Ladore v U Corporation [1995] FMSC 45; 7 FSM Intrm. 296 (Pon. 1995) (11 October 1995)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Ladore v U Corporation, [1995] FMSC 45; 7 FSM Intrm. 296 (Pon. 1995)

QUIRINO LADORE
Plaintiff,

vs.

U CORPORATION,
Defendant.

CIVIL ACTION NO. 1994-118

MEMORANDUM OF DECISION

Martin Yinug
Associate Justice

Decided: October 11, 1995

APPEARANCES:

For the Plaintiff:
Edgar W. Edward, Trial Counselor
P.O. Box 447
Kolonia, Pohnpei FM 96941

For the Defendant:
Douglas Cushnie, Esq.
P.O. Box 949
Saipan, MP 96950

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HEADNOTES

Jurisdiction - Diversity
For the purposes of diversity jurisdiction the citizenship of a corporation is considered foreign if any of its shareholders are not FSM citizens or if it was organized under the laws of a foreign government. The citizenship of a corporation formed in the FSM and wholly owned by FSM citizens is in the state of its principal place of business. Ladore v. U Corp., [1995] FMSC 45; 7 FSM Intrm. 296, 298 (Pon. 1995).

Federalism - Abstention and Certification
Abstention by the FSM Supreme Court is only proper if it has concurrent jurisdiction, such as diversity jurisdiction, and the case involves state powers or interests. Ladore v. U Corp., [1995] FMSC 45; 7 FSM Intrm. 296, 298 (Pon. 1995).

Federalism - Abstention and Certification
Abstention may be proper in a case involving a private easement where there are no issues distinctly separate from those involving state powers because state courts have the primary role in setting policy and deciding legal issues concerning ownership and interests in land. Ladore v. U Corp., [1995] FMSC 45; 7 FSM Intrm. 296, 298 (Pon. 1995).

Constitutional Law - Judicial Guidance Clause
A court must consult and apply sources of law in the FSM prior to rendering a decision, and would resort to local customary law before considering the common law of other nations. Ladore v. U Corp., [1995] FMSC 45; 7 FSM Intrm. 296, 299 (Pon. 1995).

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COURT'S OPINION

MARTIN YINUG, Associate Justice:

Before the Court is the Motion for Summary Judgment of the defendant, U Corporation. In the course of addressing the Motion, the Court considers sua sponte its jurisdiction, whether Pohnpei State law applies to the issues raised, and whether the Court should abstain from further proceedings. The Court concludes that because the main issues of this case, the issues on which defendant seeks summary judgment, raise matters that are within the power reserved to Pohnpei State, abstention is proper.

Proceedings to Date

Ladore filed his Complaint in the Pohnpei Supreme Court, on July 26, 1994. U Corporation removed the action on August 24, 1994, claiming jurisdiction before the FSM Supreme Court was proper under Article XI, Section 6(b) of the FSM Constitution.

U Corporation moved for summary judgment on June 20, 1995. Defendant characterized the Complaint as raising an issue of fact, a mixed issue of law and fact, and an issue of law. U Corporation conceded the issue of fact, admitting that it barred Ladore from using roads on U Corporation property. U Corporation asserted that there was no genuine dispute of the material facts necessary to decide the remaining issues, that the roadways on U Corporation property have not become public roads, and that barring Ladore did not violate the Pohnpei State Constitution. A hearing on the Motion for Summary Judgment was held on July 11, 1995.

Legal Analysis

The Court views the disputed issues as involving an interest in land - whether a private easement has become a public road - and regarding liability for violating the State Constitution. U Corporation submitted a Memorandum of Points and Authorities in support of its motion. Defendant's brief is barren of applicable law. It refers solely to American common law of real property, and argues but does not quote the provisions of the Pohnpei Constitution defendant claims are at issue. The defendant did not cite or quote any Pohnpei statute, case, land commission finding, regulation, or custom regarding the issue of the interest in land. In fact, U Corporation even cited the Court to the standard for granting summary judgments in force in United States Federal courts.

A. Jurisdiction

A threshold question is whether this dispute over an interest in land between an individual citizen of Pohnpei and a corporation whose principal place of business is Pohnpei, belongs before the FSM Supreme Court. The jurisdiction of the FSM Supreme Court is governed by reference to the FSM Constitution. FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 219 n.1 (Pon. 1986). Because the defendant claims diversity jurisdiction under Article XI, Section 6(b) of the FSM Constitution, the Court must examine the citizenship of the parties. Ladore appears to be a citizen of Pohnpei State.

