Berman v Kolonia Town [1994] FMSC 16; 6 FSM Intrm. 433 (App. 1994) (22 June 1994)

FSM SUPREME COURT
APPELLATE DIVISION

APPEAL CASE NO. P22-1993

MARY BERMAN,
Appellant,

vs.

KOLONIA TOWN GOVERNMENT,
Appellee.

OPINION

Argued: April 26, 1994
Decided: June 22, 1994

BEFORE:

Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court
Hon. Keske Marar, Temporary Justice, FSM Supreme Court*

*Associate Justice, Chuuk State Supreme Court, Weno, Chuuk

APPEARANCES:

For the Appellant: Mary Berman, Esq.
P.O. Box 163
Kolonia, Pohnpei FM 96941

For the Appellee: Daniel J. Berman, Esq.

Rush, Moore, Craven, Sutton, Morry & Beh
2000 Hawaii Tower
745 Fort Street
Honolulu, HI 96813-3862

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HEADNOTES

Civil Procedure - Sanctions
Rule 11 mandates a reasonable inquiry by the attorney as to whether the pleading or motion is well grounded in fact and warranted either by current law, or, alternatively, by a good faith argument that that is what the law ought to be. A bad faith argument, although still sanctionable, is thus not the only action sanctionable under this provision. A purely frivolous, good faith argument is also sanctionable. Berman v. Kolonia Town, [1994] FMSC 16; 6 FSM Intrm. 433, 435 (App. 1994).

Civil Procedure - Sanctions
The purpose of Rule 11 is to deter baseless filings. Berman v. Kolonia Town, [1994] FMSC 16; 6 FSM Intrm. 433, 436 (App. 1994).

Appeal and Certiorari - Standard of Review; Civil Procedure - Sanctions
Appeals of Rule 11 sanctions are reviewed under an abuse of discretion standard. Berman v. Kolonia Town, [1994] FMSC 16; 6 FSM Intrm. 433, 436 (App. 1994).

Civil Procedure - Sanctions
It is an abuse of discretion to deem a motion frivolous and sanctionable when it was a case of first impression in this jurisdiction, no contrary authority can be cited from another jurisdiction, and no authority was cited by the trial court, and where the appellant made a good faith argument for the extension of existing law. Berman v. Kolonia Town, [1994] FMSC 16; 6 FSM Intrm. 433, 436-37 (App. 1994).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

The sole issue presented in this appeal is whether the appellant may be sanctioned under Rule 11 of our Rules of Civil Procedure for filing a motion pursuant to Rule 60(b) asking the FSM Supreme Court Trial Division to grant her relief from its previous order abstaining from her causes of action against the appellee and thereby reassume its jurisdiction over the matter. We conclude that she may not be. Our reasoning follows.

I.

In 1991, Mary Berman, acting on her own behalf, filed suit in the FSM Supreme Court against the State of Pohnpei, the Pohnpei State Foreign Investment Board, its officers and agents, the Kolonia Town Government, and the FSM Supreme Court, alleging various causes of action, all related to her attempts to become a licensed, practicing attorney. Against the Kolonia Town Government she alleged that its license fee ordinance was unconstitutional under several provisions of both the Pohnpei and FSM Constitutions and that the ordinance was improperly adopted.

The FSM Supreme Court abstained from hearing her claims against Kolonia Town. Berman v. Pohnpei, [1992] FMSC 32; 5 FSM Intrm. 303, 306-07 (Pon. 1992). The court stated: "The court will abstain from deciding this cause of action against the Kolonia Town Government. The plaintiff may raise at a later time however, the allegation that the ordinance violates the FSM Constitution if that is still necessary after disposition by the state court." Id. at 307.

Mary Berman filed her complaint for a declaratory judgment and injunctive relief in Pohnpei Supreme Court on September 18, 1992. On February 5, 1993, she filed a motion asking the FSM Supreme Court Trial Division to "reconsider" its previous order of abstention, and grant her relief from that order by reasserting its jurisdiction over her claims against Kolonia Town because the Pohnpei Supreme Court had taken no action on her complaint. The motion was denied. Berman v. FSM Supreme Court, [1993] FMSC 20; 6 FSM Intrm. 109, 113 (Pon. 1993). No authority was cited for that denial.

Defendant Kolonia Town then moved for costs and attorney's fees. The request for costs was denied. The trial court did sanction Mary Berman under Civil Procedure Rule 11 for filing a frivolous motion. Berman v. Kolonia Town, [1993] FMSC 48; 6 FSM Intrm. 242, 246 (Pon. 1993). The court granted the request for attorney's fees and awarded Kolonia Town $500. Mary Berman appeals this sanction.

II.

The trial court held that our current Rule 11 requires an objective standard. Kolonia Town, 6 FSM Intrm. at 244-45, We agree. The pertinent part of our current Rule 11 reads:

The signature of an attorney or trial counselor constitutes a certificate by the signer . . . thathe bf thef the signerigner's knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the eion, ication, or reverreversal osal of existing law.

FSM Civ. R. 11.

