Joy Enterprises Inc v Pohnpei Utilities Corp [1998] FMSC 14; 8 FSM Intrm. 306 (Pon. 1998) (30 June 1998)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Joy Enterprises Inc v Pohnpei Utilities Corp, [1998] FMSC 14; 8 FSM Intrm. 306 (Pon. 1998)

JOY ENTERPRISES, INC.,
Third-Party Plaintiff,

vs.

POHNPEI UTILITIES CORP.,
Third-Party Defendant

CIVIL ACTION NO. 1996-062

ORDER

Andon L. Amaraich
Chief Justice

Submitted: June 2, 1998
Decided: June 30, 1998

APPEARANCES:

For the Third-Party Plaintiff:
Stephen V. Finnen, Esq.
Law Offices of Saimon & Associates
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Third-Party Defendant:
Fredrick L. Ramp, Esq.
P.O. Box 1480
Kolonia, Pohnpei FM 96941

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HEADNOTES

Torts - Contribution
The right of contribution among tortfeasors, where two or more persons become jointly or severally liable in tort for the same injury to a person, is subject to certain limitations which are set out in the statute that creates the cause of action for contribution among joint tortfeasors. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 309 (Pon. 1998).

Civil Procedure - Summary Judgment
Summary judgment on a contribution and indemnity claim is not precluded when the only issue remaining is the legal effect of the plaintiff's and defendant's court-filed settlement on the defendant's contribution claims against a third-party defendant. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 310 (Pon. 1998).

Statutes - Construction
When interpreting a statute, the plain meaning of the statutory provision must be given meaning whenever possible. Courts should not broaden statutes beyond the meaning of the law as written. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 310 (Pon. 1998).

Torts - Contribution
When a defendant's and plaintiff's prejudgment settlement, by its terms, did not extinguish or discharge a third-party defendant's potential liability to the plaintiff, the defendant's contribution action against the third-party defendant is barred, even though, since the statute of limitations had run, the settlement had the effect of extinguishing the plaintiff's potential claims against the third-party defendant. Under 6 F.S.M.C. 1202(4), for the defendant to be allowed to maintain a contribution action the settlement itself must either have discharged the common liability or extinguished the third-party defendant's liability. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 311 & n.4 (Pon. 1998).

Contracts - Indemnification; Torts - Contribution
Although the FSM Supreme Court has recognized claims for indemnity based on contractual provisions between two parties, and required precise clarity in the indemnification clause language, it is not prepared to create a common law indemnity claim. Joy Enterprises, Inc. v. Pohnpei Utilities Corp., [1998] FMSC 14; 8 FSM Intrm. 306, 311 (Pon. 1998).

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COURT'S OPINION

ANDON L. AMARAICH, Chief Justice:

This case came before the Court on third-party defendant Pohnpei Utilities Corporation's ("PUC's") Motion for Summary Judgment, filed on May 1, 1998. Third-party plaintiff, Joy Enterprises, Inc. ("Joy") responded on May 12, 1998. This matter originally was set for trial on June 2, 1998. However, on May 18, 1998, the Court issued an Order continuing the trial and setting argument on PUC's motion for summary judgment on that date. On June 2, 1998, counsel for both parties appeared, and waived oral argument on the motion.

I. Background

A. First Action

This action began as a personal injury claim made by Deltring and Cathy Tom, plaintiffs, against shareholders of Joy, when Mr. Tom suffered injuries from electrical shock while painting the Joy Hotel on January 27, 1995. Joy subsequently was substituted for its shareholders.

B. Second Action

Joy became a third-party plaintiff when it joined PUC to the action as a third-party defendant, claiming contribution and indemnity against PUC. The Toms never directly asserted any cause of action against PUC.

C. Dismissal of First Action

On September 25, 1997, the Toms and Joy executed a "Settlement Agreement and Release" ("Settlement"), in which the Toms agreed to release and discharge Joy from all liability in this case.[1]

On September 30, 1997, the Toms and defendant/third-party plaintiff Joy filed a "Stipulation and Order of Dismissal with Prejudice" ("Stipulation"). In this Stipulation, the two parties stated that the action was "fully settled between Deltring Tom and Cathy Tom and the defendant Joy Enterprises, Inc.," and that "all claims pending by each party against the other be dismissed, in their entirety, with prejudice." Stipulation and Order of Dismissal (Sept. 30, 1997).

On October 6, 1997, third-party defendant PUC stipulated to the dismissal filed by Joy and the Toms. The Court issued an Order on October 21, 1997, confirming the dismissal of the First Action, the action between Joy and the Toms. On October 14, 1997, the Toms sought leave to amend the original complaint to assert personal injury claims against PUC directly. PUC opposed the motion on the grounds that the Toms were no longer a party to the action. On December 17, 1997 the Court issued an Order agreeing with PUC, and denying the Toms' request on the basis that they were dismissed from the action as of October 6, 1997, when PUC agreed to the dismissal of claims between Joy and the Toms.

