp, and H.S. Lee until their claims have been litigated and settled by the court.

According to the complaint, Security Title was served on June 12, 2020 with a writ of execution in the amount of $6,909,333 (plus post-judgment interest) in favor of Pacific Rim and against IPI pertaining to funds held by Security Title belonging to IPI.

Pursuant to an escrow agreement for cash bond dated August 2016, Security Title is holding $2,481,300 as cash collateral to secure the obligations of IPI under an indemnity agreement or cash bond.

An escrow agreement was entered into by and between Security Title and IPI, and IPI’s “concurring beneficiaries” — namely Saipan Shrimp and H.S. Lee.

A section of the escrow agreement states that the cash bond can only be used to pay Saipan Shrimp and H.S. Lee (or their successors) to “cover claimed damages, if any, arising from crane equipment or construction operations as set forth in the license agreement in connection with IPI’s construction of the casino building/hotel in Garapan,” Security Title stated.

It added that the “defendants have competing claims for the cash bond. Pacific Rim’s claim for the cash bond funds is based on the writ of execution. IPI’s claim for the cash bond funds is based on the escrow agreement. Saipan Shrimp and H.S. Lee’s claims to the cash bond funds are based on the license agreement. Both Saipan Shrimp and H.S. Lee maintain a claim to the cash bond.”

Security Title said it acts as escrow under the terms of the escrow agreement, and “there is no instruction in that agreement addressing circumstances such as this, where a creditor of IPI attempts to levy on the cash bond.”

Security Title said, “because the defendants have competing claims to the same cash bond, and Security Title is unable to ascertain which of the defendants is entitled to the cash bond and to whom the cash bond must be paid, interpleading the cash bond with the court is appropriate.”

Security Title said the interpleader action is to solely identify the proper party entitled to the cash bond under CNMI law.

Security Title said it is also entitled to recover its attorney’s fees in the amount of $2,000 plus costs in the amount of $225 in bringing this action.

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