Davis v Kutta [1998] FMSC 18; 8 FSM Intrm. 338 (Chk. 1998) (13 July 1998)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Davis v Kutta, [1998] FMSC 18; 8 FSM Intrm. 338 (Chk. 1998)

MENRY DAVIS,
Plaintiff,

vs.

JIM KUTTA, HALVERSON NIMEISA,
RESAUO MARTIN, ERADIO WILLIAM,
FRANCIS RUBEN, JOHNSON SILANDER
and the STATE OF CHUUK,
Defendants.

CIVIL ACTION NO. 1992-1039

ORDER IN AID OF JUDGMENT AND MEMORANDUM

Martin Yinug
Associate Justice

Argued: May 15, 1998
Ordered: July 3, 1998
Entered: July 13, 1998

APPEARANCES:

For the Plaintiff:
Andrew Clayton, Esq.
Law Offices of Saimon & Associates
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Defendants:
Joses Gallen, Esq.
Assistant Attorney General
Office of the Chuuk Attorney General
P.O. Box 189
Weno, Chuuk FM 96942

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HEADNOTES

Attachment and Execution; Civil Rights
Under 11 F.S.M.C. 701 et seq. a private cause of action is provided to any person whose constitutional rights are violated. In order for the remedy provided by 11 F.S.M.C. 703 to be effective, it must be enforceable. Where the defendant in a civil rights action is a state, this means that the remedy should not be dependent upon subsequent state legislative action, such as appropriation of funds, which would thwart the Congressional mandate that 11 F.S.M.C. 701 is meant to implement. Accordingly, the FSM Supreme Court is not precluded from issuing an order in aid of judgment against a state in the absence of a state legislative appropriation. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 341 (Chk. 1998).

Attorney, Trial Counselor and Client - Fees; Civil Rights; Judgments
Interest on a judgment is payable under 6 F.S.M.C. 1401 at nine percent a year. 11 F.S.M.C. 701(3), which provides for an award of attorney's fees in a civil rights action, should be construed to permit interest on an unpaid fee award. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 341 n.2 (Chk. 1998).

Attachment and Execution
Under 6 F.S.M.C. 1409, an individual judgment debtor is allowed to "retain such property and such portion of his income as may be necessary to provide the reasonable living requirements of the debtor and his dependents," but if the debtor has some limited ability to pay, the court can order some payment. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 342 (Chk. 1998).

Attachment and Execution
Under 6 F.S.M.C. 1410(2), an order in aid of judgment may provide for the sale of particular assets, such as unencumbered property that is not necessary for the debtor to meet his family and customary obligations, and payment of the net proceeds to the creditor. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 343 (Chk. 1998).

Attachment and Execution
Under 6 F.S.M.C. 1409, the court makes two inquiries: the judgment debtor's ability to pay, and the fastest manner to accomplish payment. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 343 (Chk. 1998).

Attachment and Execution
Because the court must consider the debtor's ability to pay, an order which takes this factor properly into consideration will not result, in and of itself, in the financial undoing of a debtor. Davis v. Kutta, [1998] FMSC 18; 8 FSM Intrm. 338, 344 (Chk. 1998).

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COURT'S OPINION

MARTIN YINUG, Associate Justice:

The court has received and considered plaintiff's motion for an order in aid of judgment filed on December 15, 1997. The motion seeks an order against defendants Kutta, Nimeisa, Martin, Rueben, Silander, and the state of Chuuk pursuant to 6 F.S.M.C. 1409. The court also received Chuuk's opposition to the motion, which was filed on May 15, 1998. Also on May 15, 1998, the court held an evidentiary hearing. Of the defendants, Jim Kutta and Eradio William appeared and testified. Of the remaining individual defendants, two had moved off island and did not appear; two had passed away. As to defendant Chuuk, Presenta Shirai-Sablan, who is Directress of Chuuk State Treasury, appeared and testified.

