Kama v Chuuk [2002] FMCSC 5; 10 FSM Intrm. 593 (Chk. S. Ct. App. 2002) (19 April 2002)

CHUUK STATE SUPREME COURT
APPELLATE DIVISION

Cite as Kama v. Chuuk
[2002] FMCSC 5; 10 FSM Intrm. 593 (Chk. S. Ct. App. 2002)

[2002] FMCSC 5; [10 FSM Intrm. 593]

MINORU KAMA,
Appellant,

vs.

CHUUK STATE,
Appellee.

APPEAL NO. 09-1999

OPINION

Argued: December 10, 2001
Decided: April 19, 2002

BEFORE:

Hon. Keske S. Marar, Associate Justice, Chuuk State Supreme Court
Hon. Yoster Carl, Temporary Justice, Chuuk State Supreme Court*
Hon. Midasy O. Aisek, Temporary Justice, Chuuk State Supreme Court**

*Associate Justice, Pohnpei Supreme Court, Kolonia, Pohnpei
**Attorney at Law, Weno, Chuuk

APPEARANCES:

For the Appellant: Stephen V. Finnen, Esq.
Law Offices of Saimon & Associates
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Appellee: Tony Rosokow, trial counselor
Assistant Attorney General
Office of the Chuuk Attorney General
P.O. Box 189
Weno, Chuuk FM 96942

* * * *

HEADNOTES

Judgments - Relief from Judgment
A successor trial court judge has the same power to grant relief from judgment under Rule 60(b) that the original trial court judge had. A successor judge may vacate a judgment when the original judge would have had an adequate legal basis to do so. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 597 (Chk. S. Ct. App. 2002).

[10 FSM Intrm. 594]

Appeal and Certiorari - Standard of Review; Judgments - Relief from Judgment
Appellate review of a grant or denial of a motion for relief from judgment is limited to determining whether the trial court abused its discretion. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Appeal and Certiorari - Standard of Review
An abuse of discretion occurs when 1) the court's decision is clearly unreasonable, arbitrary, or fanciful; 2) the decision is based on an erroneous conclusion of law; 3) the court's findings are clearly erroneous; or 4) the record contains no evidence on which the court rationally could have based its decision. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
The right to seek relief from judgment under Rule 60(b) is restricted to a party or a party's legal representative. Rule 60(b) explicitly requires a motion from the affected party, not from the trial court acting sua sponte. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
The Rule 60(b) requirement that a party seek relief is unlike a Rule 60(a) correction of a clerical error in a judgment, which may be corrected by the court of its own initiative or on any party's motion. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
It was an erroneous conclusion of law for a trial court to hold it had the authority to move sua sponte to relieve a party from judgment. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Constitutional Law - Due Process - Notice and Hearing
Notice and an opportunity to be heard is the essence of due process. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Constitutional Law - Due Process - Notice and Hearing; Judgments - Relief from Judgment
When the trial court sua sponte set aside a judgment without notice and an opportunity to be heard, it set aside the judgment without due process of law. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Appeal and Certiorari - Standard of Review
A judge abuses his discretion when his action violates a litigant's right to due process because such action is clearly unreasonable. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 598 (Chk. S. Ct. App. 2002).

Civil Procedure; Contracts; Judgments
Neither Rule 68, nor any principle of contract law, requires an acceptance to be on a different piece of paper from the offer of judgment in order for it to be valid. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

Civil Procedure
While a Rule 68(b) hearing to give the court the benefit of evidence or hearing testimony concerning the claim's value may be both highly desirable and very useful, it is not an absolute necessity because the court may, on its own motion and in its discretion, order that a hearing be held. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

[10 FSM Intrm. 595]

Civil Procedure; Statutes - Construction
While it is true in construction of statutes and rules that the word "may" as opposed to "shall" is indicative of discretion or a choice between two or more alternatives, the context in which the word appears must be the controlling factor. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

Civil Procedure
When the word "may" is used in Chuuk Civil Rule 68(b) and the rule adds even further qualifiers ("a hearing be held if in the discretion of the court") that reveal the discretionary nature of the hearing, the context is clear - the word "may" in Rule 68(b) denotes discretion. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

Civil Procedure; Judgments
When the original trial judge had the discretion to hold, or not to hold, a Rule 68(b) hearing and when it appears that, based on the memorandum submitted with the offer and acceptance and the attorney general's authority to settle claims against the state, the trial judge exercised his discretion not to hold a Rule 68(b) hearing and instead issued the judgment, the holding that a Rule 68(b) hearing was an absolute necessity was an erroneous conclusion of law. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

