Youngstrom v NIH Corporation [2003] FMSC 61; 12 FSM Intrm. 75 (Pon. 2003) (19 August 2003)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Youngstrom v. NIH Corp., [2003] FMSC 61; 12 FSM Intrm. 75 (Pon. 2003)

[2003] FMSC 61; [12 FSM Intrm. 75]

VERNON YOUNGSTROM,
Plaintiff,

vs.

NIH CORPORATION,
Defendant.

CIVIL ACTION NO. 2000-037

ORDER DENYING MOTION TO DISMISS SECOND COUNTERCLAIM

Andon L. Amaraich
Chief Justice

Decided: August 19, 2003

APPEARANCES:

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

For the Defendant:
Craig D. Reffner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 967941

[12 FSM Intrm. 76]

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HEADNOTES

Choice of Law; Contracts; Statutes of Limitation
The creation of laws relating to contracts is not identified in the Constitution as falling within the national government’s powers. Rather, it is generally presumed to be a power of the state. Accordingly, state law determines the statute of limitations in a contract case. Youngstrom v. NIH Corp., [2003] FMSC 61; 12 FSM Intrm. 75, 77 (Pon. 2003).

Contracts; Statutes of Limitation
Pohnpei state law specifies limitation periods of two and twenty years for certain delineated causes of action and provides that all other actions - including contracts - must be commenced within six years after the cause of action accrues. Youngstrom v. NIH Corp., [2003] FMSC 61; 12 FSM Intrm. 75, 77 (Pon. 2003).

Contracts; Statutes of Limitation
Given that a cause of action accrues when a suit can be successfully maintained thereon, it is indisputable that if the construction was in fact defective, a suit could have been maintained from the date that construction was completed. Youngstrom v. NIH Corp., [2003] FMSC 61; 12 FSM Intrm. 75, 77 (Pon. 2003).

Contracts; Statutes of Limitation
Under the Pohnpei statute of limitations, if anyone who is liable to any action fraudulently conceals the cause of action from the knowledge of the person entitled to bring it, the action may be commenced at any time within the times limited within the statute after the person who is entitled to bring the same shall discover or shall have had reasonable opportunity to discover that he has such cause of action, and not afterwards. Youngstrom v. NIH Corp., 12 FSM Intrm. 77, 75 (Pon. 2003).

Civil Procedure - Dismissal; Contracts; Statutes of Limitation
If a plaintiff fraudulently conceals allegedly defective construction methods, the six-year limitations period does not begin to run until the date on which the defendant discovered or had a reasonable opportunity to discover the alleged defect. It is not appropriate for the court, at the juncture of a motion to dismiss, to rule on an essentially factual matter. The trial’s purpose will be to determine whether the construction methods that are alleged were, in fact, utilized; whether those methods were improper; and if they were, at what point the defendant knew or should have known of them. Youngstrom v. NIH Corp., [2003] FMSC 61; 12 FSM Intrm. 75, 77-78 (Pon. 2003).

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COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

Defendant’s second counterclaim in the above-referenced action alleges that during performance of a 1992 construction contract that had been entered into by and between the parties, plaintiff improperly stuffed hollow concrete blocks with cardboard and capped them with concrete, rather than filling them entirely with concrete.

Plaintiff has filed a Motion to Dismiss Defendant’s Second Counterclaim on the grounds that it is barred by the applicable statute of limitations and that plaintiff’s construction methods complied with

[12 FSM Intrm. 77]

defendant’s building plans and specifications.[1]

For the following reasons, the Court will deny plaintiff’s motion and allow defendant’s second counterclaim to proceed to trial.

The creation of laws relating to contracts is not identified in the federal constitution as falling within the powers of the national government. Rather, it is generally presumed to be a power of the state. Federated Shipping v. Pohnpei Transfer & Storage, 4 FSM Intrm. 3, 9, (Pon. 1989). Accordingly, the law of Pohnpei determines the statute of limitations in the present case.

The Pohnpei State Code specifies limitation periods of two and twenty years for certain delineated causes of action, and provides that all other actions - including the one at bar - "shall be commenced only within six years after the cause of action accrues." Pon. S.L. No. 3L-99-95, § 7-7 (July 20, 1995).

The issue in the present case is when the six-year limitation period began to run, i.e., when the cause of action accrued. Plaintiff argues that any cause of action relating to its construction methods accrued in 1993, when the building was completed, and is barred after 1999. He points to the fact that defendant had an opportunity and/or obligation to inspect the building for any defects at that time.[2]

Plaintiff is correct, in one regard. Given that a cause of action accrues when a suit can be successfully maintained thereon, Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 17 (App. 1993), it is indisputable that if the construction was in fact defective, a suit could have been maintained from the date that said construction was completed.

However, defendant claims that as a result of the cement caps utilized by plaintiff, the alleged construction defects were not visible in 1993, and that defendant could not reasonably have discovered the condition until December 2001 and January 2002, when it undertook additional construction activity on the building. Defendant relies on the following provision of the Pohnpei Code, which articulates an exception to the state Statutes of Limitation:

If any person who is liable to any action shall fraudulently conceal the cause of action from the knowledge of the person entitled to bring it, the action may be commenced at any time within the times limited within this chapter after the person who is entitled to bring the same shall discover or shall have had reasonable opportunity to discover that he has such cause of action, and not afterwards.

Pon. S.L. No. 3L-99-95, § 7-8 (July 20, 1995).

In sum, if plaintiff fraudulently concealed allegedly defective construction methods, the six-year limitations period did not begin to run until the date on which defendant discovered or had a reasonable opportunity to discover the alleged defect. It is not appropriate for the Court, at this juncture, to rule on an essentially factual matter. The purpose of the trial will be to determine whether the construction methods that are alleged were, in fact, utilized; whether those methods were improper; and if they

[2003] FMSC 45; [12 FSM Intrm. 78]

were, at what point defendant knew or should have known of them.

Accordingly, the Court hereby denies plaintiff’s Motion to Dismiss Defendant’s Second Counterclaim. Trial on all claims and counterclaims is scheduled to commence on Monday, August 25, 2003, at 9:00 a.m.

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^[1] The Court will not address the issue of plaintiff’s alleged compliance with plans, for that is a factual matter appropriately resolved at trial.

^[2] The parties’ contract stated that "final payment shall not be due until contractor has delivered to owner the completed project and the same is inspected and accepted by the owner." (emphasis supplied).