Mobil Oil Micronesia, Inc v Pohnpei Port Authority [2005] FMSC 45; 13 FSM Intrm. 223 (Pon. 2005) (29 April 2005)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

Cite as Mobil Oil Micronesia, Inc. v Pohnpei Port Authority, [2005] FMSC 45; 13 FSM Intrm. 223 (Pon. 2005)

MOBIL OIL MICRONESIA, INC.,
Plaintiff,

vs.

POHNPEI PORT AUTHORITY,
Defendant

CIVIL ACTION NO. 2003-024

ORDER GRANTING MOTION TO DISMISS IN PART

Andon L. Amaraich
Chief Justice

Decided: April 29, 2005

APPEARANCES:

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

For the Defendant:
Emeka Eric Akamigbo, Esq.
Assistant Attorney General
Pohnpei Department of Justice
P.O. Box 1555
Kolonia, Pohnpei FM 96941

* * * *

HEADNOTES

Contracts; Property
The Pohnpei Development Leasehold Act says that every development lease must contain a covenant stating that the lessor shall have the rights of future benefit to the improvements placed on the land by or on behalf of the lessee and that, upon the lease’s termination, existing improvements thereon shall become the property of the lessor thereof or his successor in interest without further cost or condition to be met by the lessor, the property’s title holder or any successor in interest to said property. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 225 n.1 (Pon. 2005).

Sovereign Immunity - Pohnpei
The Pohnpei Government Liability Act immunizes the State of Pohnpei and its employees from suit unless the claim underlying the suit is specifically authorized by the Act or some other state law, and even with respect to those claims, the Act imposes a variety of restrictions and limitations on the maintenance of those suits. The Act’s definition of State of Pohnpei includes all branches of government, any corporation, and other person or entity primarily acting as instrumentalities or agencies of the government, and all boards, commissions, public corporations, authorities, departments, divisions or offices of the government and this definition is more than broad enough to encompass the Pohnpei Port Authority. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 226 & n.2 (Pon. 2005).

Sovereign Immunity - Pohnpei; Statutes of Limitation
Tort claims, tax claims, contract claims, breach of fundamental rights, claims for damages, injunctive relief or writ of mandamus arising from the alleged unconstitutionality or improper administration of Pohnpei statutes or regulations, any other civil action or claim against the state founded upon any law or any regulation, or upon any express or implied contract with the Pohnpei government or for liquidated or unliquidated damages in cases not sounding in tort, and actions for collection of judgments based on claims allowed against the State of Pohnpei can be sued upon within two years of the date on which they accrue. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 226-27 (Pon. 2005).

Statutes of Limitation
A claim against Pohnpei has accrued when all of the facts comprising said claim exist, regardless of whether said facts are known or have been discovered by the claimant. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 227 (Pon. 2005).

Statutes of Limitation
Applying the Pohnpei Government Liability Act statue of limitations, as well as its test for determining when a claim accrues, Mobil’s cause of action for contract reformation accrued on September 30, 1997 when it signed the lease agreement underlying this lawsuit since all facts comprising its cause of action for reformation existed at that time whether Mobil knew it or not. Accordingly, Mobil was required to file its claim for reformation by no later than September 30, 1999. Because it did not do so, the claim will be dismissed. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 227 (Pon. 2005).

Civil Rights; Sovereign Immunity - Pohnpei; Statutes of Limitation
Since, by its own terms, the Pohnpei Government Liability Act statute of limitations is applicable only to those claims identified in Section 4 of that Act, which identifies a number of different claims, including claims based on violation of Pohnpei state law such as the Pohnpei Constitution, but does not expressly identify claims that are based upon national law or the National Constitution, the plaintiff’s claim for declaratory judgment based on violation of the National Constitution and its claim for damages for civil rights violations under 11 F.S.M.C. 701(3) are not subject to the Act’s statute of limitations and will not be dismissed on the ground that they are time barred by that statute of limitations. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 227-28 (Pon. 2005).

Administrative Law - Judicial Review; Civil Procedure - Pleadings
Failure to exhaust administrative remedies is an affirmative defense. Thus, the plaintiff is not required to plead and prove that it has exhausted its remedies. Rather, the burden to plead and prove the defense falls upon the defendant. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 228 (Pon. 2005).

Civil Procedure - Dismissal; Statutes of Limitation
Because the allegations of the plaintiff’s own complaint demonstrate that certain of its claims are subject to the defense of statute of limitations, the court may chose to dismiss those claims on the statute of limitations, although it is an affirmative defense. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 228 (Pon. 2005).

