Truk Continental Hotel, Inc v Chuuk [1994] FMSC 35; 6 FSM Intrm. 310 (Chk. 1994) (12 January 1994)

THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as Truk Continental Hotel, Inc. v. Chuuk, [1994] FMSC 35; 6 FSM Intrm. 310 (Chuuk 1994)

[1994] FMSC 35; [6 FSM Intrm. 310]

TRUK CONTINENTAL HOTEL, INC., a corporation, and RAYMOND SETIK,
Plaintiffs,

vs.

STATE OF CHUUK,
Defendant.

CIVIL ACTION NO. 1991-1014

OPINION

Richard H. Benson
Associate Justice

Decided: January 12, 1994

APPEARANCES:

For the Plaintiff:
R. Barrie Michelsen, Esq.
Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Defendant: Danny P. Barrett, Esq.
Attorney General
Office of the Chuuk Attorney General
P.O. Box 189
Weno, Chuuk FM 96942

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HEADNOTES

Civil Procedure - Summary Judgment
When a party's motion for summary judgment has been denied as a matter of law and it appears the nonmoving party is entitled to judgment as a matter of law, the court may grant summary judgment to the nonmoving party in the absence of a cross motion for summary judgment if the original movant has had an adequate opportunity to show that there is a genuine issue and that his nonmoving opponent is not entitled to judgment as a matter of law. Truk Continental Hotel, Inc. v. Chuuk, [1994] FMSC 35; 6 FSM Intrm. 310, 311 (Chk. 1994).

Federalism - National/State Power; Taxation - Constitutionality
A Chuuk state tax on a lessor or landowner who rents or leases land, building or housing unit, for residential, or office space, or other use is not an unconstitutional encroachment on the

[6 FSM Intrm. 311]

national government's exclusive power to tax income. Truk Continental Hotel, Inc. v. Chuuk, [1994] FMSC 35; 6 FSM Intrm. 310, 311 (Chk. 1994).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

On July 5, 1991, the plaintiffs filed their complaint seeking a declaratory judgment striking down section 4(2) of Chuuk State Law 191-04 as unconstitutional. That section levies a tax of ten percent on a lessor or landowner who rents or leases "land, building or housing unit, for residential, or office space, or other use . . . ." Plaintiffs view the Chuuk tax as an unconstitutional encroachment on the national government's exclusive power to tax income. FSM Const. art. IX, § 2(e).

Plaintiffs moved for summary judgment pursuant to FSM Civil Rule 56 on May 13, 1993, seeking an injunction against further enforcement of the tax and a refund of tax already paid. My order of November 22, 1993, denied that motion. This was based on the appellate division's holding in Sigrah v. Kosrae, [1993] FMSC 34; 6 FSM Intrm. 168 (App. 1993), which held that a Kosrae Transaction Tax of five per cent levied on the rental of, among other things, office space and lodging was not an unconstitutional encroachment on the national government's exclusive power to tax income.

Whether it is proper to grant summary judgment to a nonmoving party in the absence of a cross motion for summary judgment is an issue that has not arisen in this jurisdiction before. "When the language of an FSM Rule of Civil Procedure is nearly identical to a similar United States Federal Rule of Civil Procedure FSM courts will often look to the United States federal courts for guidance in interpreting this rule." Jano v. King, [1992] FMSC 11; 5 FSM Intrm. 326, 329 (App. 1992).

In the United States under their Rule 56, which for all essential purposes is identical to our Rule 56, "the weight of authority is that summary judgment may be rendered in favor of the opposing party even though he has made no formal cross-motion under rule 56." 10A Charles A. Wright et al., Federal Practice and Procedure § 2720, at 29-30 (1983). However, "great care must be exercised to assure that the original movant has had an adequate opportunity to show that there is a genuine issue and that his opponent is not entitled to judgment as a matter of law." Id. at 34.

The original movants have had that opportunity. The plaintiffs, in their memorandum of law submitted in response to my invitation to comment on the effect of the Sigrah decision on the present case, asserted that the two cases were "indistinguishable," and admitted that judgment ought to be rendered against them.

I conclude that the decision in Sigrah is controlling. Therefore summary judgment shall be entered for the defendant and the complaint dismissed on the merits.

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