Kosrae v Worswick [2001] FMSC 17; 10 FSM Intrm. 288 (Kos. 2001) (5 July 2001)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

Cite as Kosrae v. Worswick,
[2001] FMSC 17; 10 FSM Intrm. 288 (Kos. 2001)

[2001] FMSC 17; [10 FSM Intrm. 288]

STATE OF KOSRAE,
Plaintiff,

vs.

DANIEL P. WORSWICK, DANCHI CONSTRUCTION
COMPANY and PETER CHRISTIAN,
Defendants.
__________________________________________________

PETER CHRISTIAN,
Cross-claimant,

vs.

DANIEL P. WORSWICK and DANCHI
CONSTRUCTION COMPANY,
Cross-claim defendants.
_______________________________________________

CIVIL ACTION NO. 1994-2004

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: June 15, 2001
Modified: July 5, 2001

APPEARANCES:

For the Plaintiff:
April Dawn M. Skilling, Esq.
Assistant Attorney General
Office of the Kosrae Attorney General
P.O. Box 870
Tofol, Kosrae FM 96944

For the Defendants/Cross Claim Defendants:
Douglas Parkinson, Esq.
P.O. Box 2069
(Worswick & Danchi) Kolonia, Pohnpei FM 96941

For the Defendant/Cross-claimant (Christian):
Andrea Hillyer, Esq.
P.O. Drawer D
Kolonia, Pohnpei FM 96941

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[10 FSM Intrm. 289]

HEADNOTES

Civil Procedure ; Summary Judgment
In considering a summary judgment motion, the court must view the facts and the inferences to be drawn from those facts in a light as favorable to the non-moving party as reasonably may be done. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Civil Procedure ; Summary Judgment
When a movant makes out a prima facie case for summary judgment which, if uncontroverted at trial, would entitle it to a directed verdict on the issue, then the burden shifts to the nonmoving party to produce some competent evidence admissible at trial showing that there is a genuine issue of fact. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Civil Procedure ; Summary Judgment
A party is entitled to summary judgment when factual support for an essential element of the claim being asserted against the movant is absent from the case record. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Torts
A given for tort causes of action is that the alleged actor have some interest in or control over the instrumentality that brought about the tortious conduct. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Contracts ; Executory
When the sale of a barge was conditional upon inspection and was canceled after the inspection occurred, the agreement, prior to cancellation, remained an executory contract. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Contracts ; Executory
When it is contemplated that something be done to complete the sale, such as weighing, selecting, delivery, or some other act, the contract is "executory," and title does not pass until the specific goods are ascertained and appropriated in the mode agreed on. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291 (Kos. 2001).

Civil Procedure ; Summary Judgment
Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 291-92 (Kos. 2001).

Civil Procedure ; Summary Judgment
A moving party is "entitled to a judgment as a matter of law" when the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 292 (Kos. 2001).

Civil Procedure ; Summary Judgment
The inquiry involved in a ruling on a motion for summary judgment or for a directed verdict necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the

[10 FSM Intrm. 290]

merits. The process of evaluating the proof in this way takes place in the framework of viewing the facts in a light as favorable to the nonmovant as may reasonably be done. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 292 (Kos. 2001).

Agency; Business Organizations ; Corporations
Corporations of necessity must always act by their agents. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 292 (Kos. 2001).

Business Organizations ; Corporations; Civil Procedure ; Summary Judgment
A corporation's president's statement that he bought the barge made eight years after the event and which accurately describes his activity on the corporation's behalf is insufficient to create an issue of material fact precluding summary judgment in his favor when it is consistent with his acting on the corporation's behalf and when the evidence shows that neither he nor the corporation ever took interest in the barge because the purchase was canceled. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 292 (Kos. 2001).

Civil Procedure ; Dismissal; Torts ; Contribution
When a defendant is granted summary judgment on the complaint against him, that defendant's cross-claim for contribution and indemnification from another defendant in the event that he is found liable on the complaint will be dismissed since he has no basis to seek indemnification or contribution because the summary judgment order dismissed the complaint against him. Kosrae v. Worswick, [2001] FMSC 17; 10 FSM Intrm. 288, 292 (Kos. 2001).