Determining the citizenship of a corporation for purposes of diversity jurisdiction may involve the answer to three tests. First, a corporation is considered a foreign citizen if any of its shareholders are not citizens of the FSM. Federated Shipping Co. v. Ponape Transfer & Storage, [1987] FMSC 19; 3 FSM Intrm. 256, 260 (Pon. 1987).[1] Second, a corporation organized under the laws of a foreign government is considered foreign for diversity purposes. U Corp. v. Salik, [1988] FMSC 20; 3 FSM Intrm. 389, 392 (Pon. 1988). Finally, the State citizenship of a corporation formed in the FSM and owned wholly by FSM citizens is in the state of its principal place of business. Federated Shipping, 3 FSM Intrm. at 260.

U Corporation asserts that the dispute is between a citizen of Pohnpei and a business owned in part by non-citizens and licensed as a foreign corporation. Applying the three tests, the Court concludes that U Corporation is a foreign citizen. Diversity of citizenship between the parties thus exists, and jurisdiction of the FSM Supreme Court is proper.

B. Abstention

Instead of ruling on the Motion for Summary Judgment, a motion the Court would deny, the Court has determined that the proper course lies in abstaining from further decision because this case requires interpretation of a State Constitution and application of State law regarding interests in land. Abstention is supported by the decisions that outline the doctrine.[2] In Gimnang v. Yap, 5 FSM Intrm. 13, 20-21 (App. 1991), the Appellate Division laid out the general standards a court should review when considering abstention. The Gimnang standards favor abstention in this case.

Abstention is proper only if the FSM Supreme Court has concurrent jurisdiction under Article XI, Section 6(b). Gimnang, 5 FSM Intrm. at 20. Where diversity jurisdiction is invoked, as here, abstention may be proper.[3]

The second general standard is whether the FSM Supreme Court is asked to rule on an area within state powers. If the disputed issues are within the powers reserved to the states, abstention may be proper. Gimnang, at 21. Here, the parties have requested a ruling on an issue concerning an interest in land, whether a private easement has become a public road. The FSM Supreme Court has stated repeatedly that state officials, including the state courts, should play the primary role in setting policy and deciding legal issues concerning ownership and interests in land. Gimnang, at 21 (citing Ponape Transfer & Storage v. Federated Shipping Co., 4 FSM Intrm. 37, 43 (Pon. 1989); Bank of Guam v. Semes, [1988] FMSC 7; 3 FSM Intrm. 370, 381 (Pon. 1988); Etpison v. Perman, [1984] FMSC 3; 1 FSM Intrm. 405, 429 (Pon 1984); In re Nahnsen, 1 FSM Intrm. 97, 107 (Pon. 1982)). See also Heirs of Mongkeya v. Heirs of Mackwelung, [1987] FMKSC 3; 3 FSM Intrm. 92, 98-99 (Kos. S. Ct. Tr. 1987). This issue should be decided in the Pohnpei Supreme Court.

The other issue presented for summary judgment by U Corporation involves interpretation of a State Constitution. This, too, belongs before the Pohnpei Supreme Court. "[T]he alleged Pohnpei Constitution violation is a matter to be decided by the Pohnpei courts." Berman v. Pohnpei, [1992] FMSC 32; 5 FSM Intrm. 303, 307 (Pon. 1992).

The third standard adopted in Gimnang, is to determine whether the State is attempting to establish a coherent administrative policy in a complex field in which there is substantial public concern. Gimnang, 5 FSM Intrm. at 21. The Appellate Division gave as an example the efforts in Pohnpei State to make public lands available to private persons. Id. (citing Ponape Transfer & Storage v. Federated Shipping Co., 4 FSM Intrm. 37, 41 (Pon. 1989)). Here, the Court must infer that the application of customary law regarding land into a western judicial system is another attempt to create a coherent policy.