Our current rule thus mandates a reasonable inquiry by the attorney as to whether the pleading or motion is well grounded in fact and warranted either by current law, or, alternatively, by a good faith argument that that is what the law ought to be. A bad faith argument, although still sanctionable, is thus not the only action sanctionable under this provision. A purely frivolous, good faith argument is also sanctionable. Lancelloti v. Fay, [1990] USCA1 326; 909 F.2d 15, 19 (1st Cir. 1990).

III.

The facts are undisputed - the trial court abstained from hearing the claims in April, 1992, Mary Berman filed her complaint in Pohnpei Supreme Court on September 18, 1992, and no action had been taken on that complaint when Mary Berman filed her motion or even when her motion was heard.

Both counsel agree that there is no controlling authority in this jurisdiction as to whether the national court may reassume jurisdiction over a cause of action previously abstained from through the granting of a Rule 60(b) relief from judgment motion. The motion was thus a case of first impression in the FSM.

At oral argument counsel for the appellee could cite no United States case that suggested that a Rule 60(b) motion was inappropriate in this situation, neither counsel could cite any case directly on point.^[1] Nor did the court's own research reveal any.

The trial court characterized the abstention order as "akin to a dismissal without prejudice." Kolonia Town, 6 FSM Intrm. at 246. Mary Berman has, however, cited United States cases where a Rule 60(b) motion was deemed appropriate for relief from a dismissal without prejudice.^[2] She appears to argue for an extension of existing law. In her motion she may have misread Gimnang v. Yap^[3] as to which court had been the source of the delay, but she correctly noted that delay is a factor to be weighed when abstention is considered. See Gimnang v. Yap, [1990] FMSC 25; 4 FSM Intrm. 212, 214 (Yap 1990); cf. Edwards v. Pohnpei, [1988] FMSC 6; 3 FSM Intrm. 350, 364-65 (Pon. 1988) (delay is to be considered when considering whether to certify an issue to a state court).

We are also mindful of our earlier cases. We have noted that it is apt in a case of first impression, especially when the issue is of national importance, to make some allowance for wishful optimism before deeming a legal position frivolous. Innocenti v. Wainit, [1986] FMSC 3; 2 FSM Intrm. 173, 188 (App. 1986).

Our current Rule 11 was adopted some time after Innocenti. Its purpose is to deter baseless filings. Cooter & Gell v. Hartmax Corp., [1990] USSC 100; 496 U.S. 384, 393[1990] USSC 100; , 110 S. Ct. 2447, 2454[1990] USSC 100; , 110 L. Ed. 2d 359, 374 (1990) ("now clear that the central purpose of Rule 11 is to deter baseless filings"). We cannot say that Mary Berman's motion was baseless when no authority can be found on point ruling either way and where authority can be found for a good faith argument to be made for the extension of existing law.

We further note that an incorrect legal position, or a losing legal argument is not necessarily either frivolous or sanctionable under Rule 11. "It is obvious from the text of the Rule [11] that the pleader need not be correct in his view of the law." Zaldivar v. City of Los Angeles, 780 F.2d 823, 830 (9th Cir. 1986).

IV.

We review appeals of Rule 11 sanctions under an abuse of discretion standard. Cooter & Gell, 496 U.S. at 405, 110 S. Ct. at 2461, 110 L. Ed. 2d at 381-82. One way a trial court may abuse its discretion is when it bases its decision on an erroneous conclusion of law. Jano v. King, [1992] FMSC 11; 5 FSM Intrm. 326, 330 (App. 1992). Here the trial court erroneously concluded that the law offered Mary Berman no support and that it was clear FSM Civil Rule 60(b) was inapplicable.

We make no ruling on the correctness of a Rule 60(b) motion for relief from judgment as a vehicle for the FSM Supreme Court to reassume jurisdiction over a cause of action within its constitutional jurisdiction that it had previously abstained from hearing. We only hold that, taking all the circumstances into consideration, it was an abuse of discretion to deem Mary Berman's attempted use of a Rule 60(b) motion frivolous and sanctionable when it was a case of first impression in this jurisdiction, no contrary authority can be cited from another jurisdiction, and no authority was cited by the trial court, and where the appellant made a good faith argument for the extension of existing law.

V.

The trial court's sanction of Mary Berman is hereby set aside. This matter is remanded to the trial court for proceedings consistent with this opinion.

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^[1] When there is no FSM case law interpreting a rule that is similar or identical to that adopted in another jurisdiction then the court may seek guidance from that jurisdiction. Jano v. King, [1992] FMSC 11; 5 FSM Intrm. 326, 329 (App. 1992).

^[2] Williams v. Frey, [1977] USCA3 313; 551 F.2d 932, 935 (3d Cir. 1977); Chief Freight Lines v. Local Union No. 886[1975] USCA10 67; , 514 F.2d 572, 576-77 (10th Cir. 1975).

^[3] There was some confusion as to the identity of the opinion the appellant misapplied. The trial court order denying the motion cites it as the trial division opinion, Gimnang v. Yap, [1990] FMSC 25; 4 FSM Intrm. 212 (Yap 1990), while the order imposing sanctions cites the appellate opinion, Gimnang v. Yap, 5 FSM Intrm. 13 (App. 1991). The appellant appears to have relied on both in her motion.