McGillivray v Bank of the FSM (I) [1994] FMSC 9; 6 FSM Intrm. 404 (Pon. 1994) (16 May 1994)

FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 1993-052
McGillivray v. Bank of the FSM (I)
[1994] FMSC 9; 6 FSM Intrm. 404 (Pon. 1994)

DUNCAN McGILLIVRAY,
Plaintiff,

vs.

BANK OF THE FSM et al.,
Defendants.
___________________________________

MEMORANDUM OF DECISION

Andon L. Amaraich
Associate Justice

Hearing: May 4, 1994
Decided: May 16, 1994

APPEARANCES:

For the Plaintiff: Delson Ehmes, Esq.
P.O. Box 1018
Kolonia, Pohnpei FM 96941

For the Defendants: Kathleen B. Alvarado, Esq.
Douglas Parkinson, Esq.
Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Discovery

While a defendant's motion to strike portions of a complaint as immaterial or impertinent is untimely if not filed before the defendant's answer a court, in its discretion, may still consider it because the court may, on its own initiative at any time, order stricken from any pleading any insufficient defense or any redundant, immaterial, impertinent, or scandalous matter. McGillivray v. Bank of the FSM (I), [1994] FMSC 9; 6 FSM Intrm. 404, 406 (Pon. 1994).

Civil Procedure - Pleadings
Where a wife is not a party to an action the court may strike from the complaint references to harm to her because she is not a party to the litigation and therefore damages for harm to her cannot be obtained as part of the action. It would be unfair to allow the plaintiff to seek damages for harm to his wife while maintaining that she is a non-party who is not subject to the pleading, discovery, and evidentiary rules that a party is bound by. McGillivray v. Bank of the FSM (I), [1994] FMSC 9; 6 FSM Intrm. 404, 407 (Pon. 1994).

Civil Procedure - Discovery
Because methods of discovery may be used in any sequence, and courts rarely order that a deposition not be taken at all and where there has been inexcusable delay in responding to interrogatories the court will not issue a protective order barring the taking of a deposition until after less burdensome means have been tried. Instead the court will set deadlines for compliance with the outstanding discovery requests. McGillivray v. Bank of the FSM (I), [1994] FMSC 9; 6 FSM Intrm. 404, 408 (Pon. 1994).

Contracts - Damages; Torts - Damages
Where a plaintiff makes damage claims in tort as well damage claims based on contract, contract clauses limiting the contract damages do not apply. McGillivray v. Bank of the FSM (I), [1994] FMSC 9; 6 FSM Intrm. 404, 409 (Pon. 1994).

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COURT'S OPINION

ANDON L. AMARAICH, Associate Justice:

In this case plaintiff Duncan McGillivray, a United States citizen and former employee of the Bank of the Federated States of Micronesia ("the Bank"), alleges, inter alia, that the Bank and certain Bank officials fired him without cause in breach of his employment contract, made malicious and untrue statements about him that damaged his reputation in the banking community, withdrew money from his checking account without authorization, and intentionally inflicted emotional distress on him. The Bank counters that McGillivray's discharge was warranted because he, inter alia, lied about his former work experience, was insubordinate, and engaged in behavior that was harmful to the Bank's reputation. The Bank also denies that any of the defendants made untrue statements about McGillivray. In addition, the Bank cross-claims to recover damages relating both to McGillivray's alleged fraud, and to expenditures that the Bank says McGillivray improperly caused it to incur on his behalf. The jurisdiction of this Court is not challenged by either party, and is properly invoked because there is diversity of citizenship between the plaintiff and some of the defendants. FSM Const. art. XI, § 6(b).

A hearing was held on May 4, 1994, regarding six pending motions in the case: 1) defendants' motion to strike portions of Complaint (filed Dec. 7, 1993); 2) plaintiff's motion for enlargement of time to respond to defendants' motion to strike (filed Jan. 14, 1994); 3) plaintiff's motion for enlargement of time in which to respond to interrogatories (filed Jan. 27, 1994); 4) plaintiff's motion for a protective order regarding deposition of plaintiff (filed Jan. 27, 1994); 5) defendants' motion for partial summary judgment (filed Jan. 28, 1994); 6) defendants' motion for a protective order and discovery schedule (filed Mar. 17, 1994).

I. DEFENDANTS' MOTION TO STRIKE PORTIONS OF COMPLAINT

Duncan McGillivray is the only plaintiff in this case, but his complaint makes reference to harms to his wife allegedly flowing from the defendants' actions. Specifically, the complaint seeks damages based on the allegation that the defendants' actions induced the "plaintiff and his wife" to leave "a lucrative business" and that the plaintiff's termination by the defendants have left him without a means of supporting his wife so that she could write a book. Complaint para. 36. The complaint also seeks damages based on the allegation that due to the defendants' malicious acts, the plaintiff's "pregnant spouse was caused to incur great anxiety, nervousness and embarrassment." Complaint para. 49. The defendants argue that, under FSM Civil Rule 12(f), the allegations relating to the plaintiff's wife should be stricken from the complaint.

