1,066 people, mostly working at construction for casino/resort project, may be laid off
Imperial Pacific International (CNMI) LLC admits it’s currently in a financially precarious situation, having difficulty even paying its power bills, trouble meeting its payroll, and faced with the possibility of a permanent shutdown.
IPI, through counsel Michael W. Dotts, filed a motion last Friday asking the U.S. District Court for the NMI to stay or suspend proceedings until 10 days after the U.S. Court of Appeals for the Ninth Circuit issues an order resolving IPI’s appeal of the court’s judgment in connection with contractor Pacific Rim Land Development LLC’s lawsuit.
IPI appealed to the Ninth Circuit to reverse Chief Judge Ramona V. Manglona’s order last April 23 for IPI to pay its former contractor, Pacific Rim, the principal amount of $5.65 million for breach of contract.
Dotts said IPI believes, in good faith, that it has a basis to appeal the judgment. “Yet if the judgment becomes enforceable while the appeal is pending, IPI will be unable to pay it, and will likely have to close permanently,” Dotts said.
The lawyer said this situation is due largely to the fact that COVID-19 has caused IPI to close its business and that IPI barely has the resources to cover payroll, taxes, and utilities. He said IPI does not have the resources to post a bond, or to pay the judgment.
However, Dotts said, IPI has leasehold interests in real property it can post to secure payment.
Attaching Saipan Tribune’s news article and a declaration of IPI director of treasury Francis Mafnas, the lawyer cited that the Commonwealth Utilities Corp. cut off power to the casino in Garapan and at IPI’s office at Vestcor on Capital Hill last May 15 for failing to pay its bills.
Last April 24, IPI missed payroll 9 and made a partial payment on that payroll last May 10, he said. Part of payroll 10 was paid last May 8. Today, he said, IPI barely found the funds to pay the rest of payroll 9 and 10 and all of payroll 11.
Last Friday, Pacific Rim will be able to begin collecting from IPI on the partial summary judgment of $6.8 million, unless the District Court grants IPI’s motion to stay proceedings pending appeal.
He said there are 1,066 people on Saipan working for IPI. Especially during COVID-19, the people of Saipan rely on paychecks from IPI to put food on their tables for their families and to take care of the man’amko while they practice social distancing from younger adults, he said.
Dotts said IPI will be irreparably injured without a stay. He said IPI is barely able to operate during the COVID-19 pandemic and if IPI’s accounts are cleaned out to pay the judgment, IPI will not likely make payroll for 1,066 employees.
Dotts said even after paying its current CUC bill, CUC threatens to shut off power without full payment.
He said IPI has had trouble meeting its payroll and even when it makes full payment, it falls behind again on later payments.
Dotts said if IPI has trouble making an electricity bill or meeting payroll, how can it pay a $6.8-million judgment?
“Failing to stay proceedings will only exacerbate IPI’s current financial distress,” he said.
IPI is willing to place about $9 million worth of property under mortgage in favor of Pacific Rim. Dotts said this mortgage will guarantee that if IPI does not prevail in its appeal, Pacific Rim will be able to collect on the judgment.
Dotts said not issuing a stay will substantially injure other parties not involved in these proceedings—its 1,066 workers on Saipan. “Failing to stay the proceedings pending appeal will not just put IPI at risk of further financial distress, it will also put the people of Saipan at risk of layoffs, empty pockets, lack of food and shelter, and increased crime and violence,” the lawyer said.
He said denying a stay pending appeal will not just force IPI to close its doors, but it will also leave 1,066 people on Saipan without employment during COVID-19, an international pandemic that will last in the near term.
Should the court deny stay pending appeal, Dotts said not only will IPI have to shut down its casino and other businesses, but 1,066 employees will face layoffs. “If this happens, the people of Saipan will not have opportunities for employment elsewhere because of the recession resulting from COVID-19,” Dotts.
According to court records, Pacific Rim and IPI entered into a construction contract on Feb. 13, 2018, for the Pacific Rim to build a hotel-casino complex in Garapan.
Pacific Rim began work on the project, but eventually stopped because IPI did not pay it the amounts owed under the contract.
IPI recently filed counterclaims against Pacific Rim for promissory fraud, fraud in the inducement as to the promissory note, violation of Consumer Protection Act, and breach of contract.
IPI, through counsel Cong Nie, alleged, among other things, that Pacific Rim hired a kitchen helper and a delivery man and made them work in IPI’s casino-resort project in Garapan as carpenters.