The court finds that at this juncture, and based on the evidence presented, that defendants Kutta and William have a limited ability, as contemplated by 6 F.S.M.C. 1409, to pay the judgment amounts as to which they are jointly and severally liable. Defendant Kutta shall pay the sum of $7.50 every two weeks by allotment which he shall initiate. As to defendant Eradio William, the one unencumbered piece of real property which he purchased for $2,000 will be sold and the proceeds tendered to plaintiff no later than 60 days from the date of this order. At the time of the sale, he will file a brief report of the sale showing the amount received and the buyer. He will provide a copy of the report to plaintiff's counsel. Today's order is without prejudice to the plaintiff to renew her motion as to these two defendants in the event that their circumstances should change.

As to defendant Chuuk, the court finds that Chuuk has the ability to pay the judgment, plus accrued interest, as well as the award of attorney's fees and costs, plus accrued interest. For the reasons set forth below, Chuuk has until September 15, 1998, to make full payment of these amounts. On September 15, 1998, plaintiff will provide to the court a brief memorandum indicating the status of payments from all defendants. In the event that all amounts owed are not paid in full as of that date, the court will take such further action as is not inconsistent with this order, and in accordance with the accompanying memorandum.

MEMORANDUM

I. Background

Both the instant case and Sikbert Louis v. Kutta et al., 1994-1023 (hereafter "the companion case") stem from tragic events which occurred on April 17, 1992, at Wichap, in Weno, when police officers fired gunshots into a crowd. The plaintiff in this case, who was 35 years old when as a bystander she witnessed the events at Wichap, suffered a gunshot wound to her abdomen, which resulted in life-threatening injury necessitating the reconstruction of her digestive tract. At one point after surgery, her doctor gave her a 50 to 60 percent chance of survival. She may continue to suffer from discomfort, abdominal distension, vomiting, toxic build-up and stenosis - narrowing or constricting of the intestine - for up to ten years. After trial, judgment was entered in a total amount of $130,000 on August 9, 1996.

In the companion case, settlement was reached during the course of trial, but according to the allegations of the complaint in that case, during the April 17th, 1992, events at Wichap, plaintiff Sikbert Louis' son Jeffrey Louis was wounded in the buttocks, while his son Jimmy Louis was fatally wounded in the head. According to the complaint allegations, Jeffrey Louis suffered emotional distress from the time that he was injured until he subsequently committed suicide. The complaints in both cases allege a violation of the injured victims' civil rights. By its order and memorandum entered in the companion case on November 17, 1997, this court found that principles of supremacy precluded Chuuk from relying on Article VIII, section 2 of the Chuuk Constitution, or the Judiciary Act of 1990, section 4, in arguing that no Chuuk monies may be used to pay a judgment against Chuuk State without express authorization by the Chuuk legislature.[1] See Louis v. Kutta, [1997] FMSC 36; 8 FSM Intrm. 208 (Chk. 1997).

II. Discussion

In the instant case, Chuuk contends for the same proposition as it did in the companion case, and urges that the court should not issue any order in aid of judgment in the absence of Chuuk legislative action to appropriate funds. In the case at bar, Chuuk relies on the Chuuk Financial Management Act of 1982, as well Article VIII, Section 2 of the Chuuk Constitution. The former provides in pertinent part at Section 8(1) that "no officer of employee of the state . . .l obl . .160;. .160;. funds of the ge fund fund: (a) unless at the same time there are funds appropriated and available for obligation; and (b) unlessoblig is fe pur specified by the appropriatiriation." on." The court finds - as it found in the the NovemNovember 17, 1997, order in the companion case - that notions of national supremacy control to preclude Chuuk from asserting that Chuuk legislative action is a necessary prerequisite to payment of the instant judgment. The court adopts here the reasoning set out in the November 17, 1997, order. Briefly summarized, Article II of the FSM Constitution, entitled "Supremacy", provides that the FSM Constitution is "the supreme law of the Federated States of Micronesia." Article IV of the Constitution, titled "Declaration of Rights" guarantees to our citizens certain fundamental rights, rights which lie at the very core of any democratic system of governance. Under 11 F.S.M.C. 701 et seq. a private cause of action is provided to any person whose constitutional rights are violated. In order for the remedy provided by 11 F.S.M.C. 701(3) to be effective, it must be enforceable. Where the defendant in a civil rights action is a state, this means that the remedy should not be dependent upon subsequent state legislative action, such as appropriation of funds, which would thwart the Congressional mandate that 11 F.S.M.C. 701 is meant to implement. It would contravene the Supremacy Article of the FSM Constitution. Accordingly, the court finds that this court is not precluded from issuing an order in aid of judgment against defendant Chuuk in the absence of Chuuk legislative action appropriating funds to pay the judgment, costs and attorney's fees, and accrued interest thereon.[2]