Appeal and Certiorari - Standard of Review; Constitutional Law - Due Process - Notice and Hearing
A trial court abuses its discretion when it sua sponte sets aside a judgment because the court, and not a party or his legal representative made the motion; when the judgment holder was denied due process because he was not given notice and an opportunity to be heard before the decision against him was announced; and when the decision was based upon an erroneous conclusion of law that a trial court Rule 68(b) hearing was an absolute necessity before this judgment could be entered. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
Relief from judgment must be sought by motion with notice to opposing party and an opportunity for him to be heard. The motion must state the grounds for the relief, including the facts and the law on which the grounds are based, and why the movant believes that the motion is brought within a reasonable time, that is, the movant must show good reason for its failure to take appropriate action sooner. If the motion is brought pursuant to Rule 60(b)(6), the movant must also state the nature of the extraordinary circumstances that are the ground for relief. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
A motion for relief from judgment cannot be brought under Rule 60(b) subsections (1), (2), or (3) when it is more than one year after the judgment. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

Judgments - Relief from Judgment
The movant for relief from judgment must keep in mind that generally the standard for reopening a consent final judgment is a strict one. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

Debtors' and Creditors' Rights
The procedure for a judgment creditor to obtain an order in aid of judgment and the authority for a court to issue one is contained in section 55 of Title 8 of the Trust Territory Code, which, under the Chuuk Constitution's Transition Clause, is still applicable law in Chuuk. Section 55, by its terms,

[10 FSM Intrm. 596]

does not bar its application to a government judgment debtor. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

Debtors' and Creditors' Rights
Section 4 of the Chuuk Judiciary Act of 1990 denies courts the power of attachment, execution and garnishment of public property. Thus, a court may issue an order in aid of judgment addressed to the state, but is barred from issuing any order in aid of judgment that acts as an attachment, execution and garnishment of public property. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

Debtors' and Creditors' Rights
Any order in aid of judgment may, be modified by the trial court at any time upon application of either party and notice to the other, or on the court's own motion. Kama v. Chuuk, [2002] FMCSC 5; 10 FSM Intrm. 593, 600 (Chk. S. Ct. App. 2002).

* * * *

COURT'S OPINION

KESKE S. MARAR, Associate Justice:

This appeal arises from the October 18, 1999 trial court order in Civil Action No. 129-90, modifying an order in aid of judgment issued July 7, 1999, and sua sponte setting aside the underlying judgment entered on June 13, 1994. We vacate that order. Our reasons follow.

I. TRIAL COURT PROCEEDINGS

On November 1, 1990, Minoru Kama filed his complaint seeking damages for the State of Chuuk's alleged trespass and taking of his land as the result of road building Capital Improvement Project. The state filed its answer on November 16, 1990, and discovery went forward thereafter.

On May 16, 1994, the state, through its then Attorney General Kachuo Eko, made an $80,000 offer of judgment, which Kama accepted. The offer and acceptance was filed May 17, 1994, along with a two-page Memorandum in Support of Offer and Acceptance of Judgment, citing three comparable cases and detailing reasons why the offer and acceptance was a reasonable and just settlement between the parties. On June 13, 1994, based on this filing, Associate Justice Machime O'Sonis signed a judgment for $80,000.

The judgment was not satisfied. On January 11, 1999, Kama moved for an order in aid of judgment. Because Kama's counsel had since come to represent Justice O'Sonis in unrelated litigation, the case was reassigned to Associate Justice Camillo Noket. Hearings were held April 26, 1999 and May 3, 1999.

On July 7, 1999, Justice Noket issued a twelve-page Order in Aid of Judgment that noted that Kama's judgment was for the state's taking his property for a road without just compensation, and that the state had so far only paid Kama a total of $4,570, which did not even cover the interest on the judgment. Justice Noket concluded, among other things, that the court had jurisdiction to hold a hearing for an order in aid of judgment against the state and that the court had the authority to enforce its judgment against the state, except by "the process of execution, attachment and garnishment of Chuuk State Government funds that are restricted to fulfillment of the purposes for which they are appropriated." He ordered the state to satisfy the judgment through regular installment payments. He further ordered the Chuuk Director of Finance to submit a supplemental budget request for any

[10 FSM Intrm. 597]

unappropriated CIP or operations funds for the current fiscal year to pay this judgment and other similar pending judgments against the state; to submit in its annual budget request to the Legislature a request for funds to pay this judgment and other similar judgments from unappropriated CIP or operations funds; and that a further status hearing would be held on October 6, 1999.

