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Granted Assignment Application of WHNR(AM), Cypress Gardens, FL

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Released: August 3, 2012

Federal Communications Commission

Washington, D.C. 20554

August 3, 2012


DA 12-1262


In Reply Refer to:
1800B3-SS
Released: August 3, 2012
George R. Reed, Receiver
c/o Lewis J. Paper, Esq.
Pillsbury Winthrop Shaw Pittman, LLP
2300 N Street, N.W.
Washington, DC 20037
Carlos Guerrero, Member
La Poderosa, LLC
c/o Barry D. Wood, Esq.
3300 Fairfax Drive, Suite 202
Arlington, VA 22201
Florida Spanish Communications Corp.
c/o Barry A. Friedman, Esq.
Thompson Hine, LLP
1920 N Street NW, Suite 800
Washington, DC 20036-1600
Martin Santos, President
GB Enterprises Communications Corp.
1505 Dundee Road
Winter Haven, FL 33834
In re:

WHNR(AM), Cypress Gardens, FL

Facility ID No. 21766

Applications for Assignment of
License

File No. BAL-20120316AAP

Informal Objections

File No. BAL-20110810AAB

Petition for Reconsideration

Dear Mr. Santos and Counsel:
We have before us: (1) the referenced application (“Assignment Application”) seeking Commission
consent to the proposed involuntary assignment of license for Station WHNR(AM), Cypress Gardens, Florida
(“Station”), from GB Enterprises Communications Corp. (“GB”) to George R. Reed, Receiver (“Reed” or
“Receiver”); and (2) Informal Objections to the Assignment Application filed on March 20, 2012, by La
Poderosa, LLC, and its owner Carlos Guerrero (“Guerrero,” and collectively, “Poderosa”) (“Poderosa
Objection”) and on March 21, 2012, by Florida Spanish Communications Corp. (“FSCC”) (“FSCC

Objection”).1 We also have before us Poderosa’s February 15, 2012, Petition for Reconsideration
(“Petition”)2 of the staff’s February 9, 2012, grant of the referenced application3 for assignment of the
Station’s license from GB to FSCC.4 For the reasons stated below, we grant the Petition; rescind the grant of
the 2011 Application and dismiss it without prejudice; we also deny the Poderosa and FSCC Objections, and
grant the Assignment Application.

Background

. On August 10, 2011, the Parties filed the 2011 Application to assign the Station
from GB to FSCC. On September 12, 2011, Poderosa filed a Petition to Deny that application arguing
that it had made loans to GB and to GB’s President and 100 per cent stockholder, Martin Santos
(“Santos”), which were not timely repaid. Poderosa asserted that GB sought to assign the Station in order
to avoid payment of money that GB and Santos were contractually obligated to pay to Poderosa. In the
Staff Decision granting the 2011 Application, the staff noted that the Commission is not the proper forum
for the resolution of private contractual disputes such as those raised by Poderosa here. It also observed
that although “Petitioners [claimed to] have initiated arbitration proceedings in Florida seeking to collect
on the debt and for other remedies against Santos and [GB],” they had “not provided evidence of an
injunction or a stay issued by a local court against the proposed sale."5 The staff stated that, in the
absence of such an order from a local court, it routinely acts favorably on license assignment applications.
The Staff Decision explained that the “action [granting the 2011 Application was] . . . permissive only and
[did] . . . not prejudice any relief to which the parties may ultimately be entitled.”6

On January 24, 2012, Poderosa, during the pendency of the 2011 Application, obtained a Florida
state court order enjoining Santos and GB from “attempting to assign the license or other assets of the
Station to any third party, or to transfer control of [GB], pending the completion of the arbitration
proceedings.”7 Poderosa did not bring the January Court Order to the attention of the staff prior to
issuance of the Staff Decision on February 9, 2012. Subsequently, on February 16, 2012, the court
granted GB creditor Edward Olivares’s (“Olivares”) motion to appoint a Receiver to “obtain the FCC’s
consent to the involuntary assignment of the FCC license [for the Station].”8 On March 16, 2012, GB and


1 On March 29, 2012, the Receiver filed an Opposition to the Informal Objections, to which Poderosa replied on
April 11, 2012. On May 11, 2012, Receiver filed a Supplement to his Opposition, to which Poderosa filed a
Response on June 6, 2012.

