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File pnmc5021 (.txt & .wp) is in directory \pub\Public_Notices\Miscellaneous. ************************************************************************* Before the Federal Communications Commission Washington, D.C. 20554 In re: ) ) Station KDEW(AM), DeWitt, Arkansas) ) Application for Assignment of License)File No. BAL-940309EA and ) Application for Involuntary Transfer of Control)File No. BTC-940425EB ) ) Station KDEW-FM, DeWitt, Arkansas) ) Application for Assignment of License)File No. BAPLH-930806GG and ) Application for Involuntary Transfer of Control)File No. BTCH-940425EC MEMORANDUM OPINION AND ORDER Adopted: October 9, 1996Released: October 16, 1996 By the Commission: 1. The Commission has before it: (1) the December 11, 1995 application for review filed on behalf of Max H. Pearson ("Pearson"); and (2) Pearson's July 11, 1996 Supplement to his application for review. Pearson seeks Commission examination of the November 3, 1995 action by the Mass Media Bureau ("Bureau") denying Pearson's petition for reconsideration and motion for stay of a June 22, 1995 Bureau Ruling. The First National Bank of DeWitt, Arkansas ("First National") filed an opposition to the application for review on January 11, 1996, to which Pearson filed a reply on January 22, 1996; First National also filed a "Reply" to Pearson's Supplement on July 23, 1996. Pearson's application for review will be granted to the extent and for the reasons indicated below. BACKGROUND/PLEADINGS 2. The facts involved in this proceeding are not in dispute. On August 6, 1993 and March 9, 1994, Quadras, Inc. ("Quadras") filed applications to assign the licenses and sell the assets of stations KDEW-FM and KDEW(AM), respectively, to Pearson. The Bureau granted the KDEW-FM application on March 30, 1994 over the objections of First National and several individual creditors of Quadras. On April 6, 1994, The Chancery Court of Arkansas County, Arkansas, Southern District, pursuant to First National's petition, appointed First National receiver for Quadras and authorized it to file applications with the Commission for the involuntary transfer of control of the stations; the Chancery Court subsequently denied Pearson's petition to intervene in the proceeding and his petition for reconsideration of that ruling. Pursuant to the court order, on April 25, 1994, First National filed the instant applications to transfer control of Quadras to First National as Receiver, as well as a petition to deny the Pearson AM application and a petition for reconsideration of the Bureau action granting the Pearson FM application. Quadras subsequently filed an objection to the Receiver Applications. The KDEW-FM assignment ostensibly was consummated on June 17, 1994. 3. In its June 22, 1995 ruling, the Bureau: (1) granted First National's petition for reconsideration to the extent that it rescinded the March 30, 1994 grant of the KDEW-FM assignment to Pearson and dismissed that application; (2) dismissed the application to assign KDEW(AM) to Pearson; and (3) denied Quadras' objection and granted the Receiver Applications. The June 22 Ruling cited D.H. Overmyer Telecasting Co., Inc., 94 FCC 2d 117, 123 (1983) for the proposition that the Commission generally will not question the appointment of a bankruptcy receiver by a court seeking to protect a licensee's creditors. It also stated that, because the consummation of the assignment to Pearson occurred two months after the Arkansas Chancery Court granted First National control over Quadras' stock and empowered it to file the Receiver Applications, the consummation was without effect, citing Dale J. Parsons, Jr., 10 FCC Rcd 2718 (1995), aff'd, Dale J. Parsons, Jr. v. FCC, No. 95-1191 (D.C.Cir., August 8, 1996) (judgment). 4. On July 28, 1995, Pearson sought reconsideration and stay of the June 22 ruling, which the Bureau denied in its November 3, 1995 reconsideration ruling. The Bureau stated that the June 22 ruling was consistent with long-standing Commission policy to consent routinely to the temporary acquisition of broadcast stations by receivers pending disposition of station assets. The Bureau rejected Pearson's motion for stay because he had failed to demonstrate that its denial would cause him irreparable harm, and thus he had not met the standard set forth in Virginia Petroleum Jobbers Ass'n v. Federal Power Commission, 259 F. 2d 921, 925 (D.C.Cir. 1958). Pearson thereafter timely filed the instant appeal. 