D. PUC's Motion for Summary Judgment in Second Action

This case comes before the Court on PUC's Motion for Summary Judgment on the indemnity and contribution claims made by Joy against PUC.

1. Contribution

First, PUC argues that summary judgment against Joy is appropriate because Joy's contribution claim is barred under the relevant statutes.[2] In the FSM, where two or more persons become jointly or severally liable in tort for the same injury to person, there exists a right of contribution among them. 6 F.S.M.C. 1202(1). However, this right is subject to certain limitations which are set out in the statute which creates the cause of action for contribution among joint tortfeasors.

Title 6 F.S.M.C. 1202(4) states in relevant part that: "A tort-feasor who enters into a settlement with a claimant is not entitled to recover contribution from another tort-feasor whose liability for the injury or wrongful death is not extinguished by the settlement . .㼠."

PUCp>PUC argues that Joy's contribution claim is barred under this statute because the Settlement between TomJoy did not extinguish PUC's liability.

Title 6 F.S.M.C. 1204 further states:

(4) If there is no judgment for the injury or wrongful death against the tort-feasor seeking contribution, his right of contribution is barred unless he has either:

(a) discharged by payment the common liability within the statute of limitations period applicable to the claimant's right of action against him . . .; or,

(b) agreed whed while the action is pending against him to discharge the common liability and has within 1 year after agreement paid the liability . . .&#16p> PUC >PUC clthat that claim for contriontributiobution also is barred under this provision because (1) the Settlement did not extinguish the "common liabi of Jd PUC, and (2) the Settlement was not carried outd out with within the two-year statute of limitations period for personal injury, 6 F.S.M.C. 803(4).[3]

Joy responds that the Settlement and Stipulation did in fact extinguish the "common liability" of Joy and PUC to Tom, and that there are material issues of fact which preclude summary judgment on its contribution claim.

2. Indemnity

PUC also asserts that summary judgment is appropriate on Joy's indemnity claim against PUC, because Joy has no legal basis for that claim. Title 6 F.S.M.C. 1202(6), related to contribution, preserves a separate and distinct claim for indemnity "under existing law." PUC argues that "existing" law does not include common law indemnity, which has not yet been recognized in the FSM. PUC argues that, since (1) there is no statutory basis for indemnity, and (2) there is no contractual indemnity between Joy and PUC, this Court should not rescue Joy by "creating" a new common law of indemnity.

Analysis

I. Standard of Review

Under FSM Civil Rule 56, a motion for summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FSM Civ. R. 56(c); Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 582 (App. 1994); Kyowa Shipping Co. v. Wade, [1995] FMSC 15; 7 FSM Intrm. 93, 95 (Pon. 1995); Kihara Real Estate, Inc. v. Estate of Nanpei, 6 FSM Intrm. 48, 52 (Pon. 1993). Once the party moving for summary judgment presents a prima facie case of entitlement to summary judgment, the burden shifts to the non-moving party to produce evidence showing that a genuine issue of material fact remains for resolution. Kyowa Shipping Co., 7 FSM Intrm. at 95; Urban v. Salvador, [1995] FMSC 8; 7 FSM Intrm. 29, 31 (Pon. 1995); FSM v. Ponape Builders Constr., Inc., 2 FSM Intrm. 48, 52 (Pon. 1985). The non-moving party may not rely on unsubstantiated denials of liability to carry its burden. Urban, 7 FSM Intrm. at 31. It must present some competent evidence that would be admissible at trial to demonstrate that there is a genuine issue of fact, and that there is enough evidence supporting its position to justify a decision upholding its claim by a reasonable trier of fact. Id.; Alik v. Kosrae Hotel Corp., [1992] FMSC 5; 5 FSM Intrm. 294, 295 (Kos. 1992).

The Court finds that there are no genuine issues of material fact related to the Settlement and Stipulation executed and filed by Joy and the Toms. The only issue remaining is the legal effect of the Settlement and Stipulation on Joy's claims of contribution and indemnity against PUC.

II. Contribution

PUC argues that it is entitled to summary judgment on Joy's contribution claim because the Settlement between Joy and the Toms does not extinguish PUC's liability, and Joy's claim is thus barred under 6 F.S.M.C. 1202(4) and 1204(4).

When interpreting a statute, the plain meaning of the statutory provision must be given meaning whenever possible. Setik v. FSM, [1992] FMSC 19; 5 FSM Intrm. 407, 410 (App. 1992). Courts should not broaden statutes beyond the meaning of the law as written. In re Slot Machines[1988] FMCSC 5; , 3 FSM Intrm. 498, 500-01 (Truk S. Ct. Tr. 1988). Both statutes cited by PUC clearly bar Joy's contribution claim as long as the Settlement, by its terms, did not extinguish PUC's liability. A review of the Settlement reveals that Joy and the Toms explicitly did not intend to extinguish PUC's liability by executing the Settlement. The relevant portion of the Settlement states:

1.e. Exclusions from Release. This release is not intended nor in any way should it be construed to affect in anyway [sic] (i) the plaintiff Cathy Tom and Deltring Tom's existing or potential claims against Pohnpei Utilities Corporation or any other entity made a party to this litigation; (ii) Joy Enterprises Inc.'s existing or potential claims against Pohnpei Utilities Inc., [sic] or any other entity made party to this litigation.