In issuing an order in aid of judgment under 6 F.S.M.C. 1409, the court

shall hold a hearing on the question of the debtor's ability to pay and determine the fastest manner in which the debtor can reasonably pay a judgment based on the finding. In making this determination the court shall allow the debtor to retain such property and such portion of his income as may be necessary to provide the reasonable living requirements of the debtor and his dependents, including fulfillment of any obligations he may have to any clan, lineage, or other similar group, in return for which obligations he, or his dependents, receive any necessary part of the food, goods, shelter, or services required for their living.

The court considers in turn the testimony of the two individual defendants, and the testimony of Ms. Sablan-Shirai in her capacity as Directress of the Chuuk Treasury.

A. Jim Kutta

On August 9, 1998, judgment was entered jointly and severally against Mr. Kutta and other defendants for battery and violation of the civil rights in an amount totaling $110,000. Of the subsequent award of attorney fees and costs entered on December 5, 1997, $36,851.49 was apportioned to Mr. Kutta and those other defendants with whom he is jointly and severally liable. Hence, Mr. Kutta is liable for a total of $146,851.49, exclusive of interest.

Mr. Kutta testified that at the hearing that his annual salary is approximately $4,000, he takes home $132.00 every two weeks, and that he has no other source of income. He is married, and has no children. His wife's parents live with him and his wife, and he contributes approximately $60 to $70 a month to their support. He testified that he spends more than $100.00 a month for food, has utility expenses of approximately $20.00, and spends less than $50 dollars a month on clothes. Approximately $90 out his bi-weekly paycheck goes to credits at various stores, but it would appear that his estimated monthly expenses are included in this credit amount, and is not additional to it. He spends about $60 to $70 a month to support his wife's parents. He drives a pickup truck which belongs to his father-in-law. He has savings of about $400.00, but those savings come from wedding gifts to both himself and his wife. Defendant has no other liabilities other than his monthly expenses; he has no other assets.

Virtually all of what the defendant makes is necessary for the support of himself, his wife, and his wife's parents. Under 6 F.S.M.C. 1409, the court, in the case of an individual debtor, shall allow the debtor to "retain such property and such portion of his income as may be necessary to provide the reasonable living requirements of the debtor and his dependents." However, the court concludes that he does have some, albeit limited, ability to pay. Defendant shall pay the sum of $7.50 every two weeks to plaintiff. Payment shall be by allotment to be initiated by defendant.

B. Eradio William

Pursuant to the judgment entered August 9, 1996, against Mr. William, defendant is jointly and severally liable along with other defendants on the judgment in the amount of $50,000. As to the subsequent attorney fee award entered December 5, 1997, fees and costs in the amount were apportioned jointly and severally to Mr. William and other defendants in the amount of $16,430.08. The total for which Mr. William is liable is therefore $66,430.08, exclusive of interest.

Mr. William is the Chuuk Director of Public Safety, and has a salary of $600.00 bi-weekly, and after his allotments ($150 to the FSM Bank; $60 to the credit union; and $52 to the housing authority) and payroll deductions, his take-home pay is $300 every two weeks. He has no other income. He has a wife and seven children, the youngest of which is age 10. Five of the children are over 18, although he testified that he supports all five. One of the children is employed, one is in college in Washington State in the United States, and he contributes toward his support. Children of his sister also live with him, and the total number of people whom he supports in his household in Weno is 13.

Contradictions arose with respect to defendant's about his monthly expenses. He testified that he spends $600 a month for food, which is essentially all of his take-home income. But he also testified that on a monthly basis he spends $150 for clothing, $100 for utilities, $10 for telephone, $30 for medicine, and $35 for tuition for his youngest child at a private school. In response to plaintiff's counsel's question whether he has any money left over after paying his monthly expenses, he replied that he has only his wife's social security. The court does not consider defendant's wife's social security benefits in determining what defendant should pay.