Constitutional Law - Case or Dispute - Ripeness
When the plaintiff’s claims all derive from the common allegation that its facility will be taken from it at the end of the parties’ lease, when the parties have signed a lease agreement that purports to confer ownership of the facility on the defendant at a specified time, and when the parties have a good faith dispute as to the validity of this result under the National Constitution, this renders the case ripe for adjudication. Mobil Oil Micronesia, Inc. v. Pohnpei Port Auth., [2005] FMSC 45; 13 FSM Intrm. 223, 229 (Pon. 2005).

* * * *

COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

This matter is before the Court on the motion to dismiss filed by Defendant Pohnpei Port Authority ("PPA"). For the reasons set forth below, the Court will grant the motion in part.

I.

At some unspecified time prior to September of 1997, Plaintiff Mobil Oil Micronesia, Inc. ("Mobil") constructed a bulk petroleum facility (the "Facility") on certain land located in the commercial port area of Pohnpei (the "Port Land") and owned by PPA. The value of the Facility constructed by Mobil presently exceeds $1 million. It is not clear from the complaint whether, at the time Mobil constructed the Facility, it held a valid lease on the Port Land from PPA.

In September of 1997, PPA and Mobil entered a formal lease agreement for the Port Land. The term of the lease was 25 years. Subparts (A) and (D) of Paragraph XXI of the lease provided that on the expiration of the lease’s 25-year term, the Facility would become the property of PPA. Mobil refers to Subparts (A) and (D) of Paragraph XXI as the "Expropriation Provisions" of the lease. For ease of reference, the Court will do so as well.

Mobil did not receive a discounted rental rate on the Port Land in exchange for signing a lease agreement containing the Expropriation Provisions. The lease agreement also did not obligate PPA to pay Mobil any amount, let alone a reasonable one, in exchange for receiving the Facility at the end of the parties’ lease.

According to Mobil, PPA mistakenly or fraudulently represented to Mobil that the Pohnpei Development Leasehold Act of 1996, Pon. S.L. No. 4L-21-96, required the parties to include the Expropriation Provisions in their lease agreement.[1] Mobil attempted to persuade PPA that the law in this area was otherwise, but was unsuccessful. Mobil ultimately signed the lease agreement containing the Expropriation Provisions on September 30, 1997. Mobil did so "under duress, written protest and mistake."

After the lease agreement was executed, Mobil repeatedly asked PPA to amend the lease to delete the Expropriation Provisions. PPA refused to do so. Mobil filed its complaint against PPA with this Court on September 5, 2003.

II.

In its complaint, Mobil asserts three distinct claims against PPA. In its first claim for declaratory judgment, Mobil alleges that the Expropriation Provisions of the parties’ lease agreement are an unconstitutional taking of Mobil’s Facility without just compensation under both the FSM and Pohnpei Constitutions. In its second claim for Violation of Civil Rights under 11 F.S.M.C. 701(3), Mobil alleges that the Expropriation Provisions "constitute a taking of private property without compensation in violation of the Constitution and laws of the Federated States of Micronesia including the Constitution and laws of the State of Pohnpei." In its third claim for reformation of the lease agreement, Mobil alleges: (1) that Mobil and PPA intended to include the Expropriation Provisions only if required by the Pohnpei Development Leasehold Act; (2) that the Expropriation Provisions are not required under the Act; and (3) that therefore the Expropriation Provisions should be deleted to conform the lease agreement to the parties’ intentions.

III.

PPA moves for dismissal of Mobil’s complaint on three principal grounds. First, PPA argues that Mobil’s complaint should be dismissed because all of Mobil’s claims are barred by the statute of limitations set forth in the Pohnpei Government Liability Act of 1991, Pon. S.L. No. 2L-192-91 (the "PGLA"). Second, PPA argues that Mobil’s complaint should be dismissed because Mobil failed to exhaust its administrative remedies in accordance with the PGLA. Third, PPA argues that Mobil’s complaint should be dismissed because its claims are not yet ripe for adjudication.

IV.

The PGLA is the Pohnpei State Legislature’s declaration of sovereign immunity. The PGLA purports to immunize the State of Pohnpei[2] and its employees from suit unless the claim underlying the suit is specifically authorized by the PGLA or some other state law.[3] Pon. S.L. No. 2L-192-91, § 4. Furteven with respect toct to claims that are specifically authorized by the PGLA or some other state law, the PGLA still imposes a variety of restrictions and limins on the maintenance of those suits. Of particular relevanlevance at the moment is the statute of limitations imposed by the PGLA.