Because Justice Noket had resigned from the bench, that hearing was held before Associate Justice Wanis Simina on October 7, 1999. It is undisputed that at that hearing, neither the state nor the court moved to set aside the judgment and neither made any allegations of fraud or that the judgment was contrary to public policy. Nor was any evidence or testimony presented on these points. On October 18, 1999, Justice Simina issued a nine-page order "modifying" the order in aid of judgment and setting aside the underlying judgement.

The trial court order reasoned that any order in aid of judgment against the state was coercive in nature and was thus interchangeable with an order in aid of execution, and that since section 4 of the Judiciary Act of 1990, Chk. S.L. No. 190-08, § 4, denied courts "ower of a of attachment, execution and garnishment of public property," the previous order in aid of judgment was not proper. Kama v. Chuuk, [1999] FMCSC 15; 9 FSM Intrm. 496, 497-99 (Chk. S. Ct. Tr. 1999). The order also noted that the Chuuk State Supreme Court trial division generally subjected default or stipulated or agreed judgments against the state to close scrutiny. Id. at 499.

The court order, citing Chuuk Civil Procedure Rules 60(b)(4)-(6) (and also mentioning fraud, a ground under subsection (3)) for its power to do so, then set aside the underlying judgment on the ground that there had been no hearing, which it held required by Rule 68, for the court to have "the benefit of evidence or hearing testimony as to the value of the Plaintiff's claim or the validity thereof." Kama, 9 FSM Intrm. at 499-500. The court order concluded by "modifying" the July 7th order in aid of judgment "to delete any and all reference to the enforcement of the judgment entered by the court against Chuuk State on May 17, 1994 [sic]" and then setting aside that judgment and ordering "that the case be set for trial on the merits at the request and notice by either party." Id. at 500.

Kama then timely appealed the October 18, 1999 order.

II. RELIEF FROM JUDGMENT UNDER RULE 60(b)

A. A Successor Trial Court Judge's Rule 60(b) Powers

Kama contends that it was an error of law for the newly-appointed trial court judge to overrule, by setting aside the judgment, the trial court judge who originally granted judgment, and that it was an abuse of discretion for the newly-appointed trial court judge to set aside the judgment. The state takes the position that a successor judge can set aside his predecessor's judgment if there are positive or clear reasons to do so.

A successor trial court judge has the same power to grant relief from judgment under Rule 60(b) that the original trial court judge had. "A successor judge may vacate a . . . judgment whe original judl judge would have had an adequate legal basis to do so." Sumler v. District Court, 889 P.2d 50, 54 (Colo. 1995) (citing Sunshine v. Robinson, 451 P.2d 757, 760 ( 1969The successor judr judge thge thus must comply with Rule 60(b)'s requirements just as the original judge would have had to if he had remained on the case. The rule could not be otherwise. If it were, then the ability to seek relief from judgment would depend on the chance that the original judge was still on the bench and not disqualified.

Thus whether the judgment was improperly set aside turns on whether the successor judge

[10 FSM Intrm. 598]

abused his discretion when he set it aside or whether he had an adequate legal basis to do so. "Appellate review [of a grant or denial of a motion for relief from judgment] is limited to determining whether the [trial] court abused its discretion." 11 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL PRACTICE AND PROCEDURE § 2857, at 255 (2d 995). The The FSM Supreme Court has held that:

An abuse of discretion occurs when (1) the court's decision is "clearly unreasonable, arbitrary, oriful"; (2) the decision is based on an erroneous conclusionusion of law; (3) the court's findings are clearly erroneous; or (4) the record contains no evidence on which the . . . court rally could have bave based its decision.

Jano v. King, [1992] FMSC 11; 5 FSM Intrm. 326, 330 (App. 1992). That is a good description of the concept.

B. Whether Judgment PropSet A/i>

1

1. Who May Move for Relief from Judgment

In the present case the trial court sua sponte granted relief from judgment under Rule 60(b), subsections (4) through (6). However, the right to seek relief from judgment under Rule 60(b) is restricted to "a party or a party's legal representative." 11 WRIGHT, MILLER & KANE, supra, § 2852, at 235; seo 47i> 47 AM. JUR. 2D Judgments § 757, at 242 (1(those "who hwho have no justiciable grievance to be righted should not be permitted to assail the judgment"). (The Chuuk Rule 60(b) reads "or his legal represive" instead of "or a party's legal representative." This This difference does not alter the Rule's meaning any.) "Rule 60(b) explicitly requires a motion from the affected party," not from the trial court acting sua sponte. Eaton v. Janrog, [1993] USCA6 172; 984 F.2d 760, 762 (6th Cir. 1993).