2 On February 27, 2012, FSCC filed an Opposition to Petition for Reconsideration, to which Poderosa replied on
March 8, 2012.
3 File No. BAL-20110810AAB (the “2011 Application”).
4 See Letter to Carlos Guerrero, FSCC, and Martin Santos, Ref. 1800B3 (MB rel. Feb. 9, 2012) (“Staff Decision”).
The Parties have not consummated this transaction.
5 Staff Decision at 2.
6 Id.
7 See Martin Santos and GB Enterprises Communications, Corp. v. Carlos S. Guerrero and La Poderosa, LLC,
Order Granting Motion to Compel and Injunction, Circuit Court of Polk County, Florida, Case Number 53-2011
CA-001681-0000-LK Section Number 7 (Fla. Polk County Ct.) (rel. Feb. 12, 2012) (“January Court Order”).
8 See Edward Olivares v. Martin Santos, Verified Emergency Motion for Proceedings Supplementary, Injunctive
Relief, Request for Appointment of Receiver and Motion for Expedited Hearing, Case No. 2009CA-005214 Section
Number 7 (Fla. Polk County Ct.). (“Olivares Motion”), filed February 16, 2012; granted by Judge J. Michael
McCarthy (“Judge McCarthy”) on that same day (“February Court Order”).
2

Receiver filed the Assignment Application, attaching to it a copy of the February Court Order appointing
Reed as Receiver for the Station.9
In its Petition, Petitioners argue that the staff should rescind its grant of the 2011 Application and
return GB and FSCC to the status quo ante, as the January Court Order enjoining GB from assigning the
Station to any third party precludes the staff’s February 9, 2012 grant.10 In its Opposition to the Petition,
FSCC argues that there is no basis for the Commission to reconsider its consent due to Poderosa’s failure
to timely submit the January Court Order into the record and that the proper course under Commission
precedent is to allow the state court to render an ultimate decision on the merits.11 In Reply, Poderosa
argues that nothing in Northwest prohibits the staff from rescinding its grant of consent to an assignment
where an injunction prohibits an unconsummated assignment, as here.12

In its Objection, Poderosa argues that the Commission should not take any action on the
Assignment Application until the court resolves what Poderosa believes is a “conflict” between the
January and February Court Orders.13 Poderosa claims that the January Court Order enjoins GB from
assigning the assets of the Station to any third party – including the Receiver – while the February Court
Order
directs assignment of the Station to the Receiver.14 Poderosa states that Judge McCarthy, who
“labors under an extremely heavy caseload,” may have not known that the Station for which he appointed
a Receiver in the February Court Order was the same station which he enjoined from being assigned in
the January Court Order.15 Poderosa also argues that assignment of GB’s assets to the Receiver would
prejudice other creditors of GB, such as its principal, Guerrero.16
In its Objection, FSCC argues that the Assignment Application arises from the effort of single
creditor, Olivares, who has secured the appointment of Reed to take control of the Station and proceed
with a sale process for the benefit of Olivares and to the detriment of FSCC and other parties.17 It states
that the Commission should not grant the Assignment Application until and unless all matters related to


9 See Assignment Application and February Court Order at Attachment 6.
10 Petition at 2.
11 Opposition to Petition at 2, citing Northwest Broadcasting, Inc., Memorandum Opinion and Order, 12 FCC Rcd
3289, 3296 (1997) (“Northwest”).
12 Reply to Opposition to Petition at 5. Poderosa also contends for the first time that GB assigned the Station to
FSCC so that FSCC’s sole principal, Francisco Arredondo, a former employee of GB, could obtain a federal
government loan through the Minority Small Business Investment Corporation and assign the Station back to GB
“for the same $1,000 price,” thus constituting “loan fraud.” Id. at 6. We will not consider this allegation. See 47
C.F.R. § 1.45(c) (replies are limited to matters raised in oppositions).
13 Poderosa Objection at 2.
14 Poderosa also claims that the Assignment Application should be refiled as a transfer of control application with
the receiver “stepping into the shoes” of Santos and exercising control of GB stock, but not to acquire ownership of
the assets of the Station. Id. at 7. It claims that the Emergency Motion requested an Order “seizing the corporation
stock . . . [and ] appointing George R. Reed as Receiver . . . .” These items, Poderosa argues, are more consonant
with a transfer of control of the corporation than with an assignment of the station’s license and assets. Id. at 6-7.
15 Id. at 5.
16 Id. at 7.
17 FSCC Objection at 1-2.
3

the ownership and control of the Station, as well as rights and obligations of all creditors and parties to
contracts with GB, are fully resolved.18
In its Opposition to the Poderosa and FSCC Objections, Receiver argues that the Assignment
Application is merely implementing the court directive and is nothing more than a routine issuance of an
order by a state court for a receiver to take temporary possession of a radio station and to manage it for
the benefit of creditors and other parties until competing claims can be resolved.19 Receiver further
argues that contrary to Poderosa’s claim, the February Court Order, in granting the Olivares Motion,
required that the GB stock be seized by the Polk County Sheriff’s Office and not the Receiver.20 In
Reply, Poderosa argues that “no formal Order was issued delineating exactly what the scope of the
Receiver’s authority would be,” and therefore, the Commission should dismiss the Assignment
Application or, at a minimum, wait for the issuance of a court order.21