With some exceptions not relevant here, the PGLA requires that the following types of claims be sued upon within two years of the date on which they accrue:

(1) Tort claims. Claims for wrongful death, personal injury or loss of property caused by the negligent or wrongful act or omission of a government employee while acting within the scope of his or her employment, under circumstances and upon such legal evidence where the state, if a private person or corporation, would be liable to the claimant.

(2) Tax claims. Claims for the recovery of any tax alleged to have been erroneously or illegally assessed or collected, or any tax penalty claimed to have been collected without authority, or any sum alleged to have been excessive or improperly collected under applicable tax laws of Pohnpei.

(3) Contract claims. Claims based upon express or implied contract with the state.

(4) Breach of fundamental rights. Claims for any injuries suffered consequent to conduct of a government employee, acting under color of law, which violates fundamental rights defined in Article 4 of the Pohnpei Constitution.

(5) Claims for damages, injunctive relief or writ of mandamus arising from the alleged unconstitutionality or improper administration of the statutes of Pohnpei, or any regulations issued pursuant to such statutes.

(6) Any other civil action or claim against the state founded upon any law of this jurisdiction or any regulation issued under such law, or upon any express or implied contract with the Pohnpei Government or for liquidated or unliquidated damages in cases not sounding in tort.

(7) Actions for collection of judgments based on claims allowed in this statute.

Pon. S.L. No. 2L-192-91, § 4. See also Pon. S.L. No. 2L-192-91, § 27. For purpof determining ning when a particular claim accrues, the PGLA establishes the following test: "[A claim] has [accrued] when all of the facts comprising saiaim] , regardless [of] [of] whether said facts are known or have have been discovered by the claimant." Pon. S.L. No. 2L-192-91, § 27.

Applying the statue of limitations established by the PGLA, as well as the test for determining when a claim accrues, the Court concludes that Mobil’s cause of action for reformation (i.e., a claim based on an express or implied contract) accrued on September 30, 1997 when Mobil signed the lease agreement underlying this lawsuit. At that time, all facts comprising Mobil’s cause of action for reformation existed whether Mobil knew it or not. Accordingly, Mobil was required to file its claim for reformation by no later than September 30, 1999. Because it did not do so, the claim will be dismissed.

Turning to Mobil’s claim for declaratory judgment, the Court concludes that this claim actually breaks down into two claims, not one. That is, Mobil seeks (1) a declaratory judgment that the Expropriation Provisions of the parties’ lease agreement violate the National Constitution and (2) a declaratory judgment that the Expropriation Provisions of the lease agreement violate the Pohnpei State Constitution. The Court concludes that both of these claims accrued on September 30, 1997 because, by its own allegations, Mobil was aware of all facts underlying the claims on this date. However, the Court also concludes that only the claim for declaratory judgment based on the Pohnpei State Constitution is subject to dismissal under the PGLA’s two-year statute of limitations. The claim for declaratory judgment based on the National Constitution is not subject to dismissal on this ground.

By its own terms, the statute of limitations established by the PGLA is applicable only to those claims identified in Section 4 of the PGLA. Section 4 identifies a number of different claims, including claims based on violation of Pohnpei State law such as the Pohnpei State Constitution. See Pon. S.L. No. 2L-192-91, § 4(6). Bction 4 does not expt expressly identify claims for declaratory judgment that are based upon National law such as the National Ctution. Accordingly, because Mobil’s claim for declaratory judgment based on violatiolation of the National Constitution does not fall into one of the categories of claims set forth in Section 4, it is also not subject to the PGLA statute of limitations.[4] And the claim will not be dismissed on the ground that it is time barred by that statute of limitations.

A similar analysis applies to Mobil’s claim for violation of civil rights under 11 F.S.M.C. 701(3). This claim for damages is primarily based on the allegation that the Expropriation Provisions of the parties’ lease constitute an illegal taking of property under the national constitution and the laws of the FSM.[5] This type of claim does not fall within any of the categories of claims identified in Section 4 of the PGLA and therefore is not subject to the PGLA statute of limitations.[6] Accordingly, the claim will not be dismissed on the ground that it is time-barred by that statute of limitations.

V.

PPA also claims that each of Mobil’s claims should be dismissed because Mobil failed to exhaust its administrative remedies under the PGLA. The Court declines to dismiss any of Mobil’s remaining claims on this ground.

The exhaustion of administrative remedies is an affirmative defense. See Pohnpei v. Ponape Constr. Co., [1996] FMSC 13; 7 FSM Intrm. 613, 618-19 (App. 1996). Thus, Mobil is not required to plead and prove that it has exhausted its remedies. Rather, the burden to plead and prove the defense falls upon PPA.

