Federated States of Micronesia Social Security Administration v Lelu Town [2004] FMSC 30; 13 FSM Intrm. 60 (Kos. 2004) (6 December 2004)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite case as Federated States of Micronesia Social Security Administration v Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60 (Kos. 2004)

FEDERATED STATES OF MICRONESIA SOCIAL SECURITY ADMINISTRATION,
Plaintiff,

vs.

LELU TOWN GOVERNMENT,
Defendant.

_________________________________________

CIVIL ACTION NO. 2003-2008

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: December 6, 2004

APPEARANCE:

For the Plaintiff:
Michael J. Sipos, Esq.
P.O. Box 2069
Kolonia, Pohnpei FM 96941

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HEADNOTES

Attachment and Execution - Garnishment
The remedy of garnishment exists in the FSM, and does so on the basis that 6 F.S.M.C. 1404 provides that judgments may be enforced "in any . . . manner known to Americanocommon law or common in courts in the United States." FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 61 (Kos. 2004).

Attachment and Execution - Garnishment
At common law, garnishment did not exist as a remedy where the judgment debtor was a municipality because it is generally held that the funds or credits of a municipality or other public body exercising governmental functions, acquired by it in its governmental capacity, may not be reached by its creditors by garnishment served upon the debtor or depository of the municipality. FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 62 (Kos. 2004).

Attachment and Execution - Garnishment
The FSM Supreme Court has issued writs of garnishment directed toward the assets of a state government where the underlying cause of action is based on a violation of the national civil rights statute. The rationale for those writs was the Supremacy Article of the FSM Constitution, which must control regardless of a state constitutional provision, or national law, to the contrary. It has declined to issue a writ of garnishment where the judgment debtor was a state government and the judgment was based on ordinary breach of contract. FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 62 (Kos. 2004).

Attachment and Execution - Garnishment; Social Security
Although preserving the integrity of the FSM social security system is a matter of concern to all FSM citizens, when Social Security has offered no argument why the court

[2004] FMSC 30; [13 FSM Intrm. 60]

should depart from the general rule that municipal entities are immune from garnishment, a motion for issuance of a writ of garnishment directed toward the assets of a municipality will be denied. FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 62 (Kos. 2004).

Interest and Usury; Judgments; Social Security
Interest on unpaid social security taxes continues to accrue at 12% until paid, even though a judgment normally bears interest at 9%. FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 62 (Kos. 2004).

Attorney, Trial Counselor and Client - Fees; Civil Procedure - Default and Default Judgments
A plaintiff has waived any claim for attorney’s fees when it submitted a form of judgment for a sum certain for the clerk’s signature under FSM Civil Rule 55(b)(1). Attorney’s fees may only be awarded upon a judicial finding that the fees sought are reasonable. FSM Social Sec. Admin. v. Lelu Town, [2004] FMSC 30; 13 FSM Intrm. 60, 62 (Kos. 2004).

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COURT’S OPINION

MARTIN YINUG, Associate Justice:

On July 1, 2004, the plaintiff FSM Social Security Administration ("FSMSSA") filed its motion for a writ of garnishment to enforce the judgment in this case. The FSMSSA has also moved to supplement the judgment to add attorney’s fees, costs, and accruing interest. The defendant Lelu Town Government ("Lelu") did not respond to the motion.

a. The motion for a writ of garnishment

The FSMSSA is the holder of a default judgment entered on September 1, 2003, against Lelu for unpaid social security taxes. In urging that the court should issue a writ of garnishment as a means of executing on that judgment, the FSMSSA relies on Bank of Guam v. Elwise, [1988] FMSC 2; 4 FSM Intrm. 150 (Pon. 1989). Elwise acknowledges that the remedy of garnishment exists in the FSM, and does so on the basis that 6 F.S.M.C. 1404 provides that judgments may be enforced "in any . . .er kno Americaerican commocommon law or common in courts in the United States." Elwise, 4 FSM Intrm. at 152. The Elwise court noted that garnishmeertai] is ‘common in courts of the United Statestates̵’ within the meaning of the FSM Code." Id. However, the judgment debtor in Elwise was an individual, and the judgment creditor sought to garnish a portion of the individual’s wages. Here the defendant debtor is a municipality. At common law, garnishment did not exist as a remedy where the judgment debtor was a municipality: "It is also generally held that the funds or credits of a municipality or other public body exercising governmental functions, acquired by it in its governmental capacity, may not be reached by its creditors by garnishment served upon the debtor or depository of the municipality." 6 Am. Jur. 2d Attachment and Garnishment § 184 (1963) (footnote omitted).

This court has issued writs of garnishment directed toward the assets of a state government where the underlying cause of action is based on a violation of the national civil rights statute, 11 F.S.M.C. 701 et seq. See, e.g., Davis v. Kutta, [2003] FMSC 25; 11 FSM Intrm. 545, 549 (Chk. 2000); Estate of Mori v. Chuuk, [2003] FMSC 22; 11 FSM Intrm. 535, 540-42 (Chk. 2003) and Louis v. Kutta, [1997] FMSC 36; 8 FSM Intrm. 208, 214-15 (Chk. 1997). The rationale for those writs was the Supremacy Article of the FSM Constitution, which must control regardless of a state constitutional provision, Louis, 8 FSM Intrm. at 211-14, or national law, Mori, 11 FSM Intrm. at 540-42, to the contrary. This court has declined to issue a writ of garnishment where the judgment debtor was a state government and the judgment was based on ordinary breach of contract.

[13 FSM Intrm. 61]

Barrett v. Chuuk, [2004] FMSC 42; 12 FSM Intrm. 558, 560 (Chk. 2004).

This case involves a default judgment for unpaid social security taxes. Preserving the integrity of the FSM social security system is a matter of concern to all FSM citizens. However, the FSMSSA has offered no argument why the court should depart from the general rule that municipal entities are immune from garnishment. Accordingly, the motion for issuance of a writ of garnishment directed toward the assets of Lelu is denied.

b. The motion to supplement the judgment

FSMSSA has moved to supplement the judgment to add attorney’s fees, costs, and accrued interest. Interest on unpaid social security taxes continues to accrue at 12% until paid, even though a judgment normally bears interest at 9%. FSM Social Sec. Admin. v. Kingtex (FSM) Inc. (II), [1996] FMSC 60; 7 FSM Intrm. 365, 370 (Yap 1996), rev’d on other grounds, FSM Social Sec. Admin. v. Kingtex (FSM) Inc., [1997] FMSC 27; 8 FSM Intrm. 129 (App. 1997). Thus no supplementation of the judgment is required with respect to accrued interest. The judgment continues to bear interest at the rate of 12%.

With regard to adding attorney’s fees and costs to the judgment, it appears that the FSMSSA is asking for a new judgment to include those items. The court cannot determine from the motion what amount of attorney’s fees were incurred prejudgment, and what fees were in incurred in the course of post judgment proceedings to enforce the judgment. However, as to the fees incurred prejudgment, the FSMSSA waived any claim for those fees when it submitted a form of judgment for a sum certain for the clerk’s signature under FSM Civil Rule 55(b)(1). Attorney’s fees may only be awarded upon a judicial finding that the fees sought are reasonable. Jackson v. George, [2002] FMKSC 1; 10 FSM Intrm. 523, 527 (Kos. S. Ct. Tr. 2002). As to the fees incurred post judgment in the course of proceedings to enforce the judgment, the FSMSSA may file an application in accordance with George for an award of those attorney’s fees.

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[13 FSM Intrm.62]