Discussion

. The Petition. Reconsideration is warranted only if the petitioner sets forth an error
of fact or law, or presents new facts or changed circumstances which raise substantial or material
questions of fact that otherwise warrant reconsideration of the prior action.22 For the reasons set forth
below, we will grant the Petition.
We affirm that Poderosa’s allegations regarding the non-repayment of loans it made to GB and
Santos are private in nature, and therefore, fall outside the Commission's jurisdiction.23 Nevertheless, the
Commission is obligated to accommodate, as feasible, federal and state bankruptcy court proceedings.24
Although unaware of the release of the January Court Order when it granted the 2011 Application, the
staff may take official notice of court opinions and decisions once they are released.25 Accordingly, we
will grant reconsideration, rescind grant of the 2011 Application, and dismiss it without prejudice pending
the final resolution of the pertinent court proceeding. We believe that our action here furthers the
Commission’s policy of comity with state court actions and will not prejudice any involved party.26


18 Id. at 2. FSCC observes, for example, that it has a contract to acquire GB’s assets and received Commission
consent to do so by grant of the 2011 Application.
19 Opposition at 2 and 6.
20 Id. at 2-3; see also Olivares Motion at 7 and 12.
21 Reply at 6.
22 See 47 C.F.R. § 1.106.
23 See John F. Runner, Receiver (KBIF), Memorandum Opinion and Order, 36 RR 2d 773, 778 (1976).
24 See Radio Station WOW, Inc. v. Johnson, 326 U.S. 120, 131-132 (1945); Arecibo Radio Corp., Memorandum
Opinion and Order, 101 FCC 2d 545, 548 (1985) (“Arecibo”).
25 See Malin Christian Church, Inc., Letter, 25 FCC Rcd 915, 916 (MB 2010); see also Ms. Sandra Soho, Letter, 24
FCC Rcd 13826, 13827 n.2 (MB 2009) (staff takes official notice of Oregon court judgment recognizing Soho as de
facto
licensee of station KRAT(FM)).
26 See, e.g., Kirk Merkley, Memorandum Opinion and Order, 94 FCC 2d 829, 836 (1983), recon. denied, FCC 84-
305, 56 RR 2d 413 (1984) (“Merkley II”), aff'd sub nom. Merkley v. FCC, 776 F.2d 365 (1985).
4

The Objections. Section 310(d) of the Communications Act of 1934, as amended (the “Act”)27
requires the Commission to determine whether the proposed transfer or assignment of a broadcast license
would be in the public interest. Pursuant to Sections 309(d) and (e) of the Act,28 informal objections must
provide properly supported allegations of fact that, if true, would establish a substantial and material
question of fact calling for further inquiry regarding whether grant of the Assignment Application would
be prima facie inconsistent with Section 309(a) of the Act.29 This section provides that we are to grant an
application if, upon consideration of the application and pleadings and other such matters of which we
may officially take notice, we find that the public interest, convenience, and necessity will be served by
the granting of such application. If, however, the applicant fails to meet that standard, the Commission
may deny the application after notice and opportunity for a hearing under Section 309(e) of the Act.
Under this standard, when reviewed on their merits, the Poderosa and FSCC challenges fail.
To the extent that Poderosa and FSCC are concerned about their contractual and creditor rights,
we reiterate that the local courts, not the Commission, are the appropriate forum for seeking relief.30 In
this case, we follow the well established procedure of approving an application for involuntary
assignment or transfer of control pursuant to a court order appointing a receiver “to conserve the business
and assets of the Station until a sale of the Station's assets is confirmed and a purchaser is found for the
Station acceptable to the Receiver, and the FCC has granted its consent for transfer of the FCC license to
such purchaser.”31 Poderosa and FSCC Objections do not argue that the Receiver lacks the basic
qualifications to become a Commission licensee or that the proposed transaction violates the public
interest. We conclude that the appointment of the Receiver here does not conflict with Commission
policy and, consistent with our long-standing precedent of accommodation of state court actions
compliant with the Commission's rules and policies, we will defer to the court's appointment of the
Receiver.32