Rule 12(f) provides:

Upon motion made by a party before responding to a pleading or, if no responsive pleading is permitted by these rules, upon motion made by a party within 20 days after the service of the pleading upon the party or upon the court's own initiative at any time, the court may order stricken from any pleading any insufficient defense or any redundant, inmaterial [sic], impertinent, or scandalous matter.

In support of striking the references to the plaintiff's wife, the defendants argue that those references are immaterial and impertinent because: 1) the suit is based on the plaintiff's employment contract, and his wife was not a party to that contract and therefore is not a "real party in interest" who is entitled to seek damages; 2) the plaintiff's wife is not a party to the litigation and therefore cannot recover anything in this lawsuit. In response, the plaintiff argues that under FSM Civil Rule 12(f) a motion to strike portions of a complaint must be filed prior to the answer, and the defendants' motion is therefore untimely because it was filed more than four months after the answer. The plaintiff also notes that his employment contract provided for certain spousal benefits - e.g., housing and health insurance, repatriation, moving expenses - and that damages for the alleged harms to his wife are therefore recoverable because they "may reasonably be supposed to have been within the contemplation of both parties at the time the contract was made." Pl.'s Response to Motion to Strike at 3 (quoting 22 Am. Jur. 2d Damages § 455 (1988)). The plaintiff also states that during the negotiation of his contract the parties discussed that the plaintiff's wife would be using the period of the contract as an opportunity to write a book.

Regarding timeliness, the Court finds that while the motion to strike is untimely, the Court still has discretion to consider it. The language in Rule 12 stating that the Court may strike portions of a pleading on its "own initiative at any time," gives the Court discretion to do so here even though the defendants' motion was untimely. As the defendants note, that is the conclusion that has been reached by United States federal courts reading identical language in Fed. R. Civ. P. 12(f).^[1] See Andohn v. FSM, [1984] FMSC 4; 1 FSM Intrm. 433, 441 (App. 1984) (the interpretation of a Federal Rule of Civil Procedure by United States courts is persuasive in the interpretation of a FSM Civil Rule that was adopted from the United States Federal Rule).

The Court concludes that it should exercise its discretion to consider the motion because if striking the damage claims relating to the plaintiff's wife is appropriate, then doing so may save the Court and counsel time by limiting unnecessary inquiries into harms the wife may have suffered. After reviewing the motion and the plaintiff's response, the Court holds that the plaintiff's wife is not a party to this litigation and therefore damages for harm to her cannot be obtained as part of this action, and should be stricken from the complaint. See Topping v. Fry, 147 F.2d 715, 717 (7th Cir. 1945) (it is appropriate under United States Federal Rules of Civil Procedure to strike portions of a complaint that relate to an individual who is not a party to the action). It would be unfair to allow the plaintiff to seek damages for harms to his wife while maintaining that she is a non-party who is not subject to the pleading, discovery, and evidentiary rules that a party is bound by. Therefore, the Court will grant the defendants' motion to strike.

Because the plaintiff's wife is not a party in the litigation, it is not necessary for the Court to decide whether, or to what extent, damages could be sought for harms to the wife as a third-party beneficiary if she were named as a plaintiff. Although the Court recognizes that the plaintiff may attempt to amend his complaint to include his wife as a plaintiff, the Court also recognizes that the plaintiff may have reasons for not doing that, and therefore the Court declines to reach the issue of what effect such an amendment would have on the damages that could be sought.

II. PLAINTIFF'S MOTION FOR ENLARGEMENT OF TIME TO RESPOND TO MOTION TO STRIKE

The plaintiff's response to the motion to strike was untimely, but was accompanied by a motion for an enlargement of time in which to file. The defendants have not opposed the enlargement. The Court will grant the unopposed motion.

III. DISCOVERY MOTIONS

On January 27, 1994, the plaintiff filed two discovery motions. One asked for an indefinite enlargement of time to respond to the defendants' interrogatories and the other for a protective order disallowing any oral deposition of the plaintiff until after other discovery means are determined insufficient.

The defendants recently filed their own discovery motion, asking that the Court set a schedule for discovery and order that the plaintiff postpone any further discovery until he has responded to the defendants' interrogatories and allowed himself to be deposed.

