Security Title Inc. sues IPI, two others to determine who is entitled to $2.48M

A security title company has joined a long list of businesses suing the Imperial Pacific International (CNMI) LLC, this time to determine who should be entitled to IPI’s $2.48 million.

In an interpleader complaint filed yesterday before the Superior Court, Security Title Inc. is suing Pacific Rim Land Development LLC, Saipan Shrimp LLC, and H.S. Lee Construction Co. Inc. to determine as to who is rightfully entitled to IPI’s cash.

Interpleader refers to a civil procedure that allows a plaintiff to initiate a lawsuit in order to compel two or more other parties to litigate a dispute.

Security Title, through counsel G. Patrick Civille, asked the court to be allowed to interplead the cash bond and defendants be ordered to litigate between themselves their respective claims to any and all cash bond funds under the Escrow Agreement, the writ of execution, and other applicable laws.

The plaintiff asked the court to restrain the defendants from instituting any actions or proceedings against the company with respect to such claims for payments.

Security Title requested the court to enter an order directing the proper distribution of the cash bond.

Security Title moved to be discharged from any further participation in this proceeding, and that the court order and 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 Civille in the complaint, Security Title was served on Jan. 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 to seize certain funds held by Security Title belonging to IPI.

Civille said that 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 the Indemnity Agreement (cash bond).

The Escrow Agreement was entered into by and between Security Title and IPI, and IPI’s “concurring beneficiaries”—namely Saipan Shrimp and H.S. Lee. Civille said 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. The lawyer said 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.

Civille said Security Title 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.

And 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, Civille said.

The lawyer said Security Title has no interest as to whom the cash bond should be disbursed and is a mere stakeholder. He said this complaint for interpleader is necessary to restrain the filing of action by defendants in order to prevent multiplicity of judicial proceedings and to prevent Security Title from facing multiple litigation.

Civille said Security Title has brought this action solely to identify the proper party entitled to the cash bond under CNMI law. He said his client is entitled to recover its attorney’s fees in the amount of $2,000 plus costs in the amount of $225 in bringing this action.

IPI is facing multiple lawsuits in federal court and Superior Court from many companies for alleged non-payment of services and other reasons.

Pacific Rim recently obtained a writ of execution from the federal court that directs the U.S. Marshal to seize IPI’s money from four banks and two title companies, including Security Title, to satisfy a $6.9-million judgment.