Securities And Exchange Commission v. SiliconSage Builders, LLC
- Charles Breyer
- 3:20-cv-09247
- U.S. District Court · Northern District of California
- 2
Securities and Exchange Commission v. SiliconSage Builders, LLC: Judge Susan Illston denied Marwan and Rana Naboulsi’s request to pause an earlier contract-rejection order.
Marwan and Rana Naboulsi, the Receiver, SiliconSage Builders, LLC’s receivership estate, and Acres were affected by the denial of the requested stay. The July 7 order was not paused.
What happened
In Securities and Exchange Commission v. SiliconSage Builders, LLC, Marwan and Rana Naboulsi asked the court to pause its July 7, 2022 order allowing the Receiver to reject certain purchase and sale agreements. The court canceled the scheduled hearing and decided the request without oral argument.
The court applied four factors for deciding whether to pause an order during an appeal, including the applicants’ likelihood of success and possible irreparable harm. It found that the Naboulsis had not shown a strong likelihood of success. The court also rejected their argument that arbitration should decide whether the contracts could be accepted or rejected.
The court concluded that the other factors also supported denying the request because a pause would harm the Receiver’s efforts to maximize the receivership estate’s return and would not allow the Naboulsis to purchase the two units. Judge Susan Illston denied the motion.
The detailed version
- Securities And Exchange Commission v. SiliconSage Builders, LLC · No. 3:20-cv-09247
- Charles Breyer
- Dec. 6, 2022
Background
Marwan and Rana Naboulsi moved for a limited stay, meaning a temporary pause, of the court’s July 7, 2022 order. That earlier order granted the Receiver’s motion to reject certain purchase and sale agreements. The motion was scheduled for a December 9 hearing, but the court decided it without oral argument and vacated the hearing.
Legal standard
The court explained that a stay is discretionary rather than automatic, and that the party requesting it bears the burden of justification. For a stay pending appeal, the court considers: (1) whether the applicant is likely to succeed on the merits; (2) whether the applicant will suffer irreparable injury without a stay; (3) whether a stay would substantially injure other interested parties; and (4) the public interest. The court identified the first two factors as the most important.
Court’s analysis
The court found that the Naboulsis had not made a strong showing that they were likely to succeed. Relying on reasons stated by the Receiver, the court noted that its July 7 order had concluded that the Receiver had standing—the legal right to bring the request—to seek rejection of the contracts and was exercising business judgment in deciding that rejection served the receivership as a whole.
The court also rejected the Naboulsis’ argument concerning arbitration. It stated that they cited no authority supporting the proposition that whether a contract should be accepted or rejected was an issue for an arbitrator.
The court further found that the remaining stay factors favored denial. It stated that the Naboulsis could not purchase the two units under any circumstances because, even if the Ninth Circuit reversed the July 7 order, Acres still had the right and had repeatedly stated its intention to foreclose under the Construction Funding Agreement. According to the court, the purchase contracts violated the terms of SiliconSage’s loan agreements with Acres. The court also found that a stay would harm the Receiver’s efforts to maximize the receivership estate’s return and that the public interest favored resolving the estate efficiently and quickly.
Disposition
The court denied Marwan and Rana Naboulsi’s motion for a limited stay. Judge Susan Illston did not grant the requested pause.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.