The Court's consideration of whether to abstain does not end with the general guidelines promulgated in Gimnang. In Etscheit v. Mix, [1993] FMSC 39; 6 FSM Intrm. 248, 251 (Pon. 1993), the Court inquired whether there were any issues distinctly separate from those identified as being within State powers. Here there are none. U Corporation raised no affirmative defenses, and the rest of its Answer cites defenses that do not require interpretation of the FSM Constitution or national laws. In such circumstances, abstention is proper. Mendiola v. Berman (I), [1994] FMSC 15; 6 FSM Intrm. 427, 429 (Pon. 1994).

Likewise, in Damarlane v. Pohnpei Transp. Auth., 5 FSM Intrm. 67A (Pon. 1991), the Court considered whether abstention was consistent with the judicial duty to render just decisions in a speedy fashion at a minimum of cost to litigants and society. Id. at 67D. The Court observes here that justice may indeed be swifter in the Pohnpei courts.

Were the case to remain before this Court, I would deny defendant's Motion for Summary Judgment. As stated, the issues of interests in land and the Pohnpei Constitution should be decided according to the law of Pohnpei State. Yet defendant's brief makes no reference to Micronesian land law. There is no reference to any Pohnpei land law, cases, regulations, even custom or tradition that would allow the Court to make a decision. Even if there are no reported decisions or a statutory scheme on the precise issue raised, the Court would then resort to Pohnpeian customary law before it could begin to consider the common law of other nations. Phillip v. Aldis, [1987] FMPSC 6; 3 FSM Intrm. 33, 38 (Pon. S. Ct. Tr. 1987); Koike v. Ponape Rock Products, Inc., [1986] FMPSC 2; 3 FSM Intrm. 57, 64 (Pon. S. Ct. Tr. 1986). But there is no mention of customary law in defendant's brief. Likewise, the references to the Pohnpei State Constitution are to Article and section, but no text is quoted.

This Court operates under a Constitutional mandate to consult and apply sources of law in the FSM in rendering decisions. FSM Const. art. XI, § 11. Without citation to the law the Court must apply, it is impossible to reach a decision consistent with this constitutional directive.[4] Without access trces of the law, it is impossible for the Court to determinermine that a party is entitled to judgment "as a matter of law." In order to be granted summary judgment, the moving party must demonstrate that it is entitled to judgment "as a matter of law." FSM Civ. R. 56(c). In Manahane v. FSM, [1982] FMSC 14; 1 FSM Intrm. 161, 164, 172 (Pon. 1982), the FSM did not prove that it was immune from liability, an issue of law. Summary judgment was denied. In this case, U Corporation has not proved it is entitled to relief under Pohnpei State law. Therefore, summary judgment cannot be granted.

In light of all these factors, the Court concludes that it must abstain from further decision in this case. In a case where the FSM Supreme Court abstains from an action originally filed in State Court and removed to the FSM Supreme Court, remand to the State Court is proper. Mendiola v. Berman (I), 6 FSM Intrm. at 429.

Conclusion

The Court hereby abstains from further action in this suit and remands the entire matter to the Pohnpei Supreme Court.

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^[1] While the Court concurs in the conclusion of Federated Shipping, it disagrees with the reasoning to the extent the holding is based on the definition of foreign citizens found in 32 F.S.M.C. 202(4). Congress expressly limited the definitions of 32 F.S.M.C. 202 to use only in that Chapter of Title 32. While it has the power to define § 6(b) jurisdi, Congress did did not do so by enacting a definition of a "foreign corporation" limited to one Chapter of a Title wholly unrelated to jurisdiction. The Constitution should not be construed by borrowing terms of limited definition from an unrelated section of the FSM Code.

^[2] The Court considered certifying questions to the Pohnpei Supreme Court, but finds that process more cumbersome than outright abstention. Edwards v. Pohnpei, [1988] FMSC 6; 3 FSM Intrm. 350, 362 (Pon. 1988). Since one of the issues presented is characterized as one of mixed law and fact, it may not be sufficiently "clean" to be certified. Id.

^[3] The Court acknowledges that when, as here, a dispute involves only private parties, the impetus to abstain is less than when a state is a party and requests abstention. Pryor v. Moses, [1989] FMSC 16; 4 FSM Intrm. 138, 143 (Pon. 1989). Given that the other factors favor abstention, this factor carries less weight.

^[4] A telling comparison is to the exhaustive briefing and analysis of Pohnpei land law made in Etscheit v. Adams, [1994] FMSC 6; 6 FSM Intrm. 365, 372-82 (Pon. 1984).