This Rule 60(b) requirement that a party seek relief is unlike a Rule 60(a) correction of a clerical error in a judgment, which "may be corrected by the court of its own initiative or on the motion of any party." Chk. Civ. R. 60(a). Consequently, Rule 60(b) did not give the trial court the authority to move sua sponte to relieve a party from judgment. It was an erroneous conclusion of law for the court to hold it had that authority.

2. Due Process

Furthermore, the court decided its own motion without giving either party notice or an opportunity to be heard. Notice and an opportunity to be heard is the essence of due process. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997); Senda v. Creditors of Mid-Pacific Constr. Co., [1996] FMSC 18; 7 FSM Intrm. 664, 669 (App. 1996) (both citing Moore v. California Mineral Prods. Corp., 252 P.2d 1005, 1007 (Cal. Dist. Ct. App. 1953) (when trial court sua sponte raises issues of law it deems dispositive, the party against whom the decision impends is denied due process if not afforded an opportunity to be heard before the decision is announced)); see also In re Sanction of Woodruff[2001] FMSC 59; , 10 FSM Intrm. 79, 89 (App. 2001). Due process is a right guaranteed by both the Chuuk, Chk. Const. art. III, § 2, and FSM ConstitutioSM CoSM Const. art. IV, § 3

The trial court turt thus set aside the judgment without due process of law. A jubuses his discretion when his action violates a litigant's right to due process because suce such action is clearly unreasonable.

3. Rule 68

The October 18, 1999 order relied on the asserted non-compliance with Civil Rule 68 for its view

[10 FSM Intrm. 599]

that the judgment was void or should be set aside. It stated that a hearing for the purpose of the court having "the benefit of evidence or hearing testimony" as to the value or the validity of the plaintiff's claim was "an absolute necessity." Kama, 9 FSM Intrm. at 499. The state contends that for equity's sake, there must be hearing to determine whether $80,000 was the fair value of Kama's loss. The state asserts that this sum is unreasonable.

The state also contends that the offer and acceptance are invalid because each should be on a separate piece of paper, and that because both were on the same paper there was no acceptance of the offer. Neither Rule 68, nor any principle of contract law, requires an acceptance to be on a different piece of paper from the offer in order for it to be valid.

While a Rule 68(b) hearing to give the court "the benefit of evidence or hearing testimony" concerning the claim's value may be both highly desirable and very useful, see, e.g., Rosokow v. Chuuk, [1996] FMCSC 1; 7 FSM Intrm. 507, 509-10 (Chk, S. Ct. App. 1995), it was not "an absolute necessity." Rule 68(b) provides that:

If an offer, acceptance, filing and service are made incompliance with section (a) of this rule, the court may, on its own motion, order that a hearing be held if in the discretion of the court, the interests of justice require that the plaintiff prove to the court by the applicable legal standard the amount of damages or other relief sought to be awarded by the offer of judgment. The court shall then issue judgment in accordance with its findings from this said hearing.

The key phrase here is that the "court may" order a Rule 68(b) hearing. While the word "shall" is a word of command, denoting a mandatory requirement, In re Failure of Justice to Resign, [1995] FMCSC 3; 7 FSM Intrm. 105, 109 (Chk. S. Ct. App. 1995), the word "may" usually denotes discretion, BLACK'S LAW DICTIONARY 883 (5th ed. 1979) ("as a general rule, the word `may' will not be treated as a word of command unless there is something in context or subject matter of act to indicate that it was used in such sense"). "While it is true in construction of statutes and . . . ruhat trd `mad `may' as o as opposed to `shall' is indicative of discretion or a choice between two or more alternatives, the contn whie word appears must be the controlling factor." United States v. Cook, 43>, 432 F.22 F.2d 1093, 1098 (6th Cir. 1970)). The word "may" is used in Rule 68(b). The rule adds even further qualifiers ("a hearing be held if in the discretion of the court") that reveal the discretionary nature of the hearing. The context is thus clear - the word "may" in Rule 68(b) denotes discretion. The original trial judge therefore had the discretion to hold, or not to hold, a Rule 68(b) hearing. The holding that a Rule 68(b) hearing was an absolute necessity was an erroneous conclusion of law.

