Adams v Etscheit [1994] FMSC 52; 6 FSM Intrm. 580 (App. 1994) (28 November 1994)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION
Cite as Adams v Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580 (App. 1994)

YVETTE ETSCHEIT ADAMS and RENEE ETSCHEIT VARNER,
Appellants,

vs.

CAMILLE ETSCHEIT, ESTATE OF ELLA, ETSCHEIT JOUBERT,
ROBERT ETSCHEIT, SR., ESTATE OF LEO ETSCHEIT and
ROBERT ETSCHEIT, JR., Individually, and in his Capacity of Administrator,
Appellees.

__________________________________________

APPEAL CASE NO. P4-1994

OPINION

Hearing and Ruling: October 14, 1994
Opinion Entered: November 28, 1994

BEFORE:

Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin Yinug, Associate Justice, FSM Supreme Court
Hon. Lyndon L. Cornelius, Temporary Justice, FSM Supreme Court*

*Chief Justice, Kosrae State Court, Lelu, Kosrae

APPEARANCES:

For the Appellants:
Fredrick L. Ramp, Esq.
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Appellees:
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 ─ Summary Judgment
A court must deny a motion for summary judgment unless it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The court must view the facts presented and inferences made in the light most favorable to the nonmoving party. The burden of showing a lack of triable issues of fact belongs to the moving party. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 582 (App. 1994).

Contracts ─ Conditions
Although conditions to contractual obligations are not favored in the law because they tend to have the effect of creating forfeitures, parties may create a condition to a contract through plain and unambiguous language, through necessary implication manifested by the contract itself, or in some other way that makes their intent to create a condition clear. In the absence of some such showing, courts find promises, not conditions to further performances. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 582-83 (App. 1994).

Contracts ─ Conditions
Conditions precedent to a contract are not favored and the courts will not construe stipulations to be such unless required to do so by plain, unambiguous language or by necessary implication. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 583 (App. 1994).

Civil Procedure ─ Summary Judgment
Where the facts lead to differing reasonable inferences, thus establishing a genuine issue of fact, summary judgment is not available. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 583 (App. 1994).

Civil Procedure ─ Summary Judgment; Contracts ─ Conditions
Because conditions precedent are disfavored at law and require plain and unambiguous language to establish, when differing inferences create an issue of fact, summary judgment that a condition precedent exists is inappropriate. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 584 (App. 1994).

Civil Procedure ─ Summary Judgment
Whether a proposed boundary line on a map is insufficiently definite and certain to be located on the ground is a material fact genuinely at issue, precluding summary judgment. Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 584 (App. 1994).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

This is an interlocutory appeal. On April 12, 1994, the trial division issued its rulings on the pending summary judgment motions before it in Etscheit v. Adams, [1994] FMSC 6; 6 FSM Intrm. 365 (Pon. 1994). The defendants, Adams and Varner, moved for a rehearing of the trial division's dismissal, id. at 388, of its counterclaim based on an alleged family settlement agreement in 1982. This was denied by the trial division's order of June 23, 1994. On August 8, 1994, the trial division amended that order to include its certification pursuant to FSM Appellate Rule 5(a) that a controlling question of law was involved on which there was "a substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation."^[1]

Defendants Adams and Varner timely filed a petition for permission to appeal. Pursuant to FSM Appellate Rule 5(a), the remaining article XI, section 3 justices considered the petition, and, in light of the considerations outlined in Jano v. King, [1992] FMSC 11; 5 FSM Intrm. 326 (App. 1992), granted permission for the petitioners to appeal.

Oral argument was held the morning of October 14, 1994. After a recess we informed the parties from the bench of our decision to reverse. We now explain our reasoning.

I.

The issues appealed were decided by summary judgment.^[2] A court must deny a motion for summary judgment unless it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Kihara Real Estate, Inc. v. Estate of Nanpei (I), 6 FSM Intrm. 48, 52 (Pon. 1993). The court must view the facts presented and inferences made in the light most favorable to the nonmoving party. Id.; Tosie v. Healy-Tibbets Builders, Inc., [1992] FMSC 21; 5 FSM Intrm. 358, 360 (Kos. 1992). "The burden of showing a lack of triable issues of fact belongs to the moving party." Kihara Real Estate (I), 6 FSM Intrm. at 52.

The plaintiff Etscheits were the moving parties. The trial division granted summary judgment for the plaintiffs on the defendants' (Adams and Varner) counterclaim which was based on an alleged 1982 family settlement agreement. The court ruled that that agreement to partition the family's land was subject to a survey (never performed) the completion of which was "a condition precedent to enforcement of the contract" and thus the agreement was not binding. Etscheit, 6 FSM Intrm. at 388. Additionally, the court ruled that the most important element of the alleged agreement, the location of the boundaries, was "insufficiently `definite and certain'" for the agreement to be binding. Id.

II.

