Castro blocks Fennell, counsel in BOS appeal

CNMI Supreme Court Associate Justice Alexandro C. Castro has denied the request of former Bank of Saipan receiver attorney Randall T. Fennell and his counsel to declare them as parties in an appeal from a trial court’s order regarding spending cap issue.

Castro also denied the request of Fennell and his counsel attorney David Axelrod and the law firm of Schwabe, Williamson & Wyatt, to be heard at oral arguments.

Castro, however, granted Fennell and his counsel’s motion to participate in the appeal as amicus curiae (friends of the court).

The justice ruled that although Fennell, Axelrod and the Schwabe law firm have business before the receivership case pending in the Superior Court, “that business is only tangentially concerned with preserving the assets of the bank.”

Indeed, Castro said, the only interest of Fennell, Axelrod and the Schwabe law firm have in protecting the bank’s assets involves their desire not be sued and their ability to recoup their own costs, if any.

This coupled with the fact that Fennell and his counsel raced to the receivership court and attempted to dismiss one suit in two courts simultaneously do not favor granting or confirming status as an appellee, he pointed out.

Castro said if the Schwabe firm seeks to bring deficiencies in the bank’s pleading to the receivership court’s attention, the proper way to do that is through intervention with the receivership court.

The justice said Fennell and Schwabe firm may file amicus briefs with the high court.

“As for being heard at oral arguments, that decision is for the entire panel as there has been no determination that oral arguments will be necessary,” Castro noted.

In October 2005, Associate Judge Juan T. Lizama issued an order, stating that Bank of Saipan is not implementing reasonable cost controls in connection with the bank’s board of directors’ lawsuit against Fennell.

The judge ordered the bank and its board, officers, agents, employees and attorneys, not to expend any additional corporate funds in support of the board’s lawsuit against Fennell.

He gave the bank 45 days to submit to the court a plan detailing how the costs will be controlled.

Lizama said the bank must submit agreement(s) with responsible individuals and corporations in which individuals and or corporations agree to indemnify the bank for any expenses arising from the pursuit of the Fennell litigation.

“As part of this agreement, these individuals and or corporations must together pledge, mortgage or otherwise encumber a total of $2 million in real or personal property, not to include stock or other ownership interest in the bank to pay the costs should they come due,” he said.

Bank of Saipan appealed the spending cap order.

Fennell and his counsel filed motions with the high court to either confirm or declare their status as appellee, intervene, or grant them amicus curiae status.

The bank’s majority shareholders, Paul M. Calvo and Thomas J. M. Calvo, through counsel Michael W. Dotts, joined in the opposition submitted by the Bank of Saipan to the motions.

Dotts stated, among other things, that the amicus status the Fennell group seeks is not to assist the high court.

“It is to collaterally attack the rehabilitation plan and the termination of the receivership. The Fennell Group does not belong in the appeal before this Court,” Dotts stressed.

In his order issued on Wednesday, Castro said putting aside the fact that Fennell and his counsel are not aggrieved and are not appealing an order at all but instead seek to be considered appellees, there is little evidence to suggest that Fennell and his counsel are directly affected by the outcome of this appeal.

In April 2002, the Commerce secretary shut down Bank of Saipan, concluding that the bank was insufficiently liquid to continue to meet depositors’ demands.

The bank was put into receivership and Fennell was appointed receiver. He served as receiver from April 30, 2002 until his discharge on Sept. 27, 2002. The directors of the bank objected to the court’s granting Fennell blanket indemnity.