Urban v Salvador [1995] FMSC 8; 7 FSM Intrm. 29 (Pon. 1995) (16 February 1995)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite case as Urban v Salvador, [1995] FMSC 8; 7 FSM Intrm. 29 (Pon. 1995)

JORG URBAN d/b/a/ PUBLIC DESIGN,
Plaintiff,

vs.

SODER SALVADOR,
Defendant.
__________________________________________

CIVIL ACTION NO. 1994-039

ORDER AND MEMORANDUM OF DECISION

Andon L. Amaraich
Chief Justice

Hearing: November 24, 1994
Decided: February 16, 1995

APPEARANCES:

For the Plaintiff:
Ron Moroni, Esq.
P.O. Box 1618
Kolonia, Pohnpei FM 96941

[7 FSM Intrm. 030]

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

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HEADNOTES

Civil Procedure - Summary Judgment
Once a party moving for summary judgment has presented a prima facie case of entitlement to summary judgment, the burden shifts to the non-moving party to produce evidence showing a genuine issue of material fact. The non-moving party may not rely on unsubstantiated denials of liability to carry its burden, but must present some competent evidence that would be admissible at trial that there is a genuine issue of material fact. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 30 (Pon. 1995).

Civil Procedure - Summary Judgment
Where uncontested evidentiary submissions establish the existence of a contract, performance by the plaintiff, and breach by the defendant, the plaintiff may be granted summary judgment because no question of material fact has been raised. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 31-32 (Pon. 1995).

Civil Procedure - Summary Judgment
Unsupported statements of counsel at oral argument do not qualify as competent evidence upon which a court could find a genuine issue for trial. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 32 (Pon. 1995).

Civil Procedure - Summary Judgment
Where a moving party provides no documentation other than his own affidavit to support the existence of an agreement, denied by the defendant, to pay 12% interest on past due sums, there is a genuine issue of material fact requiring a court to deny summary judgment. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 32-33 (Pon. 1995).

Torts - Damages
Punitive damages merely constitute an element of recovery in an underlying cause of action. Therefore no punitive damages may be recovered without an underpinning independent cause of action. Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 33 (Pon. 1995).

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COURT'S OPINION

ANDON L. AMARAICH, Chief Justice:

Introduction

In this breach of contract action, Plaintiff, Jorg Urban, seeks to recover $2,775.00 for architectural and design services rendered to Defendant, Soder Salvador. Defendant counterclaims seeking punitive damages for the mental and financial burden caused by having to defend himself in this action. Plaintiff filed a motion for summary judgment on June 23, 1994, seeking judgment as a matter of law with respect to both liability and damages. Defendant did not file a response nor submit any competent evidence opposing Plaintiff's motion for summary judgment. Defendant filed a motion for default on June 30, 1994, seeking judgment on his counterclaim. The motion for default is premised upon Plaintiff's failure to file an answer to Defendant's counterclaim. A hearing was held on both motions on November 24, 1994.

Plaintiff's Motion for Summary Judgment

Defendant's failure to respond to Plaintiff's motion for summary judgment results in the application of FSM Civil Rules 6(d) and 56(e) to the Court's analysis of Plaintiff's motion. FSM Civ. R. 56(e) sets out the burden upon a non-moving party in the face of a properly supported motion for summary judgment, and the effect of the non-moving party's failure to properly respond to that motion. FSM Civ. R. 56(e) provides in pertinent part:

[w]hen a motion for summary judgment is made and supported as provided by this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided by this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.

Pursuant to FSM Civil Rule 56(e), once the moving party has presented a prima facie case of entitlement to summary judgment, the burden shifts to the non-moving party to produce evidence showing a genuine issue of material fact. Federated Shipping Co. v. Ponape Transfer & Storage, 4 FSM Intrm. 3, 11 (Pon. 1989). The non-moving party may not rely on unsubstantiated denials of liability to carry its burden, but must present some competent evidence that would be admissible at trial which demonstrates that there is a genuine issue of material fact. Id. When the non-moving party fails to present competent evidence in response to a properly supported motion for summary judgment, the Court must evaluate the moving party's evidentiary submissions and any other admissible evidence to determine if the movant has presented a prima facie case of entitlement to summary judgment. If the movant has presented such a prima facie case, the movant is entitled to summary judgment. Accordingly, as a result of Defendant's failure to respond to Plaintiff's summary judgment motion, judgment for the Plaintiff is "appropriate" if Plaintiff's evidentiary submissions and Defendant's admissions demonstrate a prima facie case of entitlement to judgment.^[1]

