Mid-Pacific Construction Co v Semes [1993] FMSC 55; 7 FSM Intrm. 102 (Pon. 1995) (29 March 1993)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Mid-Pacific Construction Co v Semes, [1993] FMSC 55; 7 FSM Intrm. 102 (Pon. 1995)

MID-PACIFIC CONSTRUCTION CO., INC.,
on Assignment for Benefit of Creditors, and AMBROS T. SENDA,
Plaintiffs,

vs.

HERMAN SEMES and HATLER GALLEN,
Defendants.

CIVIL ACTION NO. 1992-041

ORDER AND MEMORANDUM OF DECISION

Martin Yinug
Associate Justice

Decided: March 29, 1993

APPEARANCES:

For the Plaintiffs:
Daniel J. Berman, Esq.
Rush, Moore, Craven, Sutton, Morry & Beh
2000 Hawaii Tower
745 Fort Street
Honolulu, Hawaii 96813

For the Defendants

(Herman Semes):
Tino Donre, Esq.
Micronesian Legal Services Corporation
P.O. Box 129
Kolonia, Pohnpei FM 96941

(Hatler Gallen)
John Brackett, Esq.
P.O. Box 208
Kolonia, Pohnpei FM 96941

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HEADNOTES

Constitutional Law; Constitutional Law - Legislative Powers
In the absence of any authority or compelling policy arguments the court cannot conclude that a law, the enforcement of which entails a harsh result, is unconstitutional, and can only note that the creation of potentially harsh results is well within the province of the nation's constitutionally empowered legislators. Mid-Pacific Constr. Co. v. Semes, [1993] FMSC 55; 7 FSM Intrm. 102, 104 (Pon. 1995).

Corporations
Corporate regulation is governed by national law unless or until the states undertake to establish corporate codes of their own. Mid-Pacific Constr. Co. v. Semes, [1993] FMSC 55; 7 FSM Intrm. 102, 105 (Pon. 1995).

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COURT'S OPINION

MARTIN G. YINUG, Associate Justice:

This matter concerns defendants' second Motion for Summary Judgment. Defendants present to the Court a new legal theory since their first summary judgment motion was denied. The Court again denies defendants' motion based upon the reasoning that follows.

Facts and Legal Standard

Defendants move again for summary judgment since the denial of their earlier summary judgment motion. The facts and the applicable legal standard are set out in this Court's August 31, 1993, Order Denying Summary Judgment For Defendants. As the parties agree that no genuine issue of material fact exists, the motion requests summary adjudication solely upon matters of law.

Question of Law

Defendants first treat the Court to a slew of unsupported statements and conclusions that do not rise to the level of argument. Of these nothing more will be said.

Defendants essentially present two legal arguments. The first is that § 2.7 of the TTerritory CorpoCorporate Regulations did not survive the advent of the FSM Constitution. Attempting to make this argument, defendants first inform the Court thae Trust Territory law has passed into FSM law by virtue of e of the Transition Clause, "finer screens" should be applied. Defendants next argue that the need for such "fine tuning is seen most graphically in FSM v. Oliver [sic][1988] FMSC 29; , 3 FSM Intrm. 469 (Pon. 1988)." However, defendants offer the Court no analysis to show how that decision bears upon their case. Next defendants suggest that for other examples the Court "see cases cited in Oliver at 476." If defendants think any of the cases cited in Oliver favor their position it is their job to cite them to the Court and to provide the Court with legal analysis attempting to show their relevance. It is not the Court's job to do defendants' research for them or to put together arguments on their behalf. For the second time in this case the Court wishes to reiterate that it does not have a duty to guess what the missing points of a party's argument would be. Defendants' counsel is advised that the most effective advocacy entails presenting to the Court strong legal arguments based upon proper and complete citation of legal authority together with legal analysis applying cited authority to his clients' case. The "finer screens" or "fine tuning" argument is not sufficiently developed to be of much use either to the defendants or to the Court.

The core of defendants' first argument seems to begin with Article XV, section 1, of the FSM Constitution, noting that a Trust Territory law does not continue in effect if it is "inconsistent with this Constitution, or is amended or repeated [sic]." It notes further that under the Judicial Guidance Clause, "Court decisions shall be consistent with this Constitution, Micronesian customs and traditions, and the social and geographical configurations of Micronesia." Defendants then claim that if applying a Trust Territory law would entail a "harsh result given the current context of the FSM" then the result would be impermissible under the Judicial Guidance Clause and the law therefore would be inconsistent with the Constitution.

