CHIEF Judge Ramona V. Manglona of the District Court for the NMI has denied Imperial Pacific International’s request to vacate her receivership decision and terminate the limited receiver, Clear Management Limited acting through Timothy Shepherd.
Judge Manglona on Friday denied IPI’s motion without prejudice. “Without prejudice” means the Saipan casino investor can refile the motion.
The plaintiff, USA Fanter Corp. Ltd., sued IPI for failing to pay the full contract amount due for labor and materials it provided for the improvement of IPI’s real property in Garapan.
The lawsuit stated that IPI had paid USA Fanter $300,000 only and the unpaid balance due was not less than $2,089,345.28.
On May 4, 2021, Judge Manglona issued an order directing entry of an “Amended Final Judgment re: Mechanic’s Lien.”
After IPI appealed to the U.S. Court of Appeals for the Ninth Circuit, USA Fanter applied for a writ of execution on the judgment, and filed a motion for limited appointment of receiver in aid of execution, which the court granted on Oct. 26, 2021.
In its request to vacate receivership, IPI, through attorney Kevin T. Abikoff, stated that the casino developer is willing and able to secure the full judgment amount of $2,089,345.28 in a restricted account designated by USA Fanter or the court within five days of an order vacating the limited receivership.
He said the funds would remain in this restricted account until IPI’s appeal to the Ninth Circuit is resolved, at which point the funds would be transferred to U.S.A. Fanter for satisfaction of the judgment or returned to IPI.
But USA Fanter, through attorney Colin Thompson, opposed IPI’s motion “for its failure to address the controlling factors concerning the maintenance of a federal equity receivership and a stay of enforcement of judgment.”
He said IPI argues that in the last month, economic conditions have changed to such a degree that this court should vacate the receivership or stay the execution.
“The receiver, Clear Management Group [or CMG], holds a different opinion,” Thompson added.
He said CMG acknowledges that the casino industry was depressed 12 months ago; however, “the industry is now emerging from the pandemic ever stronger. Forecasts for 2021 gaming revenue in the U.S. are for $44 billion in 2021 (Forbes, August 2021) a new record,” Thompson added.
Thompson said there are also serious consequences of derailing the receivership.
“The receiver raises concern that the global market would lose faith in the CNMI market and CMG in particular. CMG reiterates that as the machines get older and are now without maintenance, the value of them will decline,” he added.
USA Fanter, in a separate motion, also requested the federal court to issue an order foreclosing its mechanic’s lien against IPI.
A mechanic’s lien is a “hold” against property filed by an unpaid contractor. If unpaid, it allows a foreclosure action, forcing the sale of the property in lieu of compensation, an online legal dictionary stated.
Objection
In related news, Angel Playing Cards USA Inc., through attorney Richard Miller, has asked the federal court to preliminary enjoin or stay the sale of its products by the receiver.
Miller said APC has supplied IPI Holdings Ltd. and its affiliates, including IPI, with electronic dealing shoes and playing cards since 2016.
“The Super Angel Eye β or SAE β dealing shoes are sensitive electronic devices coded for each casino that uses them. The Angel playing cards have an invisible bar code that is customized to be acknowledged and read by SAE β shoes provided to Imperial Pacific,” Miller said.
This intellectual property or “IP” is closely guarded by APC, and IPI is contractually obligated not to disclose it to third parties, he added.
“By an express term of the sales agreement and non-disclosure agreement between APC and IPI, the IP remained the sole property of APC, and APC granted IPI only a right to use the products. Because IPI did not acquire the full bundle of rights in the products, the receiver does not have full title to transfer after auction.”
In addition, Miller said, because a January 2020 shipment of 161,280 decks of playing cards has not been fully paid, IPI does not have title to those decks and therefore the receiver cannot sell them.
The sale of its products on Nov. 30, just five days from now, will irreparably harm APC and run counter to the public interest, Miller said.
He added that Angel Player Cards Inc. raises serious questions and demonstrates a fair likelihood of success on the merits.
“The receiver can go forward with the November 30 auction of other gaming equipment to satisfy the judgment in favor of USA Fanter, and APC’s products can be included in subsequent monthly auctions if the court, after adequate time fully [deliberating] on the merits of APC’s claims, determines that the receiver should sell them,” Miller said.
Judge Manglona has scheduled a hearing on APC’s motion for today, Nov. 29, at 4:30 p.m.
