IPI motion is denied

U.S. District Court for the NMI Chief Judge Ramona V. Manglona denied yesterday Imperial Pacific International (CNMI) LLC’s motion to stay or suspend execution of the court’s $6.9-million judgment in favor of IPI’s former contractor pending a resolution of IPI’s appeal of that ruling.

Manglona said IPI has not posted a bond or demonstrated that its proferred security will adequately protect Pacific Rim Land Development LLC’s rights as judgment creditor.

When asked for comments, IPI counsel Michael W. Dotts said IPI disagrees with the judge’s decision and that the company will now ask the U.S. Court of Appeals for the Ninth Circuit to grant the stay.

Dotts said 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. Hopefully, the Ninth Circuit will grant the stay,” he added.

Dotts said Manglona did raise some good points in her order—that there is no guarantee that the property will not lose value while the appeal is pending.

Dotts said 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,” he said.

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

IPI said it cannot post a bond, but states it is willing to provide other security in the form of $9 million in property leasehold interests. Manglona agreed with Pacific Rim and finds that the $9 million in leasehold interests would not adequately protect its rights.

The judge said that, 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 delays enforcing the judgment.

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

Manglona rejected the implication that IPI should be able to avoid the legal consequences of its actions due to its size. “IPI is trying to dictate which employees to pay to complete its project while disregarding its legal obligations to a contractor for services rendered,” she said.

Manglona agreed with Pacific Rim that the public interest lies with the uniform application of the law to all members of the community.

IPI, through Dotts, said if Pacific Rim starts executing the $6.9-million judgment, it will not be able to make payroll for its employees or pay taxes.

IPI currently has 1,066 employees mostly working on the construction of its hotel.

Pacific Rim obtained last April 27 a judgment for breach of the promissory note claim in excess of $6.8 million against IPI and may begin executing on the judgment last Tuesday, May 26. Last week, U.S. District Court for the NMI clerk of court Heather L. Kennedy amended the judgment, increasing the amount to $6,909,333, including interests and costs.

IPI has appealed to the U.S. Court of Appeals for the Ninth Circuit to reverse the judgment, but lacks the ability to pay for a bond. Dotts said IPI has identified about $9 million worth of real property leases that it can mortgage to Pacific Rim to secure payment of the judgment pending appeal. IPI asked the court to be allowed a stay of proceedings pending appeal.

Pacific Rim, through counsel Colin Thompson, recently filed an application for writ of execution before the federal court that will direct the U.S. Marshal to seize IPI’s money from several banks in an amount not to exceed $5,650,000.

Pacific Rims claims that IPI owes payment for the work that it did on the casino/resort project.

IPI has filed counterclaims against Pacific Rim for promissory fraud, fraud in the inducement as to the promissory note, violation of Consumer Protection Act, and breach of contract.