The record reflects that the plaintiff filed this action asking for millions of dollars in damages, and since doing so has maintained that it is too burdensome to respond to any of the defendants' discovery requests. The defendants served interrogatories on December 27, 1993, and the plaintiff filed his motion for an indefinite enlargement of time on January 27, 1994, the final day for answering the interrogatories. The basis for the motion is somewhat unclear, but the argument appears to be that the plaintiff cannot respond now because he had to move back to California from Pohnpei, his wife gave birth in December of 1993, he is beginning a new job, and a recent earthquake in California forced him out of his house and therefore he "will not be able to receive or send facsimiles until the damages are repaired."^[2] Answers to the interrogatories are now three months past the usual due date, and still none have been supplied.

The Court agrees with the defendants' position that none of the excuses offered by the plaintiff justify more than a brief extension to answer the interrogatories, and certainly none justify the fact that no responses have been filed after four months. The set of interrogatories is relatively brief, and none of the questions are so burdensome that they could not be answered promptly even with the pressures described by the plaintiff. The argument that the plaintiff cannot respond to interrogatories because his facsimile machine was damaged in the earthquake is without merit. Obviously, most people have no home facsimile machine, and the 30-day deadline for responding to interrogatories was created at a time when almost certainly no one had access to such technology. At best that problem would justify granting a brief delay so that the plaintiff could find another facsimile machine or send the materials by mail. None of the problems articulated justify the extended delay that has already taken place. Therefore, the plaintiff's motion for an enlargement of time in which to respond to interrogatories is denied.

The plaintiff offers the same set of justifications (moved, new job, new baby, earthquake) to explain why, under FSM Civil Rule 26(c)(1), the Court should grant a protective order preventing the defendants from deposing the plaintiff until after alternative means of discovery have failed. He argues that these difficulties would make it too burdensome and costly for him to come from California to Pohnpei to be deposed. The defendants note, however, that in July and August of 1993, they tried to arrange to take the plaintiff's deposition in California when the defendants' counsel would be visiting there in September of 1993, but that the plaintiff stated that he would rather come to Pohnpei to be deposed. Aff. Doug Parkinson (accompanying opposition) paras. 6-14. According to the defendants, the plaintiff has twice agreed to come to Pohnpei to be deposed, but has not done so. Id. The plaintiff does not contradict the defendant's claim that the plaintiff was offered the opportunity to be deposed in California, nor does he satisfactorily explain why he refused the opportunity to be deposed there if, in fact, it was too burdensome for him to come to Pohnpei. Even if it is now very burdensome for the plaintiff to come to Pohnpei for a deposition, he cannot be heard to complain if he previously refused an opportunity to be deposed in California.

The plaintiff argues that any information that the defendants seek by deposition can and should be sought first by less burdensome means. This argument rings hollow when, after four months, the plaintiff has failed to respond to less burdensome discovery (interrogatories), and when the plaintiff has refused the defendants' offer to minimize the burden of a deposition by taking it in California. Moreover, FSM Civil Rule 26(d) states that, generally, "methods of discovery may be used in any sequence." As the defendants point out, depositions are generally recognized as being the most effective way of obtaining information from an individual, 4A James W. Moore et al., Moore's Federal Practice 30.02 (1987), and courts almost never order that a deposition not be taken at all, 4 James W. Moore et al., Moore's Federal Practice 26.69 (1984). Any plaintiff who brings a multi-million dollar lawsuit that involves issues of his credibility has to expect that he will be deposed prior to trial, and, barring truly extraordinary circumstances, not present here, has to be prepared to make himself available for such discovery. Therefore, the plaintiff's motion for a protective order is denied.

The defendants have moved that the Court set a discovery schedule in order to deal with the plaintiff's delays in responding to discovery. As indicated above, the Court believes that the plaintiff has not cooperated satisfactorily in discovery. Therefore, the Court believes it is appropriate to set deadlines within which the plaintiff must comply with the outstanding discovery requests. Given the amount of time the plaintiff has already had, fifteen days from the date of the entry of this order should be more than enough time for the plaintiff to complete his response to the interrogatories. The plaintiff is also directed to submit to an oral deposition within 60 days of the entry of this order.

The defendants also ask for a protective order prohibiting the plaintiff from engaging in further discovery until such time as he has responded to the defendants' discovery requests. The Court sees no good reason to further delay the progress of this case in the manner requested. The discovery propounded by the plaintiff has been minimal - a set of 12 interrogatories that was less than three pages long and a set of 6 supplementary interrogatories that was less than two pages long. The problem is not that the plaintiff has been filing too much discovery, but that he has been responding to too little. The Court's order setting deadlines for the plaintiff to respond to the interrogatories and submit to a deposition should remedy the problem, and the Court declines to slow the litigation down further by requiring the plaintiff to wait before filing additional discovery.