As to assets, he testified that he owns two houses, one in Weno, which is on land belonging to his wife, and one in Fefan, which is on lineage land. He also owns two pieces of property, one purchased for $2,000, one for $1,500. Title to the latter piece is disputed. Defendant testified that he owns nothing else of value.

Based on defendant's testimony, his monthly expenditures substantially exceed his income. Allowing for a certain margin of error with respect to defendant's arithmetic, the court is convinced that, based on defendant's testimony as a whole, defendant's family obligations stretch his income to its limit. Under 6 F.S.M.C. 1409, the court shall allow the debtor sufficient property and income necessary to meet his extended family obligations. The court will order no payments to plaintiff out of defendant's income.

However, defendant has one piece of unencumbered property which he purchased for $2,000, which is not necessary for the defendant to meet his family and customary obligations. As set forth under 6 F.S.M.C. 1410(2), an order in aid of judgment may provide for "the sale of particular assets and payment of the net proceeds to the creditor." Within 60 days from the date of this order, Mr. William will sell the property and tender the proceeds to the plaintiff. At the time of tender, he will file a brief written statement with the court indicating to whom the property was sold, and the amount received.

C. State of Chuuk

Under the terms of the August 9, 1996, order, the state of Chuuk was found liable jointly and severally with other defendants in the sum of $130,000, while as to costs and fees, Chuuk was found liable jointly and severally with others for a total of $42,900. The total as to Chuuk, exclusive of interest, is therefore $172,900.

The Directress of the Chuuk State Treasury, Presenta Sablan-Shirai, testified that Chuuk has approximately 160 judgments outstanding against it that total approximately 16 million dollars. Chuuk has approximately 30 million dollars in investments which are held by the FSM national government. Chuuk also receives a monthly drawdown from the FSM government. For the month of May, 1998, that amount was approximately 1.6 million dollars. Chuuk also receives 50% of FSM revenues and customs funds collected in Chuuk. These funds should be paid monthly, but can be two to three months late. As an example, for the month of January 1998, Chuuk's share of customs funds was $60,000, and Chuuk had just received that amount on May 15, 1998, the date of the hearing. For February and March, Chuuk's share of FSM revenues and customs funds should be approximately $250,000 for each of those two months.

Chuuk has made partial payments on some of its judgments. In December of 1997, Chuuk paid $5,000 on the instant judgment, with an additional $800 paid in March of this year. The $5,800 which plaintiff has received to date is all that defendant Chuuk has paid on the judgment since it was entered on July 26th, 1996. The $800 paid in March was out of a total of $100,000 that was appropriated from investment earnings for payment on judgments. The Public Sector Reform Oversight Committee determined, based on the nature of the individual case, how this appropriation was to be allotted. In December of 1996, $400,000 had also been appropriated for judgment payments, and it was from this appropriation that the $5,000 payment was made.

Under 6 F.S.M.C. 1409, the court makes two inquiries: the debtor's ability to pay, and the fastest manner to accomplish payment. As to the former concern, based on the testimony of Ms. Sablan-Shirai, the court finds that Chuuk has the ability to pay the instant judgment amount. The second concern is the fastest manner in which to effect payment.

By separate order issued today in the companion case, the court has directed the FSM Secretary of Finance to pay over to Chuuk the sum of $150,000, which was previously withheld from funds owed by the FSM to Chuuk on December of 19, 1997, together with the interest that has accrued on the judgment. A garnishment of this sort obviously impacts on the way that Chuuk administers its finances. Principles of supremacy, flowing from the fact that both judgments rest on violation of the national civil rights statute, dictate that both judgments be paid with dispatch - to this extent, the impact of their payment must be borne. At the same time, a second garnishment in the instant case, coming as it would on the heels of the garnishment in the companion case, would have additional impact on Chuuk's administration of its finances.

