Bank of Federated States of Micronesia v Aisek [2005] FMSC 20; 13 FSM Intrm. 162 (Chk. 2005) (28 February 2005)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite case as Bank of Federated States of Micronesia v Aisek, [2005] FMSC 20; 13 FSM Intrm. 162 (Chk. 2005)

BANK OF THE FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

JULITA AISEK, NOPUKO BARKER, SHERRI BARKER,
and ERMES PAUL,
Defendants.

__________________________________________________

CIVIL ACTION NO. 2004-1006

ORDER

Dennis K. Yamase
Associate Justice

Decided: February 28, 2005

APPEARANCES:

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

For the Defendant (Aisek):
Camillo Noket, Esq.
P.O. Box 119
Weno, Chuuk FM 96942

For the Defendants (N.&S. Barker):
Salomon Saimon, Esq.
P.O. Box 118
Kolonia, Pohnpei FM 96941

[13 FSM Intrm.178]

For the Defendant (Paul):
Joses Gallen, Esq.
P.O. Box 189
Weno, Chuuk FM 96942

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HEADNOTES

Civil Procedure - Interpleader
The purpose of the interpleader rule is to force competing claimants to contest a dispute between them without involving the stakeholder in litigation and subjecting the stakeholder to potential multiple liability. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 164 (Chk. 2005).

Civil Procedure - Interpleader
Interpleader is a two-step process. During the first stage, the court must make a determination whether the party invoking the remedy of interpleader has met its burden to establish its right to interplead the defendants. If it has, the court will order the sums deposited in the court’s registry and, upon deposit, will then discharge the plaintiff. The action then proceeds to its second stage. This usually consists of enjoining the parties from prosecuting any other proceeding related to the same subject matter, and then proceeding to determine the remaining parties’ respective rights to the money. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 164-65 (Chk. 2005).

Civil Procedure - Interpleader
When all parties acknowledge in their pleadings that the plaintiff bank is subject to competing claims for the rental payments for the land because both of two different defendants claim to own the land on which the bank sits and thus to be the rightful recipient for any rental payments for the land’s use, the plaintiff has established that it legitimately fears that it will be subject to competing claims for the same rental payments and is potentially subject to double or conflicting liabilities. It has thus established its right to the interpleader remedy. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 165 (Chk. 2005).

Civil Procedure - Interpleader
Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 165 (Chk. 2005).

Civil Procedure - Motions
When no opposition has been filed to a motion, it is generally deemed a consent to that motion. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 165 (Chk. 2005).

Civil Procedure - Interpleader
When it is undisputed that only one defendant paid for the improvements to the property, and it is also undisputed that only she pays for the property’s maintenance and upkeep and for insurance on it; and when it is undisputed that the other defendant made no improvements to the land, the plaintiff’s motion for interpleader remedy will be granted with the condition that only the portion of the rent attributable to the land, and not the portion attributable to her improvements, should be deposited in the court’s registry. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 165 (Chk. 2005).

Property
Individuals may have full title to the improvements (as distinguished from the soil) they make upon land not owned by them. Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 166 (Chk. 2005).

[13 FSM Intrm.179]

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COURT’S OPINION

DENNIS K. YAMASE, Associate Justice:

This comes before the court on the Bank of the FSM’s Motion for Order Granting Interpleader and Discharging Plaintiff, filed on February 1, 2005 and served on each of the defendants by mail on January 27, 2005. On February 9, 2005, Julita Aisek filed and served her response, which opposed the motion in part. No other party filed a response.

I.

The plaintiff Bank of the Federated States of Micronesia leases its Chuuk facility from defendant Julita Aisek. Aisek purchased an adjoining lot from defendant Nopuko Barker, and, because that land was swampy and had not been filed in, traded part of that land for the land on which the bank now sits because it had been filled and was thus easier to build on. Barker had a certificate of title from the Chuuk Land Commission for a larger parcel of land which included the land traded to Aisek. Aisek then constructed the building which the bank now leases and made other improvements.

Defendant Ermes Paul prevailed in a Chuuk State Supreme Court civil action, which vacated Barker’s certificate of title and vested ownership in Ermes Paul. In re Lot No. 014-A-21[2003] FMCSC 1; , 11 FSM Intrm. 582, 590-91, 595 (Chk. S. Ct. Tr. 2003). For reasons not apparent from the record, only Nopuko Barker was named a defendant in the state court action.^[1] That decision was appealed to the Chuuk State Supreme Court appellate division, which has not yet heard the appeal. When Paul, relying on that decision, demanded that the bank stop paying rent to anyone else but him and indicated that he would discuss it further with the bank, the bank filed this action for interpleader.

II.

The bank, as the plaintiff in interpleader, seeks an order granting it the right to pay the rent for its Chuuk facility into the court’s registry until the dispute over who owns the land upon which its facility is situated has been resolved. It also asks to be discharged from the case once that order is issued.

The purpose of the interpleader rule is to force competing claimants to contest a dispute between them without involving the stakeholder in litigation and subjecting the stakeholder to potential multiple liability. Bank of Hawaii v. Helgenberger, [1999] FMSC 15; 9 FSM Intrm. 260, 263 (Pon. 1999). Interpleader is a two-step process. During the first stage, the court must make a determination whether the party invoking the remedy of interpleader has met its burden to establish its right to interplead the defendants. See 7 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 1714, at 5 (2001) (discussicussing U.S. Civil Procedure Rule 22(1) which is similar to FSM Rule 22(1)).

