Youngstrom v NIH Corporation [2002] FMSC 21; 11 FSM Intrm. 60 (Pon. 2002) (24 July 2002)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Youngstrom v. NIH Corp.,[2002] FMSC 21; 11 FSM Intrm. 60 ( Pon. 2002)

[2002] FMSC 21; [11 FSM Intrm. 60]

VERNON YOUNGSTROM,
Plaintiff,

vs.

NIH CORPORATION,
Defendant.

CIVIL ACTION NO. 2000-037

ORDER TO PERMIT FILING OF AMENDED ANSWER
AND COUNTERCLAIM

Andon L. Amaraich
Chief Justice

Decided: July 24, 2002

APPEARANCES

For the Plaintiff:
Tino Donre, Esq.
Micronesian Legal Services Corporation
P.O. Box 129
Kolonia, Pohnpei FM 96941

For the Defendant:
Craig D. Refner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

* * * *

HEADNOTES

Civil Procedure - Pleadings
A pleading must state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim. Youngstrom v. NIH Corp., [2002] FMSC 21; 11 FSM Intrm. 60, 61 (Pon. 2002).

[11 FSM Intrm. 61]

Civil Procedure - Pleadings
A pleading may state as a counterclaim any claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim and a pleading may be amended with leave of court to include a counterclaim when the counterclaim either matured or was acquired by the pleader after serving his pleading or when a pleader failed to set it up through oversight, inadvertence, or excusable neglect, or when justice requires. Youngstrom v. NIH Corp., [2002] FMSC 21; 11 FSM Intrm. 60, 62 (Pon. 2002).

Civil Procedure - Pleadings
When a defendant seeks to amend its answer to include a permissive counterclaim and the plaintiff opposes on the basis that the statute of limitations has run on the proposed counterclaim, and when considerations of judicial economy weigh in favor of granting defendant’s motion for leave to amend, the court will not address the issue of statute of limitations on the proposed counterclaim because this is a defense that could be the basis for a motion to dismiss the counterclaim, rather than a basis to oppose defendant’s motion to amend. Youngstrom v. NIH Corp., [2002] FMSC 21; 11 FSM Intrm. 60, 62 (Pon. 2002).

Civil Procedure - Pleadings
A party may seek leave of court to amend a pleading to include an omitted counterclaim, and leave will be freely given when justice so requires. Youngstrom v. NIH Corp., [2002] FMSC 21; 11 FSM Intrm. 60, 62 (Pon. 2002).

* * * *

COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

Plaintiff Vernon Youngstrom filed his complaint against defendant NIH Corporation ("NIHCO") on June 1, 2000. On June 21, 2000, defendant answered and filed a counterclaim against plaintiff. Since that time it is clear that the parties have engaged in some discovery. On March 19, 2002, defendant filed a motion seeking leave of court to amend its answer to assert an additional counterclaim against plaintiff. Defendant asserts in its motion that the existence of the counterclaim only became known to defendant some time in December 2001 to January 2002.

The complaint in this case seeks rent which plaintiff alleges defendant owes for occupation of a warehouse pursuant to a 10 year lease agreement dated October 5, 1995. Defendant asserts in its first counterclaim, which it filed with its answer, that plaintiff poorly constructed the leased premises and caused the loss of defendant’s property. In defendant’s proposed amended answer, defendant seeks to add a second counterclaim alleging faulty construction by plaintiff on other premises occupied by defendant. In its proposed amended answer, defendant asserts that plaintiff performed improper and defective construction on the NIHCO building pursuant to a contract which was completed in 1993.

FSM Rule of Civil Procedure 13(a) states that:

A pleading shall state as a counterclaim any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.

[11 FSM Intrm. 62]

(emphasis added). FSM Rule of Civil Procedure 13(b) states that: "A pleading may state as a counterclaim any claim against an opposing party not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim." (emphasis added). It is clear that the second counterclaim defendant seeks to assert in its proposed amended answer is a permissive counterclaim under FSM Rule of Civil Procedure 13(b), rather than a compulsory one under Rule 13(a).

FSM Rule of Civil Procedure 13(e) states that: "A claim which either matured or was acquired by the pleader after serving his pleading may, with the permission of the court, be presented as a counterclaim by supplemental pleading."

FSM Rule of Civil Procedure 13(f) states that: "When a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment."

Plaintiff opposes defendant’s motion for leave to amend its answer on the basis that the statute of limitations has run on the second counterclaim, since the contract allegedly was completed in 1993 and the relevant statute of limitations is only six years. This is a defense that could be the basis for a motion to dismiss the counterclaim, rather than a basis to oppose defendant’s motion for leave to amend its answer. Accordingly, the Court will not address the issue of statute of limitations on defendant’s second counterclaim.

The Court finds that considerations of judicial economy weigh in favor of granting defendant’s motion for leave to amend its answer. Under Rule 15 of the FSM Rules of Civil Procedure, a party may seek leave of court to amend a pleading. Leave shall be freely given when justice so requires. E.M. Chen & Assocs. (FSM), Inc v. Pohnpei Port Auth., [2000] FMSC 20; 9 FSM Intrm. 551, 559 (Pon. 2000). Rule 13(f) also provides that an omitted counterclaim may be set up by amendment "when justice so requires." FSM Civ. R. 13(f). Accordingly, the Court will grant defendant’s motion for leave to amend its answer.

Accordingly, defendant’s motion to amend its answer and assert an additional counterclaim is HEREBY GRANTED. Defendant shall have ten (10) days from the date of this Order to file its amended answer and assert any new counterclaim, and plaintiff shall be allowed the time specified in the FSM Rules of Civil Procedure to file any answer to the newly asserted counterclaim.

* * * *