A moving party is entitled to summary judgment when it has demonstrated that it is entitled to judgment as a matter of law and that there are no genuine issues of material fact. FSM Civ. R. 56(c); Kihara Real Estate v. Estate of Nanpei (I), 6 FSM Intrm. 48, 52 (Pon. 1993).

The admissions of Defendant, combined with the evidentiary submissions of Plaintiff, establish Defendant's liability for breach of contract. Defendant admits in his answer that a contract exists between the parties, that the contract provided for the performance of architectural services by Plaintiff, that, under the terms of the contract, Defendant was to pay $3,375.00 to Plaintiff, and that Defendant has only paid Plaintiff $600.00. Def.'s Answer (Apr. 26, 1994). Plaintiff's evidentiary submissions, in the form of an affidavit and a copy of a proposal by Plaintiff for professional services ("Proposal"), Letter from Jorg Urban to Soder Salvador (Jan. 18, 1993) (Ex. to Pl.'s Memorandum in Support Motion for Summary Judgment (June 23, 1994)), establish the terms of the contract and Plaintiff's full performance of those terms. These evidentiary submissions are uncontested. In particular, Defendant does not dispute that the Proposal reflects the terms of the contract between the parties.^[2] Plaintiff's uncontested evidentiary submissions and Defendant's admissions establish the existence of a contract, performance by Plaintiff, and breach by Defendant in the form of his failure to pay the agreed upon sum.

While Defendant has not filed a response to Plaintiff's summary judgment motion or otherwise submitted any competent evidence raising a issue of material fact as to liability, counsel for defendant raised, during oral argument, the defense of unsatisfactory performance by Plaintiff. Pursuant to FSM Civil Rule 56(e), the unsupported statements of counsel at oral argument do not qualify as competent evidence upon which the Court could find a genuine issue for trial. Furthermore, counsel for Defendant's allegation of unsatisfactory performance by Plaintiff, even if it were competent evidence, is without merit and does not raise a question of material fact.

Counsel for Defendant stated at oral argument that Plaintiff breached the contract by only providing "rough" designs "without specifications." However, the uncontested Proposal submitted into evidence by Plaintiff establishes that, under the first phase of the contract, Plaintiff was to prepare only "rough sketch plans and preliminary designs." Accordingly, the unsupported claims of Defendant's counsel are no defense at all. Counsel for Defendant, rather than raising a question of material fact as to the adequacy of Plaintiff's performance, is admitting that Plaintiff has fulfilled the terms of the first phase of the contract by providing exactly what is called for in the contract, rough sketches.

Plaintiff has established, through Defendant's admissions and his own uncontested evidentiary submissions, that there are no genuine issues of material fact and that Plaintiff is entitled to judgment as a matter of law. Accordingly, the Court finds that summary judgment in favor of Plaintiff for $2,775.00 is appropriate pursuant to FSM Civil Rules 6(d) and 56(e).

Plaintiff also seeks to recover 12% annual interest on the unpaid balance of $2,775.00. Plaintiff alleges that the parties orally agreed to apply an annual interest rate of 12% on any sums owing Plaintiff which were not promptly paid. Plaintiff completed and delivered the plans in February of 1994, and therefore seeks to recover 12% annual interest starting as of February 1994, on the unpaid balance of $2,775.00. Plaintiff provides no documentation or third party affidavits to support the existence of the alleged agreement to pay 12% interest on all past due sums. Plaintiff's only supporting evidence is his own affidavit attesting to such an agreement. Defendant denied in his answer and at oral argument that a 12% past due provision was ever incorporated into the terms of the contract.

