Louis v Kutta [1998] FMSC 27; 8 FSM Intrm. 460 (Chk. 1998) (7 October 1998)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Louis v Kutta, [1998] FMSC 27; 8 FSM Intrm. 460 (Chk. 1998)

SIKBERT LOUIS,
as personal representative
of the estates of his sons
Jeffrey and Jimmy Louis, deceased,
Plaintiff,

vs.

JIM KUTTA, HALVERSON NIMEISA,
RESAUO MARTIN, JOHNSON SILANDER
and the STATE OF CHUUK,
Defendants,

THE FEDERATED STATES OF MICRONESIA,
Garnishee/Defendant.

CIVIL ACTION NO. 1994-1023

ORDER

Martin Yinug
Associate Justice

Decided: October 7, 1998

APPEARANCES:

For the Plaintiff:
Frank Casiano, trial counselor
Midasy O. Aisek, Esq. (supervising attorney)
Micronesian Legal Services Corporation
P.O. Box D
Weno, Chuuk FM 96942

For the Garnishee:
Julia Freis, Esq.
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941

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HEADNOTES

Appeal and Certiorari - Decisions Reviewable; Attachment and Execution
It is unlikely that in paying the judgment an appellant would waive its appeal, so long as payment was made under protest. In holding that the right to appeal was not precluded by payment, the courts have sometimes noted that payment had been made under protest; conversely, in holding that the right to appeal was barred by payment, the courts have sometimes noted that payment had not been made under protest. Louis v. Kutta, [1998] FMSC 27; 8 FSM Intrm. 460, 461 (Chk. 1998).

Appeal and Certiorari - Decisions Reviewable; Attachment and Execution
There is no persuasive authority that should a garnishee pay a judgment pursuant to a garnishment order, that the garnishee would waive its rights to appeal. Louis v. Kutta, [1998] FMSC 27; 8 FSM Intrm. 460, 462 (Chk. 1998).

* * * *

COURT'S OPINION

MARTIN YINUG, Associate Justice:

The court is in receipt of the Motion for Relief Pursuant to the Rules of Civil Procedure 60(b) and Points and Authorities in Support Thereof, which was filed by the garnishee/defendant FSM on August 25, 1998, and Plaintiff's Opposition to Garnishee's [sic]/Defendant Motion for Relief From Amended Order in Aid of Judgment, which was filed by plaintiff on August 27, 1998. Defendant Chuuk filed no response to the FSM's motion.

By order dated July 6, 1998, the court directed the FSM as garnishee to pay over to the plaintiff the sum of $150,000, plus accrued interest, in satisfaction of the judgment entered pursuant to stipulation on June 7, 1995. In response to that order, the FSM has filed a motion under Rule 60 to be allowed to deposit the $150,000 plus interest in an interesting bearing account pending its appeal of this court's July 6, 1998, order. The FSM contends that were it to pay the money to the plaintiff, it would risk waiver of the issues which it has appealed by the notice dated August 14, 1998, although it does not cite to any authority in support of this proposition. The FSM also urges that placing the judgment amount in an interest bearing account serves the interest of Chuuk, in that the clock would stop on the accruing judgment interest, which accrues by statute at 9%. According to the FSM, during the pendency of the appeal, plaintiff would receive bank interest as opposed to the higher judgment rate of interest. Plaintiff objects strongly to this proposal, urging that he should be paid, and be paid now.

On the one hand, it would seem unlikely that in paying the judgment the FSM would waive its appeal, so long as payment was made under protest. One commentator, writing in 1955, noted:

Whether a payor may save his right to appeal by paying under protest is a question which has never been precisely decided. However, in holding that the right to appeal was not precluded by payment, the courts have sometimes noted that payment had been made under protest; conversely, in holding that the right to appeal was barred by payment, the courts have sometimes noted that payment had not been made under protest.

