H1B transfer petition Denied. I94 already expired.

[lraden]

I had initially come to the USA on H4 visa. Later changed to H1B with Employer A which expired in November 2017.

I applied for an H1B transfer with Employer B in October 2017 and started working with new employer with the receipt. This petition has been denied in Jan 2018.

What are my options? I have applied for I 539 to change to H4 status immediately but I am not sure if that is a valid form for me since my I94 expired in Nov 2017. Is my stay legal?

 

Thanks!