It appears that, based on the memorandum submitted with the offer and acceptance and the attorney general's authority to settle claims against the state, see Truk v. Robi, [1988] FMCSC 1; 3 FSM Intrm. 556, 560-63 (Truk S. Ct. App. 1988), the trial judge exercised his discretion not to hold a Rule 68(b) hearing and instead issued the judgment.

4. Abuse of Discretion

The trial court thus abused its discretion when it set aside the judgment because the court, and not a party or his legal representative made the motion; because Kama was denied due process when he was not given notice and an opportunity to be heard before the decision against him was announced; and because that decision was based upon an erroneous conclusion of law that a trial court Rule 68(b) hearing was an absolute necessity before this judgment could be entered. The order setting aside the judgment must therefore be vacated.

[10 FSM Intrm. 600]

C. Rule 60(b) on Remand
Should the state, on remand, wish to seek relief from the judgment entered in Kama's favor, the relief shall be sought by motion with notice to Kama and an opportunity for him to be heard. The motion must state the grounds for the relief, including the facts and the law on which the grounds are based, and why the movant believes that the motion is brought within a reasonable time, that is, the movant must show good reason for its failure to take appropriate action sooner. Walter v. Meippen, [1996] FMSC 5; 7 FSM Intrm. 515, 518 (Chk. 1996); 11 WRIGHT, MILLER & KANE, supra, § 2866, at 383. he motion is n is brought pursuant to subsection (b)(6), the movant must also state the nature of the extraordinary circumstances that are the ground for relief. 11 WRIGHT, MILLER & KANE,upra, § 2857,2857, at 2The motion cion cannot be brought under subsections (1), (2), or (3) as motions for relief under those subsections must be filed "not more than one year after the judgment." Chk. Civ. R. 60(b). The movant must keep in mind that generally "the standard for reopening a consent final judgment is a strict one." Philadelphia Welfare Rights Org. v. Shapp, [1979] USCA3 522; 602 F.2d 1114, 1119 (3d Cir. 1979).

III. ORDER IN AID OF JUDGMENT AGAINST THE STATE

Kama contends that the trial court has the authority to issue an order in aid of judgment addressed to the state. Kama contends that, contrary to the trial court holding appealed from, the Judiciary Act of 1990 does not bar the issuance of an order in aid of judgment directed to the state. The state's brief does not mention the order in aid of judgment, and the state did not touch on this issue at oral argument. The October 18, 1999 trial court order stated that the trial court was modifying the previous order in aid of judgment. Not explained was exactly how there could be a modified order in aid of judgment when the judgment it was supposed to be in aid of was set aside.

The procedure for a judgment creditor to obtain an order in aid of judgment and the authority for a court to issue one is contained in section 55 of Title 8 of the Trust Territory Code, which, under the Chuuk Constitution's Transition Clause, Chk. Const. art. XV, § 9, is stillicable law in Chin Chuuk. Section 55, by its terms, does not bar its application to a government judgment debtor. Section 4 of the Judiciary Act of 1990, Chk. No. 190-08, § 4, does, ho, deny courts "tts "ths "the power of attachment, execution and garnishment of public property."

This court concludes that this provision does not bar the issuance of an order in aid of judgment addressed to the state, but does bar the issuance of any order in aid of judgment that acts as an "attachment, execution and garnishment of public property." The July 7, 1999 order in aid of judgment does not appear to act in such a fashion. It ordered the Chuuk Director of Finance to submit budget requests to the Legislature. (While the court may have some doubt whether an order in aid of judgment in one case can include orders in aid of judgments in "all other similarly unpaid court judgments" that point was not raised and argued and so will not now be addressed here.) The order also generally ordered the state to pay, but every money judgment is an order to pay. The July 7, 1999 order in aid of judgment is therefore reinstated to the extent that its terms are still applicable.

The July 7, 1999 order in aid of judgment may, as any order in aid of judgment may, be modified by the trial court at any time "upon application of either party and notice to the other, or on the court's own motion." 8 TTC 57. Thus, on remand, either party, or the trial court, may, with notice, move to modify the July 7, 1999 order in aid of judgment.

IV. CONCLUSION

Accordingly, the October 18, 1999 trial court order is vacated. The June 13, 1994 judgment and, to the extent that its terms are still applicable, the July 7, 1999 order in aid of judgment are

[2002] FMCSC 21; [10 FSM Intrm. 601]

reinstated. This case is hereby remanded to the trial court, which may take such further action as is consistent with this opinion.

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