Default judgment against owners and management of Dynasty recommended

Court issued numerous warnings for not hiring counsel

U.S. District Court for the NMI Magistrate Judge Heather L. Kennedy has recommended to District Court designated Judge Frances Tydingco-Gatewood to direct the clerk to enter a default judgment against the owners and management of the defunct Tinian Dynasty Hotel & Casino in connection with the lawsuit filed against them by their former foreign workers or CW-1 employees.

In her report issued Thursday, Kennedy also recommended to Tydingco-Gatewood that the answers of Tinian Dynasty’s owners and management—Hong Kong Entertainment (Overseas) Investment Ltd. and Mega Stars Overseas Ltd.—to the lawsuit be stricken.

Kennedy said it is well established that “a corporation may appear in the federal courts only through licensed counsel.”

In this case, Kennedy said, the court informed defendants on multiple occasions after the withdrawal of their lawyers both in 2016 and 2018, that they may face sanctions, including stricken answers and a default judgment, if they failed to obtain counsel.

“Yet no counsel has appeared to represent defendants since Jan. 16, 2018 when defendants’ second counsel was permitted to withdraw from the case,” Kennedy said.

Therefore, the magistrate judge said, the court may strike HKE and Mega Stars’ answers and enter default based on their failure to defend and failure to comply with the court’s orders to obtain counsel.

Kennedy noted that the plaintiffs’ (former workers) motion for default judgment does assert an amount of damages or include any evidence necessary for the court to determine the amount of damages for the entry of a final judgment.

Under Rule 72(a) of the Federal Rules of Civil Procedure and Local Rule 72 4(b), Kennedy said, any objection to this report and recommendation must be in writing and filed with the clerk of court within 14 days.

She said appeals may have been waived due to the failure to file objections within the specified time.

Samuel Mok is counsel for Eric F. Dona and six other co-plaintiffs. There are 15 named plaintiffs in this case.

In their lawsuit, Dona and co-plaintiffs alleged that the owners and management of Tinian Dynasty lied to them about their immigration legal status.

Mok alleged that the owners and management of Tinian Dynasty lied that the workers were legally authorized to work notwithstanding the denial of their CW-1 petitions.

In her report and recommendation issued Thursday, Kennedy said in this employment dispute, plaintiffs filed a complaint with claims of fraudulent concealment, negligent misrepresentation, constructive fraud, and wrongful termination, and seeks punitive damages.

Defendants HKE and Mega Stars retained counsel and answered the complaint on Oct. 26, 2015.

On Feb. 22, 2016, the court granted the motion to withdraw filed by defendants’ counsel.

On March 17, 2016, Kennedy said, the court ordered that a corporation must be represented by counsel and ordered HKE and Mega Stars to appear at the next status conference with counsel or show cause as to why substitute legal counsel cannot be obtained.

On April 20, 2016, a corporate designee appeared at the status conference without counsel.

The court issued an order directing HKE and Mega Stars to appear with counsel on May 24, 2016. The judge then warned that in the event defendants appeared without counsel they must show cause why appropriate sanctions should not be imposed, including the possibility of having their respective answers stricken.

On May 19, 2016, second counsel, Daniel Guidotti, for defendants filed an appearance.

After the parties engaged in some discovery and settlement negotiations, Kennedy said, HKE and Mega Stars’ second counsel moved to withdraw on Jan. 3, 2018.

Although counsel for defendants appeared for the motion hearing on Jan. 10, 2018, a corporate representative of defendants failed to appear.

The court continued the hearing and issued a show-cause order.

On Jan. 16, 2018, Chun Wai Chan, a corporate representative of both defendants, appeared telephonically at the hearing on the motions to withdraw and to show cause.

During the hearing, the court granted defense counsel Daniel Guidotti’s motion to withdraw and ordered defendants to obtain new counsel before the next status conference.

At that time, Kennedy said, the court told the defendants that corporations may appear in court only through an attorney and that failure to obtain counsel may result in sanctions, including the entry of a default judgment.

Defendants failed to obtain counsel by the next status conference on Jan. 30, 2018, and informed the court that they did not intend to obtain counsel because of financial inability.

Following the hearing, Kennedy said, the court issued an order requiring defendants to show cause as to why sanctions should not issue for failure to obtain counsel.

Chan filed a letter with the court citing financial inability to hire an attorney.

On April 27, 2018, plaintiffs filed the instant motion that asked the court to strike defendants’ answers to the complaint and enter default and default judgment against HKE and Mega Stars in an amount of damages to be determined at a hearing.

Last February, Chan disclosed that the total outstanding liabilities of the owner of Tinian Dynasty has now climbed to over $250 million, excluding the $75 million in civil penalty assessed by the U.S. Department of the Treasury Financial Crimes Enforcement Network (FinCEN).

Chan revealed that HKE’s outstanding liabilities is continuously increasing due to late payment penalties and interest.

Chan said Tinian Dynasty’s casino operation stopped in August 2015, and when the hotel operation halted in March 2016 no more income could be generated since then.

Ferdie De La Torre | Reporter
Ferdie Ponce de la Torre is a senior reporter of Saipan Tribune. He has a bachelor’s degree in journalism and has covered all news beats in the CNMI. He is a recipient of the CNMI Supreme Court Justice Award. Contact him at ferdie_delatorre@Saipantribune.com

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