California Pacific Associates v Alexander [1995] FMSC 33; 7 FSM Intrm. 198 (Pon. 1995) (13 July 1995)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as California Pacific Associates v Alexander, [1995] FMSC 33; 7 FSM Intrm 198 (Pon. 1995)

CALIFORNIA PACIFIC ASSOCIATES,
Plaintiff,

vs.

MANOA ALEXANDER and ELIORY ALEXANDER,
Defendants.

CIVIL ACTION NO. 1993-081

ORDER

Martin Yinug
Associate Justice

Hearing: July 10, 1995
Decided: July 13, 1995

APPEARANCES:

For the Plaintiff:
Martin Mix, Esq.
P.O. Box 143
Kolonia, Pohnpei FM 96941

For the Defendants:
Manoa Alexander (pro se)

For the Intervenor

(WSTC):
Daniel Berman, Esq.
Rush, Moore, Craven, Sutton, Morry & Beh
2000 Hawaii Tower
745 Fort Street
Honolulu, HI 96813

(FSM)
Carole Rafferty, Esq.
Assistant Attorney General
Office of the FSM Attorney General
P.O. Box PS-105
Palikir, Pohnpei FM 96941

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HEADNOTE

Civil Procedure - Intervention; Debtors' and Creditors' Rights
An intervenor must make a three part showing to qualify for intervention as a matter of right: an interest, impairment of that interest, and inadequacy of representation by existing parties. A tax lien holder and a judgment creditor with an unsatisfied writ of execution may intervene as a matter of right where an assignee is compromising a debtor's accounts receivable. California Pac. Assocs. v. Alexander, [1995] FMSC 33; 7 FSM Intrm. 198, 200 (Pon. 1995).

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COURT'S OPINION

MARTIN G. YINUG, Associate Justice:

Subsequent to the court-ordered public notice of a proposed settlement between Defendants Manoa and Eliory Alexander and Plaintiff California Pacific Associates ("CPA"), who is a creditor of Ponape Federation of Cooperative Associations ("PFCA") and an assignee of PFCA accounts receivable, two other creditors of PFCA filed motions to intervene.

On February 27, 1995, Western Sales Trading Company ("WSTC") moved for intervention as a matter of right pursuant to FSM Civil Rule 24(a)(2). WSTC has an unsatisfied judgment and writ of execution against PFCA for $2,000.00. WSTC argues that the proposed settlement, which compromises defendants' debt to PFCA for substantially less than the face value of the debt, will significantly reduce the PFCA's collectible assets and thereby increase WSTC's difficulty in satisfying its claims against PFCA. To protect its interests in the assets of PFCA, WSTC seeks to intervene in this action.

On March 20, 1995, the FSM Government also moved for intervention as a matter of right. The FSM claims that PFCA owes the National Government tens of thousands of dollars in Wages and Salaries taxes and Gross Revenue taxes as well as interest and penalties upon those unpaid taxes. The FSM also claims a statutory lien on all assets of PFCA for the purpose of satisfying all unpaid Wages and Salaries taxes. The FSM contends that no other creditors may satisfy their claims against PFCA until the FSM's lien is satisfied in full. The FSM seeks to intervene to protect its lien claim as well as its other tax claims.

FSM Civil Rule 24(a)(2) permits intervention as a matter of right:

when the applicant claims an interest relating to the property or transaction which is the subject of the action and the applicant is so situated that the disposition of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

Pursuant to the above quoted rule, an intervenor must make a three part showing to qualify for intervention as a matter of right: interest, impairment, and inadequacy of representation. Wainit v. Truk, 2 FSM Intrm. 81, 83 (Truk 1985). Both the FSM and WSTC have satisfied this three part test.

First, both the FSM as lien holder and WSTC as a creditor with an unsatisfied Writ of Execution have an interest in the assets of PFCA. Defendants' debt to PFCA constitutes one of the assets of PFCA, and both the FSM and WSTC may be entitled to look toward that asset to satisfy their claims.

Second, both the interests of the FSM and WSTC may be substantially impaired if they are not allowed to intervene. Settlement of defendants' debt for less than full value may deprive the FSM or WSTC of sufficient assets with which to satisfy their claims. Additionally, the FSM and WSTC may have substantial difficulties in retrieving the proceeds of the proposed settlement from CPA if it is later determined that either or both have priority over CPA. Pending resolution of this action, CPA may dissipate the settlement proceeds and recovery from CPA, a foreign corporation, may be difficult, if not impossible.

Third, neither of the present parties to the action can adequately represent the interest of the FSM or WSTC as creditors of PFCA.

Conclusion

Accordingly, it is hereby ordered that the Motions to Intervene of the FSM and WSTC are granted.

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