IMPERIAL Pacific International LLC’s opposition to lifting the stay on the limited receivership is simply one more example of its bad faith and delay tactics, according to Aaron Halegua, the lawyer of seven construction workers who sued IPI on allegations of labor violations and human trafficking.
Halegua said IPI previously agreed that the federal court had the authority to appoint a receiver when executing the stay agreement, but after defaulting under that agreement, IPI now argues that a public law that was enacted in January 2021 makes its own agreement invalid.
Halegua said IPI had also agreed not to oppose or seek a stay on any aspect of the stay agreement or its enforcement, including any orders resulting from IPI’s default under the stay agreement.
IPI’s motion opposing the lifting of the stay is without merit, Halegua said.
On behalf of his clients, he asked the court to order that: (1) the stay on the limited receivership is lifted and Clear Management may proceed with the auction of IPI’s casino equipment; (2) IPI shall pay plaintiffs’ attorneys’ fees for the time spent litigating this motion, and plaintiffs shall submit their time as part of the fee petition for work enforcing the judgment, litigating the appeal, and litigating the finding of default on the stay agreement; and (3) in the event that IPI satisfies all judgment creditors and (once again) seeks to stay the limited receivership, no stay will be granted unless IPI has already deposited with the court a sum sufficient to cover any and all costs and damages incurred by Clear Management.
Halegua said there remains the possibility that the auction will be cancelled or stayed prior to the actual sale so “it is unfair to ask that Clear Management restart this process without at least guaranteeing that it will be compensated for any work it performs and damages it suffers if the process is stayed before the auction and sales are completed.”
Halegua said the court has the authority to appoint a receiver to liquidate property to satisfy a judgment creditor regardless of whether that creditor (or any other party) has a lien or security interest in that property — an issue that only becomes relevant when it comes time to distribute the auction proceeds, the lawyer added.
Here, he said, the court properly appointed Clear Management, not based on any writ of execution — a fact acknowledged by IPI, Halegua added.
He said the plain language of 4 CMC § 51564 limits only a party establishing a “lien or security interest” pursuant to a “transaction.”
“It does not preclude (or even mention) a court appointing a receiver to liquidate assets. Even IPI does not argue that the statute prohibits receivership,” Halegua said.
Instead, as underscored by the use of the word “transaction,” the statute is intended to prohibit IPI from giving “consensual liens” to parties, not to preclude judicial or statutory liens, he added.
“This is consistent with the actual purpose of 4 CMC § 51564, which is to help ensure that electronic gaming machines do not wind up in poker parlors or other places in Saipan’s villages without the knowledge of the Commonwealth Casino Commission or Department of Finance,” Halegua said.
IPI, moreover, does not have any standing to raise a claim under 4 CMC § 51564 and, if it did, IPI has long-waived its right to raise such an objection, Halegua added.
He said, “The casino commission — whom IPI claims is the intended beneficiary of the statute’s restriction — has never objected to any writ of execution or to any aspect of the limited receivership.”
Lastly, even if the court finds that 4 CMC § 51564 imposes some relevant limitation, it only applies to “any machine or part thereof” regulated by CCC, Halegua said.
The limited receivership should still proceed with liquidating the chairs, security cameras, and other equipment that Clear Management was preparing to sell, Halegua added.
IPI, through attorney Kevin Abikoff, has filed an opposition to lifting the stay of limited receivership for its gaming equipment.
Halegua and attorney Bruce Berline represent the plaintiffs: Tianming Wang, Dong Han, Yongjun Meng, Liangcai Sun, Youli Wang, Qingchun Xu, and Duxin Yan. The plaintiffs were previously employed by IPI’s former contractor and subcontractor, MCC International and Gold Mantis, both of which have already settled with the workers.
Recently, Chief Judge Ramona V. Manglona of the District Court for the NMI found that IPI had failed to comply with its obligation under the stay agreement with the seven workers. IPI did not make a required payment by May 1, 2022 or file notice, and that it failed to cure the default within 10 days.
On May 31, 2022, Judge Manglona ordered American Contractors Indemnity Company to release to plaintiffs the $3 million secured by the supersedeas or appeal bond.
As to the plaintiffs’ request that the stay on the limited receivership for IPI’s casino gaming equipment be lifted, Judge Manglona said further briefing was necessary on the issue.
She scheduled a hearing for June 9 on the plaintiffs’ request to lift the stay on the limited receivership.
The receivership remains on hold until June 15.
On May 26, 2021, the federal court entered a default judgment in favor of the workers plus post-judgment interest and attorneys’ fees for a total amount of $5.9 million.
IPI has filed an appeal to the U.S. Court of Appeals for the Ninth Circuit.
Aaron Halegua