The Court recognizes that it has chosen to dismiss certain claims on the statute of limitations, which is also an affirmative defense. But that is because the allegations of Mobil’s own complaint demonstrate that its claims are subject to the defense. See 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 352-54 (2d ed. 1 T0). The Court does not believe the same is true with respect to the exhaustion of administrative remedies defense. There is no allegation in the complaint showing that Mobil failed to exhaust its administrative remedies. And the law does not require Mobil to include an affirmative statement to this effect to state a claim. Accordingly, the Court will not dismiss any of Mobil’s claims on the ground that it failed to plead exhaustion of remedies.[7]

VI.

PPA’s final ground for dismissing Mobil’s complaint is that the claims set forth therein are not ripe. In this connection, PPA argues that Mobil’s claims, which all derive from the common allegation that Mobil’s Facility will be taken from it at the end of the parties’ lease, are not ripe until the lease ends. The Court disagrees. The parties have signed a lease agreement that purports to confer ownership of the Facility on PPA at a specified time. The parties also currently have a good faith dispute as to the validity of this result under the national constitution. This renders the case ripe for adjudication.

VII.

For the reasons set forth above, the Court grant PPA’s motion to dismiss to the following extent:

1. Mobil’s claim for reformation is dismissed.

2. Mobil’s claim for declaratory judgment is dismissed to the extent it is based on violation of Pohnpei State laws, not national laws.

3. Mobil’s claim for violation of civil rights under 11 F.S.M.C. 701(3) is dismissed to the extent it is based on violation of Pohnpei State laws, not national law.

* * * *

---

^[1] Section 13(7) of the Pohnpei Development Leasehold Act says that every development lease must contain the following:

A covenant stating that the lessor shall have the rights of future benefit to the improvements placed on the land by or on behalf of the lessee and that, upon the termination of the lease, existing improvements thereon shall become the property of the lessor thereof or his successor in interest without further cost or condition to be met by the lessor, the title holder of the property or any successor in interest to said property . . . .

[2] The PGLA defines the State of Pohnpei to include “all branches of government, any corporation, and other person or entity primarily acting atrumentalities or agencies cies of the government, and all boards, commissions, public corporations, authorities, departments, divisions or offices of the government.” This definition is more than broad enough to encompass PPA. See E.M. Chen & Assocs. (FSM), Inc. v. Pohnpei Port Auth., [2000] FMSC 20; 9 FSM Intrm. 551, 555-56 (Pon. 2000).

^[3] At this stage, PPA does not contend that the Court should dismiss Mobil’s complaint on sovereign immunity grounds under the PGLA.

^[4] The Court recognizes that Section 2 of the PGLA purports to immunize the State of Pohnpei and its employees from any claims not specifically identified in Section 4 of the PGLA. Thus, it could be argued that, because claims for violation of rights secured by the National Constitution are not specifically identified in Section 4, the State of Pohnpei and its employees are immune from such claims. PPA has not made this argument, however, and no party has briefed the issue. Accordingly, the Court expresses no opinion on the merits of it.

^[5] In support of its claim for violation of civil rights, Mobil originally alleged that the Expropriation Provisions of the parties’ lease agreement constituted “a taking of private property without compensation in violation of the Constitution and laws of the Federated States of Micronesia including the Constitution and laws of the State of Pohnpei.” This allegation tends to suggest that Mobil is trying to base its national civil rights claim on both National law and Pohnpei State law. 11 F.S.M.C. 701(3) does not provide a remedy for violation of state law, however. Accordingly, to the extent Mobil’s second claim for civil rights violations is based on state law, the claim is dismissed.

^[6] It could be argued that Mobil’s claim is one based upon an express contract. See Pon. S.L. No. 2L-192-91, § 4(3). But the court believes the claim is best characterized as one for violation of the national constitution. It might also be argued that the claim is one “arising from the alleged unconstitutionality or impradministration of the statustatutes of Pohnpei.” Pon. S.L. No. 2L-192-91, § 4(6). Bat is not how the Cthe Court views Mobil’s claim. Mobil’s claim is not that the Pohnpei statute requiring forfeiture of improvements at the conclusf a lease is unconstitutional. Nor does Mobil appear to arto argue that the statute was improperly administered with respect to Mobil. Instead, Mobil claims that the Expropriation Provisions of the lease, standing alone, constitute an unconstitutional taking of Mobil’s property.

^[7] The Court also points out, but does not decide, that there is a substantial legal question as to whether a party asserting claims for violation of rights under the national constitution is required to submit those claims first to a state administrative procedure. See Louis v. Kutta, [1997] FMSC 36; 8 FSM Intrm. 208, 214 (Chk. 1997).