If it has, the court will order the sums deposited in the court’s registry and, deposit, will then discharscharge the plaintiff. Helgenberger, 9 FSM Intrm. at 263. The action then proceeds to its second stage. This usually consists of enjoining the parties from prosecuting any other proceeding related to the same subject matter, and then proceeding to determine the remaining [13 FSM Intrm.180] parties’ respective rights to the money. 7 Wright et al., supra, § 1714, at 627. Interpleader is remedial in character and should be applied liberally. See, e.g., 6247 Atlas Corp. v. Marine Ins. Co., 155 F.R.D. 453, 462 (S.D.N.Y. 1994); Federal Deposit Ins. Corp. v. Howse<802 F. Supp. 1554, 1565 n.15 n.11 (S.D. Tex. 1992).

III.

All parties acknowledge in their pleadings that the bank is subject to competing claims for the rental payments for the land. Both Aisek and Paul claim to own the land on which the bank sits and thus to be the rightful recipient for any rental payments for the land’s use. The Barkers do not claim to own the land anymore. (They also state, in their answer to the bank’s complaint for interpleader, that they do not claim the right to receive any rental payments for the land.) The bank has established that it legitimately fears that it will be subject to competing claims for the same rental payments and is potentially subject to double or conflicting liabilities. "Persons having claims against the plaintiff may be joined as defendants and required to interplead when their claims are such that the plaintiff is or may be exposed to double or multiple liability." FSM Civ. R. 22(1). The bank has thus established its right to the interpleader remedy.

Aisek, in her response to the motion, contends that only part of the rental payments should be deposited in the court’s registry. Her point is that only part of the payment is rent for the land; the rest of the payment is rent for the building she constructed, and for services she provides to the tenant bank, under the written lease’s terms - maintenance and repair of the building, including providing air conditioning and ventilation; maintaining insurance on the building, and the use of the parking lot.

Neither Paul nor the Barkers responded to the bank’s motion or to Aisek’s partial opposition. When no opposition has been filed to a motion, it is generally deemed a consent to that motion. Naoro v. Walter, [2003] FMSC 17; 11 FSM Intrm. 619, 621 (Chk. 2003); FSM Civ. R. 6(d).

Aisek contends that only the portion of the rent attributable to the land, and not the portion attributable to her improvements, should be deposited in the court’s registry. It is undisputed that only Aisek paid for the improvements to the property, the current bank building and the parking lot. It is also undisputed that only she pays for the maintenance and upkeep of the property and for insurance on it. And it is undisputed that Paul made no improvements to the land. The bank’s motion will therefore be granted with the condition proposed by Aisek.

There is, however, no evidence in the record that would allow the court to determine what portion of the bank’s rent should be attributed to the rental of the land and what portion should be apportioned to the building’s rent and parking lot use. The lease, understandably, does not make that distinction. The court will therefore give Julita Aisek leave to present evidence to assist the court in apportioning the rent between the land and the building. Evidence that may help the court would be that showing the value of the land as unimproved property and the separate value of the building. If the building’s construction was financed by a loan, the amount of the loan and the amount of a monthly payment may be of some help. Other evidence, such as rent for, or value of, comparable undeveloped land would be of assistance.

Aisek shall have until March 17, 2005 to file and serve her estimation of how the rent should be apportioned between the land and the improvements on it along with any available supporting evidence. Any other party may file and serve a response, with supporting evidence as to the relative value of the land and the building, to Aisek’s filing no later then March 30, 2005. The court will then make a determination of what portion of the rent is attributable to the land and order that amount deposited in the court’s registry in an interest-bearing account. The bank will then be discharged from the case.

[13 FSM Intrm.181]

The case will continue between the remaining parties as Ermes Paul versus Julita Aisek, Nopuko Barker, and Sherri Barker (depending on developments, the parties may need further realignment later). Because of the state court litigation over the land title, the court will hold in abeyance any determination of the remaining parties’ rights until the state court litigation has been finally resolved. If it should result that Ermes Paul is not the landowner, the court will turn the funds in the court’s registry over to Aisek and close the case. If Ermes Paul is confirmed as the landowner, the court will then proceed to determine whether Paul is liable to Aisek for the improvements she made to the land, and, if so, the amount of that compensation due Aisek. See In re Estate of Hartman[1994] FMSC 38; , 6 FSM Intrm. 326, 330 (Chk. 1994) (individuals may have full title to the improvements (as distinguished from the soil) they make upon land not owned by them). Whether the Barkers have any liability to either Aisek or Paul may also become an issue. (In their answer to the bank’s complaint in interpleader, the Barkers suggested that equity may favor giving Paul title to the unimproved land they received in trade from Aisek instead of his taking the land developed by Aisek and paying her full compensation for her improvements to it.)

IV.

Accordingly, the Bank of the FSM’s motion will be granted in part once the court has determined the amount of the bank’s rent attributable to rental of the land. The court will then order that amount paid into the court’s registry to be deposited in an interest-bearing account. Once the first payment is made, the bank will be discharged as a party and the dispute(s) between the remaining parties will be held in abeyance until the final resolution of the state court litigation over the land title. Once that is resolved this case will proceed accordingly.

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[13 FSM Intrm.182]

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^[1] At trial, the parties stipulated that Nopuko Barker had transferred her entire interest to her daughter, Sherri Barker, and that Sherri should be added (and the state court did add her) as a defendant. In re Lot No. 014-A-21[2003] FMCSC 1; , 11 FSM Intrm. 582, 584 n.1 (Chk. S. Ct. Tr. 2003). It should instead have substituted Sherri for Nopuko since she was the Nopuko’s successor in interest and Nopuko no longer had an interest.