5. Application for review/Supplement. In his application for review, Pearson argues that the Bureau: (1) misapplied precedent in denying his motion for stay; (2) erroneously failed to consider Arkansas state law regarding the validity of the alleged receivership; (3) failed to consider applicable precedent regarding deferral of or conditioning action upon an application in recognition of pending civil litigation; and (4) ultimately failed to consider the public interest consequences of its actions. In the July 11, 1996 Supplement, Pearson submits a copy of a decision by the Supreme Court of Arkansas reversing and remanding the Chancery Court's denial of his petition to intervene in the state receivership proceeding. Although the issue of the receivership's validity was not before the Court, the decision contains the following dicta: "We cannot overlook the fact that First National had itself appointed receiver even though it has an interest in the matter, an appointment which was in apparent violation of Ark. Code Ann. 16-17-207." DISCUSSION 6. Stay. As noted by the Bureau, the four factors considered in determining whether or not a stay is warranted are: (1) the likelihood that the party seeking the stay will prevail on the merits of the appeal; (2) the likelihood that the moving party will be irreparably harmed absent a stay; (3) the prospect that others will be harmed if the court grants the stay; and (4) the public interest in granting the stay. See Virginia Petroleum Jobbers, supra, 259 F. 2d at 925. In requesting reconsideration and stay of the staff's June 22, 1995 ruling, Pearson in essence asked for his reinstatement as KDEW-FM licensee and for a hold on all further action in the Commission's KDEW-FM proceeding pending the outcome of proceedings in the Arkansas state court. In its November 3, 1995 reconsideration ruling, the Bureau rejected Pearson's arguments for granting a stay, holding that he had not met the second prong of the Virginia Petroleum Jobbers standard because "'mere injuries, however substantial, in terms of money, time, and energy' expended do not constitute irreparable harm because there is the 'possibility that adequate compensatory or other corrective relief will be available at a later date.' Wisconsin Gas Co. v. FERC, 758 F. 2d 669 (D.C. Cir. 1985)." Pearson argues in his application for review that the Bureau erred in not granting his July 28, 1995 request for stay of the June 22, 1995 action because the Bureau did not adequately consider all precedent. Specifically, citing Washington Metropolitan Area Transit Commission v. Holiday Tours, Inc., 559 F. 2d 841 (D.C. Cir. 1977), Pearson maintains that monetary losses can constitute irreparable harm when the loss threatens the very existence of the business in question. He states that in this case denial of the requested stay has "completely destroyed" his business as a radio broadcaster in DeWitt because, with the uncertainty regarding KDEW-FM ownership, he was unable to sell advertising for the station and was forced to terminate its operation and business activities on September 16, 1995. The station remains silent. 7. The Bureau correctly denied Pearson's motion for stay of the June 22 action. The key word in the consideration of the second standard in evaluating a request for stay is irreparable. Virginia Petroleum Jobbers, supra, 259 F. 2d at 925. The economic injury complained of in this case, if any, is in the nature of "temporary monetary losses for which 'adequate compensatory or other corrective relief will be available at a later date.'" Washington Metropolitan Area Transit Commission, 559 F. 2d at 843, note 2. While Pearson argues that his business of running a radio station in DeWitt has been "completely destroyed," Pearson himself apparently anticipates that he can resume his broadcast business in DeWitt should the Commission grant his stay request. Similarly, we have not been presented with any evidence that Pearson could not return the station to the air and resume his business should he ultimately prevail on the merits of the receivership proceeding and reclaim his allegedly rightful ownership of the KDEW(AM)/-FM. These circumstances do not support a finding of irreparable injury. 8. Furthermore, in citing Washington Metropolitan Area Transit Commission to support his request for stay, Pearson ignores much of the holding of that case. Specifically, there the court indicated that "destruction of a business" can constitute irreparable harm under the Virginia Petroleum Jobbers test if "the other three factors [relevant to granting a stay] strongly favor interim relief." 