The court seeks an approach that reconciles these two concerns - effecting expeditious payment of the judgment in the instant case while avoiding, from Chuuk's standpoint, what may be the unplanned for impact of a second garnishment. Toward this end, two considerations are relevant. First, the judgment in this case was entered August 9, 1996, or a year and two months after judgment in the companion case. The court will therefore grant some additional leeway with respect to payment of the judgment, attorney's fees, and accrued interest in this case. Second, the testimony at the hearing in this matter is that the Public Sector Reform Oversight Committee, working through legislative appropriation, has paid approximately half a million dollars in judgments in the last six months. Thus Chuuk has established a useful procedure for the orderly payment of outstanding judgments. The operation of this mechanism to effect payment of the instant judgment in a way that does not affect the flow of funds to Chuuk from the national government is preferred.

The court will revisit this matter on September 15, 1998. On that date plaintiff will file with the court a brief memorandum indicating what the status of payment in this case is with respect to the judgment. If the judgment, attorney's fees, and all accrued interest are not paid in full at that time, the court will then take further action in accordance with this memorandum.

The court addresses a final concern of gravity raised by Chuuk in its opposition. The court is aware that the effect of this order, along with that order issued this date in the companion case, is to give priority to two judgments over the many judgments which are outstanding against Chuuk. That is appropriate. The court reiterates that the judgments in these two cases are based on national court judgments based on violations of the national civil rights statute, 11 F.S.M.C. 701 et seq. National supremacy dictates that these judgments should be paid, and should be paid forthwith. Chuuk, however, urges that for the court to grant the motion for order in aid of judgment in this case is to "destroy the basic edifice under which our State Government operates. To grant this motion is to bestow . . .rightestroy thoy the fiscafiscal integrity of the Chuuk State Government."

Chuuk's concern in this regard is, obvioua sigant one. Upon reflection, however, the court does not believe that the effect of t of this this order, nor the one in the companion case, will be as prognosticated. First, the court is at pains to make it clear that its ruling today in this case and the companion case are limited by their facts to judgments based on violations of the national civil rights statute, 11 F.S.M.C. 701 et seq. A second line of defense against the untoward result foretold by Chuuk lies in the language of 6 F.S.M.C. 1409 itself, which provides that the court must consider the debtor's ability to pay. An order which takes this factor properly into consideration will not result, in and of itself, in the financial undoing of a debtor. The court concludes that the orders issued today in both this case and the companion case are consistent with this stricture provided by the statute. In sum, the court concludes that today's orders will not of themselves undermine the fiscal integrity of Chuuk state.

III. Conclusion

Defendant Jim Kutta will initiate an allotment of $7.50 every two weeks to be made to plaintiff. No later than 60 days from the date of this order, defendant Eradio William will sell the real property that he purchased for $2,000, and tender the proceeds to plaintiff. At that time he will file with the court a brief report of the sale showing the amount received and the buyer. He will provide a copy of the report to plaintiff's counsel. With respect to the motion for order in aid of judgment as to Chuuk, plaintiff will provide to the court on September 15, 1998, a memorandum showing the status of payments received from all defendants. If payment of all amounts owing, plus accrued interest, has not been made in full at that time, the court will take further action not inconsistent with this order, and in accordance with the memorandum.

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^[1] Article VIII, § 2 of the Chuuk Constitution in pertinent part is: "No public funds may be paid out of the treasury of the State of Chuuk except as prescribed by statute." The Judiciary Act of 1990, Chuuk S.L.08, § 4 in pertinent part iach [sch [state and mund municipal] court shall have power to issue all writs for equitable and legal relief, except the power of attachment, execution and garnishment of public property."

^[2] Interest on the judgment is payable under 6 F.S.M.C. 1401 at nine percent a year. As to interest on the attorney fee award, the court looks to the rationale in Gates v. Collier, [1980] USCA5 1009; 616 F.2d 1268 (5th Cir. 1980), on which this court relied in its November 17, 1997, order in the companion case. The Gates court noted: "In sum, we believe that § 1988 [the Unitates statute tute allowing for an award of attorney's fees in civil rights actions] should be liberally construed to permit theding of interest on attorneys' fees." Id. at 1278 (footnote omitted). Similarly, 11 , 11 F.S.M.C. 701(3), which provides for an award of attorney's fees in a civil rights action, should be construed to permit interest on an unpaid fee award.