U.S. District Court for the NMI Chief Judge Ramona V. Manglona has denied the request of three Swift Air LLC executives to postpone the settlement conference and the depositions of its two executives.
At a hearing on Friday, Manglona basically ruled that Donald A. Stukes, Jeffrey Conry, and Boris Van Lier were not in compliance with the rules in filing their motion to postpone the settlement conference and for protective order.
Manglona ordered the three to appear at a scheduled settlement conference today, Monday, before District Court Senior Judge Alex R. Munson.
Manglona also ordered Conry and Van Lier to appear at their scheduled depositions on Tuesday and Wednesday, Nov. 5 and 6, also on Saipan.
The judge allowed limited discussions on the defendants’ motion for permanent injunction, saying there should be a separate hearing on that issue.
Manglona also noted that when the U.S. Bankruptcy Court for the District of Arizona issued an order confirming the reorganization plan for Swift Air, everybody was aware of that except the federal court on Saipan.
Attorney Steven Pixley, counsel for Saipan Air, told Saipan Tribune after the hearing that Manglona basically found that defendants had not established the legal basis to postpone the depositions that all parties had agreed to.
Pixley said that when he was in North Carolina last month for the depositions, the defendants tried to get the depositions postponed.
Pixley said the defendants filed on Thursday—just three to four days before the depositions—a motion asking the court again to postpone the depositions.
“The judge denied it and ordered them to be here. So they need to be here next week and we’ll proceed,” the lawyer said.
As for the permanent injunction matter, Pixley said they already filed their opposition to that issue. “Saipan Air is very confident about that,” he added.
Pixley said the defendants in this case have “engaged in activity that is tantamount to fraud.”
Attorney Michael White, counsel for the defendants, refused to comment.
At the hearing, however, White argued that their motion is not frivolous and that they are merely asking for a postponement of the depositions until their motion for permanent injunction is resolved.
White reiterated their position that if the court grants their motion for permanent injunction, Saipan Air’s lawsuit would be permanently stopped and effectively dismissed, which would make all scheduled proceedings moot.
At the hearing, Pixley recounted the background before the defendants filed their motions, which he described as “dilatory and deceptive practice.”
Pixley said he went to North Carolina for the scheduled deposition order last month, only to learn that the defendants filed in court a protective order to postpone the depositions.
“There is no merit to their contentions at all,” Pixley said.
These motions, Pixley said, only show that the defendants are consistent with their behavior—“dilatory, deceptive and unsupported by law.”
Pixley pointed out that on Oct. 1, 2013, the Bankruptcy Court issued an order confirming the reorganization plan for Swift Air LLC.
Pixley said that Conry and Van Lier undoubtedly knew about this order on Oct. 8, 2013, yet during the hearing on the previous motion for protective order, they agreed to appear on Saipan for depositions on Nov. 5 to 6, 2013.
Instead, Pixley said, the defendants elected to wait until the time for objecting to the third amended plan has expired before making the dismissal demand on Oct. 24, 2013.
On Oct. 24, 2013, Saipan Air received a letter from the defendants’ lawyer demanding that Saipan Air drop its lawsuit within seven days, based upon the representation that Swift Air’s reorganization plan contains a supplemental injunction that “bars Swift Air’s creditors from commencing or continuing in any action or other proceeding of any kind…”
Pixley said the Ninth Circuit has repeatedly held, without exception, that section 525(e) of the Bankruptcy Code “precludes bankruptcy courts from discharging the liabilities of non-debtors.”
Therefore, Pixley said, if the reoganization plan did provide for the release of third-party liability, as the defendants now represent, such a provision would have rendered the reoganization plan unconfirmable as a matter of law.
“There is no possible way that the Bankruptcy Court would have confirmed the plan if it contained such a third-party release provision,” he said.
Pixley said nowhere in the third amended plan does it “specifically” or “definitely” state that the Saipan litigation was included in the release.
Pixley said neither the reorganization plan nor the disclosure statement contained any details or specifics that would alert anyone that the Saipan litigation was included in the injunction.
Pixley pointed out that the parties in the Saipan litigation are not the same as the parties in the bankruptcy proceeding.
“Swift Air, LLC is not a party to the Saipan litigation,” he said.
Pixley said Conry is playing games with the judicial system. He said there is disturbing evidence that Conry is now attempting to contradict a sworn declaration that he filed in the Arizona Bankruptcy Court in a fraudulent effort to gain advantage in the Saipan litigation.
In its $40-million racketeering lawsuit, Saipan Air is suing Stukes, Conry, Van Lier, Hank Robert and 10 unnamed co-defendants for allegedly conspiring to fraudulently obtain money and other property from the company.