Poderosa and FSCC also argue that the Commission should refrain from acting on the
Assignment Application until the court resolves alleged conflicts between the January and February
Court Orders
. We disagree. Although any alleged inconsistencies in the January and February Court
Orders
certainly are a matter for the court, not the Commission, to decide,33 as we stated previously in the


27 47 U.S.C. § 310(d).
28 47 U.S.C. § 309(e).
29 Id. § 309(a). See, e.g., WWOR-TV, Inc., Memorandum Opinion and Order, 6 FCC Rcd 193, 197 n.10 (1990), aff'd
sub nom. Garden State Broadcasting L.P. v. FCC
, 996 F.2d 386 (D.C. Cir. 1993), rehearing denied (Sept. 10,
1993); Area Christian Television, Inc., Memorandum Opinion and Order, 60 RR 2d 862, 864 (1986) (informal
objections, like petitions to deny, must contain adequate and specific factual allegations sufficient to warrant the
relief requested).
30 See, e.g., O.D.T. International, Memorandum Opinion and Order, 9 FCC Rcd 2575, 2576 (1994); Arecibo, 101
FCC 2d at 550-551.
31 See e.g., Caswell Capital Partners, LLC, Letter, 24 FCC Rcd 2894, 2898 (MB 2009), aff’d, Gresham
Communications, Inc.
, Memorandum Opinion and Order, 26 FCC Rcd 11895 (2011).
32 See Merkley II, 56 RR 2d at 417.
33 See, e.g., Paxson Management Corporation and Lowell W. Paxson, Memorandum Opinion and Order, 22 FCC
Rcd 22224, 22235 (2007), citing Northwest, 12 FCC Rcd at 3293 (issue of whether a particular court order
constitutes a valid exercise of its authority under state law is a question appropriately resolved under state judicial
procedures).
5

Staff Decision, the Commission’s grant of an assignment or transfer of control application merely finds
that the parties to the Assignment Application are qualified under, and the proposed transaction does not
violate, the Act, or the Commission's rules and policies. Therefore, the permissive grant herein does not
prejudice any relief to which any party may ultimately be entitled under state law.34 From our
perspective, it is sufficient that the court granted the Olivares Motion both “as to Injunctive Relief and
Appointment of Receiver.”35
Finally, with respect to Poderosa’s claim that the staff should refrain from acting on the
Assignment Application because it is unclear whether or not the Receiver will hold only the stock of GB,
this matter also is best resolved by Poderosa, FSCC, and Receiver seeking clarification of the February
Court Order
from the state court judge who issued it. We will honor and give effect to any such
determination but, as explained above, we need not withhold action on the Assignment Application while
Poderosa brings its claim to state court.

Conclusion/Actions

. In light of the above discussion, we find that Poderosa has presented
circumstances that warrant reconsideration of the staff’s grant of the 2011 Application. Accordingly, IT
IS ORDERED, that the La Poderosa, LLC and Carlos Guerrero February 15, 2012, Petition for
Reconsideration IS GRANTED, and that the application for approval to assign the license for Station
WHNR(AM), Cypress Gardens, Florida, from GB Enterprises Communications Corp.
to Florida Spanish Communications Corp. (File No. BAL-20110810AAB), granted on February 9, 2012,
IS RESCINDED and that application IS DISMISSED without prejudice.36
Additionally, Poderosa and FSCC have not raised a substantial and material question of fact
warranting further inquiry regarding the Assignment Application. We further find that the Receiver is
qualified to hold the license for Station WHNR(AM), Cypress Gardens, Florida, and that grant of the
Assignment Application is consistent with the public interest, convenience and necessity. Accordingly,
IT IS FURTHER ORDERED, that the Informal Objections filed by La Poderosa, LLC and Carlos
Guerrero on March 20, 2012, and by Florida Spanish Communications Corp. on March 21, 2012, ARE
DENIED, and the application for approval to assign the license for Station WHNR(AM), Cypress
Gardens, Florida (File No. BAL-20120316AAP) from GB Enterprises Communications Corp. to Geroge
R. Reed, Receiver, IS GRANTED.
Sincerely,
Peter H. Doyle
Chief, Audio Division
Media Bureau


34 See, e.g., MB Communications, Inc., c/o James L. Oyster, Esq., The Finger Lakes Radio Group, Inc., c/o John F.
Garziglia, Esq.,
Letter, 26 FCC Rcd 11178, 11179 (MB 2011).
35 Olivares Motion at 1.
36 We note that should the Florida state court lift its injunction or otherwise permit this transaction, the Parties may
re-file their application.
6

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