This provision in the Settlement cannot be read in any way to suggest that Joy and the Toms intended to extinguish PUC's liability to either party, or to extinguish the common liability of Joy and PUC to the Toms. Under the plain language of 6 F.S.M.C. 1202(4) and 1204(4), the tort-feasor seeking contribution must have agreed, while the action was pending, to extinguish the common liability of the joint-tortfeasor from whom contribution is thereafter sought. Joy clearly did not intend to and did not discharge the "common liability" of Joy and PUC to the Toms when it entered into the Settlement with the Toms. In fact, the Settlement expressly states that Joy and the Toms' existing and potential claims against PUC shall remain unaffected by the Settlement. Joy is also, therefore, precluded by statute from seeking contribution against PUC.

Joy argues that the contribution claims should not be barred because the Settlement had the effect of extinguishing PUC's liability.[4] The fact that the Settlement had this unintended effect does not matter. Under 6 F.S.M.C. 1202(4), the settlement itself must either have discharged the common liability or extinguished PUC's liability for Joy to be allowed to maintain a contribution action against PUC. While the Toms' dismissal from the case was a result of the Settlement between Joy and the Toms, Joy clearly did not intend to pay the Toms on behalf of PUC. Thus, since the Settlement, by its terms, did not extinguish PUC's liability, Joy is not entitled to seek contribution from PUC.

III. Indemnity

PUC argues that summary judgment is appropriate on Joy's indemnity claim against PUC. PUC claims that Joy has no legal basis for its indemnity claim.

Title 6 F.S.M.C. 1202(6), related to contribution, preserves a separate and distinct claim for indemnity "under existing law." PUC argues that "existing" law in the FSM does not recognize common law indemnity claims, and that, since (1) there is no statutory basis for indemnity, and (2) there is no contractual indemnity between Joy and PUC, this Court should not "create" a new common law of indemnity in this case.

The Court agrees with PUC. This Court previously has recognized claims for indemnity based on contractual provisions between two parties. FSM v. Bartolome, 4 FSM Intrm. 182, 185 (Pon. 1990); Semens v. Continental Air Lines, [1985] FMSC 3; 2 FSM Intrm. 131, 136-37 (Pon. 1985). However, even when the Court has recognized claims for contractual indemnity, the Court has required "precise clarity in the language of the [indemnification] clause." Bartolome, 4 FSM Intrm. at 185.

Here, the undisputed facts demonstrate that there was no contractual relationship between Joy and PUC, let alone any precise or clear agreement by PUC to indemnify Joy. PUC's Motion for Summary Judgment, Aff. Nixon Anson para. 10. The Court is not prepared to create a common law indemnity claim, and Joy has demonstrated no other legal basis for its indemnity claim against PUC.

Conclusion

The Court finds that the pleadings and affidavits on file show that there is no genuine issue as to any material fact and that PUC is entitled to a judgment as a matter of law. FSM Civ. R. 56(c); Adams v. Etscheit, [1994] FMSC 52; 6 FSM Intrm. 580, 582 (App. 1994); Kyowa Shipping Co. v. Wade, [1995] FMSC 15; 7 FSM Intrm. 93, 95 (Pon. 1995); Kihara Real Estate, Inc. v. Estate of Nanpei, 6 FSM Intrm. 48, 52 (Pon. 1993).

Accordingly, it is hereby ordered that Count I of Joy's Third-Party Complaint, seeking contribution and indemnity from PUC, is dismissed with prejudice.

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^[1] It also should be noted that, as part of the Settlement Agreement, Joy agreed to assign to the Toms any and all potential claims that Joy had against PUC.

^[2] For purposes of this motion, the Court must view the facts and inferences in a light most favorable to the non-moving party. Bank of Guam v. Island Hardware, [1986] FMSC 22; 2 FSM Intrm. 281, 284 (Pon. 1986). While PUC denies that it is a joint tort-feasor, it claims that even if it were a joint tort-feasor with Joy, it nevertheless would be entitled to summary judgment.

^[3] The two-year statute of limitations for the Toms to sue PUC would have run in January, 1997, about 8 months before the Settlement Agreement was signed.

^[4] This is because the statute of limitations for any tort action by the Toms against PUC has expired. PUC's potential liability to the Toms was extinguished by the Toms' failure to bring claims against PUC directly within the limitations period, or to amend their complaint to assert claims against PUC directly, before they allowed themselves to be dismissed from the action by the Settlement and Stipulation.