Gray: Century Estate is not entitled to intervene in request for receivership

Former Imperial Pacific International (CNMI) LLC employee Joshua Gray, who has a receivership request in the U.S. District Court for the NMI against IPI, is opposed to IPI creditor Century Estate Investment’s motion to intervene in his request.

Century Estate Investment Ltd., a financial institution that lent IPI over $9 million back in 2022, wants to intervene in the receivership that Gray is seeking.

Gray, through attorneys Aaron Halegua and Bruce Berline, has filed a motion in opposition, stating that Century Estate is not entitled to intervene in this matter.

“The precedent in this circuit makes clear that district courts do not simply rubber stamp any motion for intervention that is filed. The intervenor bears the burden of making a showing that it is entitled to intervene. Century Estate has clearly failed to do so and thus its motion should be denied at this stage,” the opposition states.

Gray’s lawyers explained that there are four factors to consider in determining whether one is entitled to intervention: timeliness, an interest relating to the subject of the litigation, practical impairment of an interest of the party seeking intervention if intervention is not granted, and inadequate representation by the parties to the action.

“Century Estate has not presented any evidence to show that it actually satisfies the four criteria for intervening in a case,” the opposition states.

In the first requirement that the motion to intervene be timely, Gray’s attorneys argue that Century Estate should have filed its motion to intervene as soon as Gray applied for a writ of execution so as not to prejudice him, yet it failed to do so.

“Century Estate waited until the writ was executed by the U.S. Marshals Service and plaintiff moved to appoint Clear [Management] as the limited receiver before it took any action. This greatly prejudices Gray, who has already relied upon the absence of any other assertions of interests in the property subject to the writ,” the plaintiffs argue.

To be specific, Gray initially filed for the writ of execution on July 3, 2023. However, Century Estate waited roughly 10 weeks to file its motion to intervene.

“In that time, plaintiff has paid USMS to enforce the writ as well as spent dozens of hours negotiating with Clear Management about liquidating IPI’s assets and drafting a motion to appoint a receiver. Century Estate’s intervention will further complicate and delay plaintiff’s effort to recover on its judgment,” said Gray’s attorneys.

The second requirement to be entitled to an intervention is that the intervenor has a significantly protectable interest in the litigation. Gray’s lawyers argue that Century Estate has not established that it has a valid security interest. In fact, they said, the evidence that Century Estate did provide to validate its claims to IPI’s property could be fraudulent.

“Century Estate only submits the mortgage documents filed with the CNMI’s Recorder’s Office. However, as set forth in plaintiff’s earlier filing, several ‘badges of fraud’ suggest that this alleged mortgage interest stems from a fraudulent conveyance and should be invalidated. The little evidence that Century Estate did provide actually contains additional evidence of fraudulent intent—for instance, the signatory for Century Estate is the executive director of IPI’s parent company, and the dates that the mortgages were filed show an effort to obstruct creditors. Further, Century Estate has provided no evidence of any loan document, the actual transfer of the $9 million, or any effort to collect this debt. Accordingly, Century Estate has not met its burden to demonstrate that it has a valid interest in the property,” said Gray’s lawyers.

Lastly, the third factor is that the action will impair or impede the intervenor’s ability to protect its interest, and, relatedly, the fourth factor is that such interest is inadequately represented by the other parties in the action.

Here, Gray argues that Century Estate has failed to carry its burden of demonstrating that these criteria are met.

“Even if Century Estate has a senior interest in the property subject to the writ, it has provided zero explanation as to why plaintiff’s effort to liquidate that property for its maximum value somehow impedes its own interest. In fact, Century Estate [previously] stated that it seeks to intervene in this action in order to have the right to move forward and order liquidation of assets to mitigate its losses. If this is truly what Century Estate seeks—as opposed to obstructing other creditors from liquidating IPI’s assets and satisfying their debts—then it has not carried its burden of showing why plaintiff cannot adequately represent its interest to liquidate those assets,” Gray’s team of lawyers said.

U.S. District Court for the NMI Chief Judge Ramona V. Manglona will hold a hearing on this matter on Oct. 26.