559 F. 2d at 843. It went on to describe how grant of a stay in that case would have no impact on other parties or on the public interest. Here, in contrast, the Bureau explicitly granted the Receiver Applications to prevent Quadras from assigning the stations' licenses and thus evading the policy of creditor protection underlying the appointment of a receiver. We believe rescinding these grants, reinstating Pearson as the KDEW-FM licensee and Quadras as the KDEW(AM) licensee, and staying further Commission action until resolution of the Arkansas state court proceedings would undermine this policy. Thus, we reject Pearson's arguments regarding the denial of its request for stay. 9. Receivership validity. Pearson contends that the Bureau ignored his evidence that the appointment of First National, a major creditor, as Quadras' receiver violates Arkansas statutory and case law, citing Arkansas Code Section 16-117-207(b), as amended and Cook v. Martin, 75 Ark. 40 87 S.W. 635 (1905). He therefore claims that the Bureau erred when it approved the application to assign the KDEW(AM) and KDEW-FM licenses to First National as receiver for Quadras. Additionally, in his July 12 Supplement, Pearson points to the dicta in the June 24, 1996 Arkansas Supreme Court opinion indicating that the appointment of First National "is in apparent violation" of state law. 10. We believe that D.H. Overmyer, 94 FCC 2d 117 (1983), cited in both Bureau rulings, is dispositive of this issue. In D.H. Overmyer, a debtor challenged an involuntary assignment application to a bankruptcy trustee alleging, as does Pearson here, that there were "mistakes, illegalities, and irregularities" in the bankruptcy court's decision. In ruling on the objection, the Bureau stated that we have "consistently held that the Commission will not generally question the appointment of a bankruptcy trustee or receiver where a court is seeking to protect the creditors of a financially disabled licensee." Rather, "such disputes should be left to those tribunals which are specifically charged with reviewing such matters on appeal." Overmyer, 94 FCC 2d at 123. See also H. Edward Dillon, 42 FCC 2d 203 (1973) (Commission refuses to delay action on or independently investigate involuntary assignment in light of allegations of fraud and conspiracy in appointment of receiver where state appellate court refused to grant stay of receiver's appointment and specifically authorized the receiver to close the sale). Accord, O.D.T. International, 9 FCC Rcd 2575, 2576 (1994) (Commission will not hear "what amount to appeals" of state court matters). 11. In accordance with this precedent, we will not at this point overturn the Bureau's grant of the Receiver Applications. First National's receivership has not been invalidated by a state court of competent jurisdiction. While the Arkansas Supreme Court vacated and remanded to the Chancery Court its denial of Pearson's right to intervene, it did not overturn First National's appointment as receiver. Moreover, the Arkansas Supreme Court statement regarding the propriety of First National's appointment as Quadras' receiver in remanding the case to the chancery court was dicta. Nevertheless, in light of the remand and the questions concerning the legality of the receivership raised by the Arkansas Supreme Court, we will exercise our discretionary authority and impose an appropriate condition on the grant of the Receiver Applications, as described in Paragraph 13, infra. 12. We also note that our records indicate that Station KDEW-FM has been silent since September 15, 1995, while KDEW(AM) has been silent since June 25, 1991. We caution all parties that, pursuant to the Commission's May 17, 1996 Order implementing Section 403(l) of the Telecommunications Act of 1996, Pub. L. No. 104-104, 110 Stat. 56 (1996), the stations' licenses will expire automatically at 12:01 a.m. on February 9, 1997 unless the stations resume broadcast operations by that date. See Order, FCC 96-218 (released May 17, 1996)  4-5. 13. Accordingly, in light of the above discussion, the Application for Review filed by Max H. Pearson IS GRANTED to the extent that the Receiver Applications will be conditioned as specified below, and IS DENIED in all other respects. Additionally, the grant of the applications (File Nos. BTC-940425EB and BTCH-940425EC, respectively) for involuntary transfer of control of stations KDEW(AM) and KDEW-FM from Quadras, Inc. to First National Bank of DeWitt IS AFFIRMED, subject to the following condition: The grant of these applications (BTC-940425EB/BTCH-940425EC) is without prejudice to whatever action, if any, the Commission deems appropriate as a result of the final determination in the Arkansas state court proceeding In Re Quadras, Inc., Case No. E-94-53. FEDERAL COMMUNICATIONS COMMISSION William F. Caton Acting Secretary