The FSM Supreme Court has had occasion in the past to consider whether an agreement contains a condition precedent. "Conditions to contractual obligations are not favored in the law because they tend to have the effect of creating forfeitures." Kihara v. Nanpei, [1992] FMSC 16; 5 FSM Intrm. 342, 344 (Pon. 1992) (requisite clarity to establish condition precedent did not exist). "Parties may create a condition [to a contract] through `plain and unambiguous language,' through `necessary implication' manifested by the contract itself, or in some other way that makes their intent to create a condition clear. In the absence of some such showing, courts find promises, not conditions to further performances." Panuelo v. Pepsi Cola Bottling Co. of Guam, [1991] FMSC 36; 5 FSM Intrm. 123, 127 (Pon. 1991). See also Federated Shipping Co. v. Ponape Transfer & Storage Co., 4 FSM Intrm. 3, 10 (Pon. 1989) (conditions to contracts not favored).

Other authorities agree that conditions to contracts are not favored. "[C]onditions precedent are not favored and the courts will not construe stipulations to be such unless required to do so by plain, unambiguous language or by necessary implication." 17A Am. Jur. 2d Contracts § 471, at 491 (1991) (footnotes omitted). Courts apply traditional interpretation techniques and have displayed two preferences in interpretation.

One preference is for an interpretation that imposes on a party a duty to see that an event occurs, rather than one that makes the other party's duty conditional on the occurrence of the event. The other preference is for an interpretation that will reduce an obligee's risk of forfeiture if the event does not occur.

Courts manifest the first preference when an agreement refers to an event within the control of one of the parties....

E. Allan Farnsworth, Contracts 549-50 (1982).

III.

The trial division ruled that the words "sketch approved subject to survey" written on a map of the property the parties allegedly agreed to partition, and on which was also drawn a line representing the partition line and future boundary between the two sides, created a condition precedent to the partition agreement. Etscheit, 6 FSM Intrm. at 388. The trial division then ruled that the partition agreement was not enforceable because no survey had been performed.^[3] Id. (quoting 17A Am. Jur. 2d Contracts § 34).

Since this ruling was made on the appellees' motion, the court must view the facts presented and inferences made in the light most favorable to the nonmoving party (here, appellants). A reasonable inference drawn in the light most favorable to the nonmoving party is that the words "approved subject to survey" meant, not that the agreement to divide the land was void if there was no survey, but that the location of the boundaries and dividing line on the map were approved subject to a survey to locate that line on the ground. There may well be other reasonable inferences that do not lead to the conclusion that a condition precedent was created by those words. The plaintiffs argue that concluding that a survey was a condition precedent was a reasonable interpretation. Even if this is true it is not the only reasonable interpretation. Since the facts lead to differing inferences, thus establishing a genuine issue of fact, summary judgment is not available.

IV.

Because conditions precedent are disfavored at law and require plain and unambiguous language to establish, and because the differing inferences create an issue of fact, summary judgment that a condition precedent exists is inappropriate. Therefore the summary judgment ruling that the words "sketch approved subject to survey" create a condition precedent was reversed.

V.

A similar analysis applies to the trial division's ruling that the location of the boundaries were "insufficiently `definite and certain'" for the alleged agreement to be binding. Affidavits by the appellant Adams and by a witness, Martin Mix, were before the trial court describing the alleged agreement. As to boundaries, they state that a map of Mpomp (the name of the parcel to be divided) was used, and upon it notations were made and lines drawn to show the partition. The sketch was also before the court. Whether the line on the map is insufficiently definite and certain to be located on the ground is a material fact genuinely at issue. Therefore summary judgment is precluded on this ground as well.

VI.

The plaintiffs-appellees further contend that the alleged 1982 partition agreement is unenforceable because it is barred by the applicable statute of limitations, by the Pohnpei statute of frauds, and by waiver, estoppel and laches based on the appellants' acts and omissions. Neither the trial division's April 12th summary judgment nor its June 23rd denial of the petition for rehearing made any rulings on these grounds. They are not issues for which permission was granted for this interlocutory appeal. They have yet to be considered by the trial division. Appellees may raise these issues in the trial division whenever they think appropriate.

VII. CONCLUSION

The summary judgment conclusions that the words "sketch approved subject to survey" created a condition precedent and that any agreement was not binding because the description of the property was not sufficiently definite and certain are reversed. The appellants may offer proof on those matters at trial if they so choose.

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^[1] Appellee argues that because the appellants sought and received amendment of the June 23, 1994 order denying their Motion to Reconsider instead of the April 12, 1994 summary judgment the appellate division cannot consider the April 12th summary judgment. Both orders considered the issues now on appeal and the trial court's ruling and reasoning were the same in both. The Civil Rules mandate that they be construed so as "to secure the just, speedy and inexpensive determination of every action," FSM Civ. R. 1, and the appellate division has the power to modify or suspend any technical requirements at its discretion, FSM App. R. 2. Therefore, even if the April 12th order were not incorporated into the June 23rd denial the appellate division could still consider it.

^[2] The issues arose on the plaintiffs' motion to dismiss defendants' counterclaim which was based on an alleged 1982 family agreement. The motion to dismiss for failure to state a claim upon which relief can be granted was treated as one for summary judgment because matters outside the pleadings were presented to and not excluded by the court. Etscheit, 6 FSM Intrm. at 386 (following FSM Civ. R. 12(b)).

^[3] No survey was ever completed. The only attempt to perform one was allegedly thwarted by the plaintiffs' [appellees'] refusal to cooperate.