While Defendant's repeated denial of the existence of a 12% interest provision is not competent summary judgment evidence, the Court will note that Defendant contests the existence of the interest provision. Plaintiff's affidavit regarding the interest provision, the substance of which Defendant contests, standing alone, does not convince the Court that there is no question of material fact regarding the subsequent oral incorporation of the 12% interest provision into the written Proposal. The existence of a question of material fact regarding the alleged agreement to pay 12% interest on past due sums requires the Court to deny Plaintiff's motion for summary judgment as to the award of 12% interest. See Tosie v. Healy-Tibbits Builders, Inc., [1992] FMSC 21; 5 FSM Intrm. 358, 360 (Kos. 1992) (instructing that courts may not grant summary judgment on any matter for which there is a dispute as to a material fact).

Defendant's Motion for Default

On June 30, 1994, Defendant filed a motion for default judgment on his counterclaim for punitive damages. Plaintiff has neither filed an answer to the counterclaim nor an opposition to the motion for default. Under such facts, typically, Defendant would be entitled to a default judgment pursuant to FSM Civil Rule 55(a). However, in this case, the Court will not enter a default judgment against Plaintiff because the claim for punitive damages is wholly without legal merit.

Defendant's sole cause of action is a claim for punitive damages for having to respond to this suit. Punitive damages are normally an element of recovery on a recognized cause of action and are awarded as a supplement to actual damages. Defendant, however, does not assert a recognized cause of action, such as a claim grounded in tort or breach of contract, as a basis for recovery of punitive damages. Defendant, instead, seeks to create a new and independent cause of action in which no actual damages need be alleged or proven. This Court has uncovered no FSM decisions which have addressed the issue of whether a claim for punitive damages may stand as an independent cause of action. When there are no FSM authorities addressing an issue of first impression, this Court may look to the common law decisions of U.S. courts for guidance. Semens v. Continental Air Lines, Inc., [1985] FMSC 3; 2 FSM Intrm. 131, 141 (Pon. 1985).

United States authorities are in virtually uniform agreement that there is no separate and distinct cause of action for punitive damages; rather, punitive damages merely constitute an element of recovery in an underlying cause of action. 22 Am. Jur. 2d Damages § 741 (1988). "A party who has no cause of action independent of a supposed right to recover exemplary damages has no cause of action at all." Id. at 795. Without an independent cause of action underpinning Defendant's counterclaim for punitive damages, the law does not permit Defendant to recover punitive damages. Accordingly, Defendant's motion for default judgment is denied.

Conclusion

Accordingly, it is hereby ordered that Plaintiff's motion for summary judgment is granted as to Defendant's liability for the sum of $2,775.00.

It is further ordered that Plaintiff's motion for summary judgment is denied as to Defendant's liability for 12% interest on Defendant's outstanding debt to Plaintiff.

It is further ordered that Defendant's motion for default judgment is denied.

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^[1] FSM Civil Rule 6(d) is also applicable to this action and provides the Court with guidance similar to that of FSM Civil Rule 56(e). FSM Civil Rule 6(d) provides that the failure of a party to file a memorandum of points and authorities in opposition to an adverse parties motion "constitute[s] a consent to the granting of the motion." Accordingly, Defendant's failure to file any response to Plaintiff's summary judgment motion constitutes Defendant's consent to the motion. See Actouka v. Kolonia Town, [1991] FMSC 20; 5 FSM Intrm. 121, 123 (Pon. 1991) (granting summary judgment motion pursuant to FSM Civ. R. 6(d)). However, Defendant's consent to Plaintiff's motion is not, in and of itself, a sufficient basis for this Court to grant Plaintiff's motion. Even when an opposing party consents to a motion, pursuant to FSM Civil Rule 6(d), that motion may only be granted if it is well grounded in fact and law. In re Parcel No. 046-A-01[1993] FMSC 30; , 6 FSM Intrm. 149, 152 (Pon. 1993). Accordingly, the Court must evaluate Plaintiff's motion to determine whether it is well grounded in fact and law (i.e., whether it is "appropriate" to grant the motion).

^[2] The uncontested Proposal specifies that Plaintiff would provide four phases of architectural and construction supervision services. The Proposal specifies the cost for each phase of Plaintiff's services. The first stage of the proposal, which is the only phase for which Plaintiff seeks to recover, requires Plaintiff to provide rough sketches and preliminary designs.