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COURT'S OPINION

MARTIN G. YINUG, Associate Justice:

The amended motion for summary judgment of defendant/cross-claimant Peter Christian ("Christian") was filed on May 4, 2001. Plaintiff state of Kosrae ("Kosrae") filed its response on May 28, 2001. The amended motion is granted. Christian is dismissed as a party defendant.

Christian has moved for summary judgment on two bases. He contends that he is not a proper party to this case because he is not the owner of the barge which is the subject of this dispute involving claims for damages resulting from the barge's sinking in Lelu Harbor in Kosrae in 1992. He also asserts the limitations period for the claims that Kosrae asserts against him are precluded by the applicable statute of limitations of six years. Because the court grants the motion on the basis that Christian has no personal interest in the barge, the court does not address the limitations question.

Ponape Construction Company ("PCC") is an FSM corporation of which Christian was at relevant times president. In 1991, acting on behalf of PCC, Christian agreed to purchase the barge for use in PCC's dredging and construction business, one of the stated business purposes set forth in its articles of incorporation filed with the FSM Registrar of Corporations on July 8, 1985. The purchase price was approximately $12,000. The sale was conditional upon inspection and delivery, and was canceled after an initial downpayment of $6,000, which was in the form of a PCC check in that amount to an individual named Walimuni "Chicko" Mendis. The $6,000 was company money, not Christian's personal money. The purpose for the cancellation was the barge's poor condition, which Christian discovered when he inspected it. Although the $6,000 check itself has yet to be located, Christian presents a copy of the check ledger showing that it was PCC check number 3264, dated July 17, 1991. The check was signed by Chris Christian, who was at that time an officer of PCC and authorized to sign PCC checks. Christian also presents a copy of the check stub, which bears the notation "1st

[10 FSM Intrm. 291]

payment for barge in KSA."

To create a fact issue, Kosrae relies on a statement made by Christian in a telephone call which occurred more than eight years after the events just described. In his affidavit in support of Kosrae's response to Christian's amended motion for summary judgment, Mr. Ronald Bickett, who is Kosrae's attorney general, states that in a phone conversation with Christian in October of 1999, Christian said that he, Christian, bought the barge. This rendition of what Mr. Christian said is slightly different from Mr. Bickett's statement in his declaration which was filed in support of Kosrae's November 23, 1999, request for leave to file the first amended complaint adding Christian as a party. In that declaration, Mr. Bickett says that Christian said that he, Christian, "had had some involvement with the Kung Yung barge." In any event, Kosrae contends that Christian's statement that he bought the barge precludes summary judgment in Christian's favor.

Also, Mr. Bickett says in his declaration that Christian told him the downpayment amount was $10,000, not $6,000. The documentary evidence, which Kosrae does not challenge, shows that the downpayment was in fact $6,000. The discrepancy does not create a material issue of fact, since there is no dispute that the payment was a downpayment.

In considering a motion for summary judgment, the court must view the facts and the inferences to be drawn from those facts in a light as favorable to the non-moving party as reasonably may be done. Damarlane v. Pohnpei Transp. Auth., 5 FSM Intrm. 1, 3 (Pon. 1991). Where a movant makes out a prima facie case for summary judgment which, if uncontroverted at trial, would entitle it to a directed verdict on the issue, then the burden shifts to the nonmoving party to produce some competent evidence admissible at trial showing that there is no genuine issue of fact. Federated Shipping Co. v. Ponape Transfer & Storage Co., 4 FSM Intrm. 3, 11 (Pon. 1989). A party is entitled to summary judgment where factual support for an essential element of the claim being asserted against the movant is absent from the case record. Celotex Corp. v. Catrett, [1986] USSC 146; 477 U.S. 317, 322[1986] USSC 146; , 106 S. Ct. 2548, 2552[1986] USSC 146; , 91 L. Ed. 2d 265, 273 (1986).