IV. DEFENDANTS' MOTION FOR PARTIAL SUMMARY JUDGMENT ON THE ISSUE OF DAMAGES

The defendants have moved for partial summary judgment on the issue of damages, arguing that the plaintiff's employment contract specifically states what he is entitled to in the case of involuntary termination and that no damages above that amount are available. As explained below, however, the contract does not appear to limit either the tort damages that the plaintiff can claim, or the amount of contract damages he would be able to obtain in the event that he shows that his discharge was without cause.

The plaintiff's employment contract states:

Bank shall have the right to terminate Employee at any time with or without cause. . .
a) >( term terminationation is for cause, Employee shall be entitled to be paid his salary to the date of termination and nothing else. . . .

(b) If termonationithouse, Eee shal shall be l be entitentitled to the greater of 90 days severance pay or payment for the term of the contract and return transpion oand hpendents and return of household effectffects.

Employee Contract para. 6. The Court agrees with the defendants that the language in section (a) stating that in the case of termination for cause the employee is entitled to "his salary to the date of termination and nothing else," (emphasis added), limits the relief he may obtain. However, section (a) only covers termination with cause. Section (b), which treats termination without cause deletes the language stating that the employee is entitled to "nothing else." Therefore, under the contract the employee who is discharged without cause is entitled to the compensation listed in section (b), but does not appear to be limited to that compensation. This interpretation is difficult to avoid when one considers that the "and nothing else" language was included in the section on termination with cause, but deleted from the section on termination without cause. Therefore, arguably, if the plaintiff can show that his discharge was without cause, then his damages may not be limited. In addition, the plaintiff's complaint makes tort claims against the defendants which involve matters beyond the termination of his employment contract, see, e.g., Complaint paras. 44, 47, 49, and which are not covered by the contract. The defendants' summary judgment motion must therefore be denied at this point.

Finally, the defendants note that national banks in the United States may dismiss officers at any time and for any reason without incurring liability for wrongful discharge or breach of contract. However, that is based on a provision in the United States' National Banking Act which prohibits a bank from contracting away the right to terminate an officer at any time. The FSM Congress has

not, however, adopted that restriction from United States law into the banking code of the FSM. See generally 29 F.S.M.C. 101 et seq.; 30 F.S.M.C. 101 et seq. If any implication can be drawn from this, it is not that the restriction in the United States Code was meant to apply in FSM, but rather that the FSM Congress intended to depart from the United States rule that allows national banks to discharge officers without risking liability. See, e.g., Tammow v. FSM, 2 FSM Intrm. 53, 58 (App. 1985) ("departure from the form of the United States Constitution reveals an intention to depart from the substance well").

CONCLUSION

For the reasons discussed above, it is hereby ordered that:

1. The defendant's motion to strike is granted to the extent that the following portions of the Complaint are stricken:

a. The portions of para. 36 reading "and his wife" and "and plaintiff is without employment which plaintiff anticipated will enable his wife to write a book all to the plaintiff's damage in the amount of $1,650,000."

b. Those portions of para. 49 reading "and his pregnant wife."^[3]

2. The plaintiff's motion for leave to file a late response to the defendants' motion to strike is granted.

3. The plaintiff's motion for an enlargement of time to respond to the defendant's first set of interrogatories is denied.

4. The plaintiff's motion for a protective order regarding the plaintiff's deposition is denied.

5. The defendants' motion for a protective order and discovery schedule is granted to the extent that the plaintiff is ordered to respond to the defendant's first set of interrogatories within 15 days of the entry of this order and further ordered to submit to an oral deposition within 60 days of the entry of this order. The defendant's motion is denied to the extent that it sought a protective order prohibiting further discovery by the plaintiff.

6. The defendant's motion for partial summary judgment is denied.

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^[1] The defendants cite Holzsager v. Valley Hospital, 482 F. Supp. 629, 631 (S.D.N.Y. 1979); Kraus v. Keibler-Thompson Corp., 72 F.R.D. 615 (D. Del. 1976).

^[2] The problems are detailed in the affidavit accompanying the plaintiff's motion for a protective order, which is incorporated by reference into the motion for an enlargement.

^[3] The Court's order does not strike parts of the complaint that do not refer to the plaintiff's wife either explicitly or by necessary inference. The order is narrower than what the defendants requested in that regard. The defendants had asked that in paragraphs 36 and 49 the entire sentences containing references to the plaintiff's wife be stricken, even though those sentences also contained allegations relating to the plaintiff himself. The defendant also asked that two sentences seeking specific amounts of compensatory and punitive damages on page 12 of the Complaint be stricken even though those requests did not contain any reference to the plaintiff's wife or include harms to the plaintiff's wife by necessary implication.