E.H. Schopler, Annotation, Defeated Party's Payment or Satisfaction Of, or Other Compliance With, Civil Judgment as Barring His Right to Appeal, 39 A.L.R.2d 153, 172 (1955) (footnote omitted). That same commentator notes that "[o]utside Kansas, the courts agree that payment following the issuance of execution upon a judgment does not cut off the payor's right to appeal." Id. at 166 (footnotes omitted). "Under this view the decisive factor is the coercive effect of the issuance of execution." Id. n.11. Although these annotation comments appear directed toward the judgment debtor, there is nothing about the rationale of these comments that is inapplicable to an otherwise timely appeal filed by a garnishee.

On the other hand, the court takes for the moment an expansive view of the FSM's position. Within the specific context of an order of remittitur under Rule 59 of the United States Federal Rules of Civil Procedure, there is a split in the United States circuits as to whether acceptance, as opposed to payment, of a money award waives the right to appeal the reduction.[1] Rule 59 of the United States Federal Rules of Civil Procedure is identical to Rule 59 of the FSM Rules of Civil Procedure, except for changes to section (a) to reflect the fact that we do not have jury trials in Micronesia. Under Federal Rule 59,

[i]n the Fifth Circuit the rule is now well developed that a plaintiff who has accepted a remittitur under protest and who has not yet enjoyed the fruits of the judgment may appeal and challenge the requirement of the remittitur. The Seventh Circuit, with support elsewhere, holds that the plaintiff waives any objection to the remittitur and that he cannot challenge it on appeal.

11 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 2815, at 105-06 (1973) (otetnotes omitted). This split in the federal circuits on the question of acceptance of a remittitur by no means suggests concluy that were the FSM to satisfy the judgment through payment of the garnishment, it would wald waive its right to appeal the important issues that it has set out in its notice of appeal. Those cases holding that acceptance of a remittitur waives the right to challenge the remittitur on appeal necessarily implicate the so-called "acceptance of benefits" doctrine. See International Harvester Credit Corp. v. East Coast Truck & R.V. Sales, Inc., [1977] USCA5 380; 547 F.2d 888, 890 (5th Cir. 1977); Cherokee Nation v. United States, 355 F.2d 945, 949 (Ct. Cl. 1966). Here, the FSM is not in the position of receiving a benefit.

Albeit in an entirely different context, a case from the trial division of the Yap state court addresses the waiver implications of a tax payment made without protest. The court held that a necessary precondition to a suit to recover an illegal tax payment was payment of the tax under protest. Failure to protest was deemed a waiver of a claim for recovery of the tax. Gimang v. Yap, [1996] FMYSC 1; 7 FSM Intrm. 606, 612 (Yap S. Ct. Tr. 1996). This case reiterates the importance of protest.

Looking to the authorities available to it, the court has been unable to locate persuasive authority for the FSM's position that should it pay the judgment pursuant to the garnishment order, it would waive its rights to appeal. Thus the court is inclined to deny the FSM's motion, and to direct the FSM to satisfy the judgment, with due notice having been given of the FSM's protest. The underlying judgment itself was entered pursuant to stipulation, and Chuuk itself did not object to the garnishment. However, before doing so the court requests the benefit of the parties' further thinking on the waiver issue. The court directs the parties to submit to the court on or before Monday, October 19, 1998, a short supplemental briefing in which they should cite any additional authorities to which they may have access that are relevant to the FSM's waiver issue. If no additional authority is available to them, the parties should so indicate, and the court will rule forthwith.

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^[1] It bears noting that at least one court appears to equate the remitting by plaintiff of a portion of his damages with payment. See, e.g., Collins v. Retail Credit Co., 410 F. Supp. 924, 934 (E.D. Mich. 1976) ("[P]laintiff may decide to remit all but $50,000 of the punitive damage award but do so under protest and thereby preserve its right to appeal or cross appeal. . .&#1Payment under protest west would seem to preserve plaintiff's rights to appeal or cross appeal.").