As to Christian, the amended complaint alleges negligence, nuisance, strict liability, and trespass. A given for these tort causes of action is that the alleged actor have some interest in or control over the instrumentality that brought about the tortious conduct, in this case the barge: to question the propriety of Christian's actions or failure to act with respect to the barge presupposes, however self-evidently, that it was in fact Christian who acted or failed to act and thereby interfered with Kosrae's interest. See WILLIAM L. PROSSER, HANDBOOK OF THE LAW OF TORTS 6 (4th ed. 1971). Kosrae has brought forward no affirmative matter to controvert that the purchase agreement for the barge provided for a price of $12,000; that a substantial downpayment was made; that the sale was conditional upon inspection; and that Christian cancelled the sale after that inspection occurred. No fact contemporaneous with the transaction suggests that the sale was consummated. Prior to cancellation, the agreement remained an executory contract wherein PCC, not Christian, was the purchaser. "[W]hen it is contemplated that something be done to complete the sale, such as weighing, selecting, delivery, or some other act, the contract is `executory,' and title does not pass until the specific goods are ascertained and appropriated in the mode agreed on." 15A WORDS AND PHRASES 312 (1950). Nothing in the record indicates that Christian or PCC ever possessed or took title to the barge, or that either Christian or PCC ever exercised actual or constructive control over the barge.

[T]he plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which the party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof

[10 FSM Intrm. 292]

concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to a judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.

Celotex, 477 U.S. at 322-23, 106 S. Ct. at 2552, 91 L. Ed. 2d at 273. Considering the contemporaneous facts of the transaction, there is a failure of proof as to an essential element of Kosrae's case. Kosrae has not demonstrated that it was Christian's actions or failure to act which resulted in the alleged damage in this case.

"[T]he inquiry involved in a ruling on a motion for summary judgment or for a directed verdict necessarily implicates the substantive evidentiary standard of proof that would apply at the trial on the merits." Anderson v. Liberty Lobby, Inc., [1986] USSC 144; 477 U.S. 242, 252[1986] USSC 144; , 106 S. Ct. 2505, 2512[1986] USSC 144; , 91 L. Ed. 2d 202, 214 (1986). The process of evaluating the proof in this way takes place in the framework of viewing the facts in a light as favorable to the nonmovant as may reasonably be done. Federated Shipping Co., 4 FSM Intrm. at 11. To counter Christian's evidence showing that he and PCC were involved with the barge only to the extent of initiation of a purchase that was subsequently cancelled, Kosrae relies exclusively on Christian's statement made more than eight years after the operative events had transpired. That statement, that Christian bought the barge, was made in the October, 1999, telephone conversation with Ronald Bickett. Yet corporations of necessity must always act by their agents. Indeed, article IV, section 5 of PCC's bylaws provides that unless otherwise authorized by the board of directors, "only the President shall have the power or authority to bind the corporation by any contract." Christian was president of PCC at relevant times, and it was he who initiated the barge purchase on behalf of PCC. His statement, "I bought the barge," accurately describes his activity on behalf of PCC. But Kosrae would have this statement read in the sense that Christian personally took title to the barge. To read the statement as Kosrae urges requires the court to discard the evidence which shows that neither Christian nor PCC ever took an interest in the barge. Christian's statement must be viewed in the light most favorable to Kosrae as may reasonably be done. Id. In the context of all of the other evidence, it is not reasonable to read the statement as Kosrae urges, where the statement comes more than eight years after operative events and is susceptible to an alternative reading entirely consistent with Christian's efforts on behalf of PCC. Hence, Christian's statement is insufficient to create a genuine issue of material fact precluding summary judgment in Christian's favor under Rule 56 of the FSM Rules of Civil Procedure.

For these reasons, Christian's amended motion for summary judgment is granted. The amended complaint is dismissed as to Christian.

Per the order of April 23, 2001, defendant Daniel Worswick's motion to dismiss count 2 of Christian's cross-claim was held in abeyance pending the filing of Christian's amended motion for summary judgment, or until the time designated for filing the amended motion elapsed. Count 2 of Christian's cross-claim is for contribution and indemnification from Worswick in the event Christian is found liable on the amended complaint. Since this order dismisses the amended complaint as to Christian, Christian has no basis for seeking indemnification or contribution from Worswick. Count 2 of Christian's cross-claim is therefore dismissed.

Finally, this case is set for trial on Tuesday, September 25, 2001, at 9:30 a.m.

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