Defendants provide no support for the proposition that a law the enforcement of which entails a harsh result is unconstitutional. To simply assert that proposition is not enough, especially in a summary judgment motion when the presumptions generally favor the non-moving party. Defendants would need to, but do not, show the Court how it is that a legally mandated "harsh result" is inconsistent with the current context of the FSM. Especially where defendant provides no legal authority for his bold proposition, a strongly reasoned policy argument is essential. The Court, however, has been unable to detect one, or to construct one if its elements are contained within defendants' contentions supporting their motion.

In the absence of any authority or compelling policy arguments whatsoever provided by the defendants, the Court will only note that the creation of potentially harsh results is well within the province of this nation's constitutionally empowered legislators. Indeed, the law is replete with instances where individual conduct can lead to the imposition of a "harsh result." However, as defendants do not effectively support their contention the Court is not compelled to undertake an extensive review of these instances.

Almost five years have elapsed since the decision in Mid Pac v. Senda, [1990] FMSC 23; 4 FSM Intrm. 376 (Pon. 1990), which gave wide recognition to the type of result a violation of § 2.7 can entail. The Court takes notice of the fact that the national legislature has not since undertaken to repeal or amend the corporate regulations, nor has the Pohnpei State legislatuacted a corporate code of its own. This dual legislative acve acquiescence in the well known implications of § 2.7 indicatethe Court that that § 2.7 i viewed by national oral or state legislators as inconsistent with the current context of tM. If it were, the Court can only assume that one of the legislative bodies empowered to mato make § 2.7 consistent would have done so. The telling fact that two separate legislative bodies do not view § 2.7 as so inconnt with the the current co of the FSM so as to necessitate changing the law, coupled with defendants' failure to offe offer the Court a compelling argument as y § 2.7 is inconsistent wit cure current context text of the FSM, influences the Court to hold that defendants have not carried their burden of persuasion.

Defendants' second argument is that the regulation of corporations is a matter of state law, and that therefore this Court should render its decision in accordance with a Pohnpei State case which defendants assert requires a ruling in their favor. The Court does not find the state law argument persuasive and thus need not consider the Pohnpei State case.

Section 2.7 of the Trust Territory Corporate Regulations became national, not state, law by virtue Article XV, § 1 of the FSMtitution, the Tthe Transition Clause: "A statute of the Trust Territory continues in effect except to the extent it is inconsistent with this Constitution, or is amended or repealed." The Court has already held for purposes of this summary judgment motion that § 2.7 is not inconsistith theh the Constitution. Nor has it been amended or repealed. Since there is no question that the Constitution is national law, both fundamental and supreme, the Trust Territory Corporate Reions adopted by it, and notd not inconsistent with it or amended or repealed, continue in effect as national law.

Defendants tell this Court, though, that an "inexorable conclusion is that regulation of corporations is a state power" and that "[t]he FSM Congress has tacitly acknowledged that fact by providing for a transfer of that function to the state" under 36 F.S.M.C. 206 (1987 Supp.), but fail to discuss the text of the cited provision or provide the Court with any legal analysis.

The cited provision states: "(1) Nothing in this provision may be construed as preventing a State from establishing its own process of incorporation. (2) Upon application by a State, the President shall transfer the function of incorporation to the State for any corporate function not within the exclusive authority of the National Government." 36 F.S.M.C. 206.

This provision does not show that corporate regulation is a matter exclusively controlled by state law. To the contrary, the language unambiguously indicates that the matter of corporate regulation is governed by national law unless or until individual states undertake to establish corporate codes of their own. The Court knows of no Pohnpei State corporate statute and defendants do not cite or direct the Court to one. Contrary to what defendants represent to this Court, section 206 of Title 36 of the FSM Code does not transfer corporate authority to the states but merely provides a mechanism for such a transfer should a state decide to undertake corporate regulation. Pohnpei State has not done so. The text of section 206 thus compels the Court to reject defendants' state law argument. The Pohnpei State case cited by defendants need not be considered.

Conclusion

For the reasons above, defendants' Motion for Summary Judgment is denied.

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