Federated States of Micronesia v Kana Maru No. 1 [2006] FMSC 49; 14 FSM Intrm. 365 (Chk. 2006) (18 August 2006)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as FSM v. Kana Maru No.1, [2006] FMSC 49; 14 FSM Intrm. 365 (Chk. 2006)

FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

KANA MARU NO. 1, a fishing vessel, TETUMI

NISHI, TOSHIHIKO IKEMA, and SANKO BUSSAN

COMPANY (GUAM), LIMITED,
Defendants.

CIVIL ACTION NO. 2006-1011

ORDER

Dennis K. Yamase
Associate Justice

Hearing: August 16, 2006
Decided: August 18, 2006

APPEARANCES:

For the Plaintiff:
Keith J. Peterson, Esq.
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941

For the Defendants:
David Ledger, Esq.
Carlsmith Ball LLP
134 West Soledad Avenue, Suite 401
P.O. Box BF
Hagatna, Guam 96932-5027

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HEADNOTES

Admiralty
Whenever an asserted maritime counterclaim arises out of the same transaction or occurrence as the original maritime action, and the defendant or claimant in the original action has given security to respond in damages, any plaintiff for whose benefit such security has been given shall give security in the usual amount and form to respond in damages set forth in such counterclaim, unless the court, for cause shown, directs otherwise. Proceedings on the original claim shall be stayed until such security is given, unless the court otherwise directs. FSM v. Kana Maru No. 1[2006] FMSC 49; , 14 FSM Intrm. 365, 366-67 (Chk. 2006).

[14 FSM Intrm. 373]

Jurisdiction - In Rem; Marine Resources
When the government’s complaint seeks, among other things, a vessel’s forfeiture under 24 F.S.M.C. 801(1), the case is, in part, an in rem proceeding, albeit one created by the marine resources statute. FSM v. Kana Maru No. 1[2006] FMSC 49; , 14 FSM Intrm. 365, 367 (Chk. 2006).

Admiralty
When the defendants have not yet given any security for the plaintiff’s benefit no countersecurity bond will be required for a fishing boat’s counterclaims because the defendants have not complied with Rule E(6)(d)’s prerequisite for countersecurity. Countersecurity will only be required of a plaintiff when there are counterclaims against any plaintiff for whose benefit security has been given. FSM v. Kana Maru No. 1[2006] FMSC 49; , 14 FSM Intrm. 365, 367 (Chk. 2006).

Admiralty; Separation of Powers - Judicial Powers
If there is a conflict between the Supplemental Admiralty and Maritime Rules and Title 24, then Title 24 must prevail because the Constitution permits the Chief Justice to promulgate procedural rules, which Congress may amend by statute and since Congress has the authority to amend or create procedural rules by statute (and when Congress has enacted a procedural rule, it is valid) and the Chief Justice does not have the authority to amend Congressionally-enacted statutes, if the statute applies and the statute and the rule conflict, the statute must prevail. FSM v. Kana Maru No. 1[2006] FMSC 49; , 14 FSM Intrm. 365, 367 n.1 (Chk. 2006).

Admiralty; Marine Resources
The court will not direct that the government provide countersecurity under the admiralty rules for a defendant’s counterclaims in an fishing boat seizure case. FSM v. Kana Maru No. 1[2006] FMSC 49; , 14 FSM Intrm. 365, 367 (Chk. 2006).

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COURT’S OPINION

DENNIS K. YAMASE, Associate Justice:

This came before the court on August 16, 2006, for hearing the defendant Sanko Bussan Co.’s Motion for Counter-Security. The defendant asks that the plaintiff government be required to post counter-security, pursuant to FSM Supplemental Admiralty and Maritime Rule E(6)(d). The motion is denied. The court’s reasons follow.

The fishing vessel Kana Maru No. 1 was arrested on May 19, 2006, by the FSS Micronesia marine surveillance vessel for alleged violations of FSM Marine Resources Act, Title 24 of the FSM Code. On July 4, 2006, the court, pursuant to FSM Pub. L. No. 12-34, § 80 (to be codified at.S.M.CS.M.C. 806), set bond for release of the Kana Maru No.1 at $180,000. [FSM v. Kana Maru No. 1[2006] FMSC 26; , 14 FSM Intrm. 300, 302 (Chk. 2006).] The Kana Maru No.1 has not yet posted a bond and the FSM national government is holding it in Weno harbor.

On July 21, 2006, the defendants filed their answer, which contained counterclaims for wrongful arrest and damages. On July 31, 2006, the defendants filed their amended counter claims and on August 2, 2006, filed Tetsuo Okubo’s verification of those counterclaims. The defendants ask to the court to require the government, pursuant to Supplemental Rule E(6)(d), to post countersecurity of $531,778 to cover the defendants’ counterclaims before the government can proceed with this case. The Rule provides that:

Whenever an asserted counterclaim arises out of the same transaction or occurrence as the original action, and the defendant or claimant in the original action has

[14 FSM Intrm. 374]

given security to respond in damages, any plaintiff for whose benefit such security has been given shall give security in the usual amount and form to respond in damages set forth in such counterclaim, unless the court, for cause shown, directs otherwise. Proceedings on the original claim shall be stayed until such security is given, unless the court otherwise directs.

FSM Mar. R. E(6)(d). The government contends that the defendants’ counterclaims do not arise "out of the same transaction or occurrence as the original action"; that the Admiralty and Maritime Rules do not apply because this is not an in rem action; that only Title 24 applies and that title does not provide for countersecurity; and that the national government’s sovereign immunity precludes requiring a bond.

Without going into the merits of the case, the defendants’ counterclaims do appear to arise from or flow out of the national government’s original seizure of the vessel and, for the purposes of this motion, will be assumed to arise from the same occurrence. Since the government’s complaint seeks, among other things, the Kana Maru No. 1's forfeiture under 24 F.S.M.C. 801(1), this case is, in part, an in rem proceeding, albeit one created by the marine resources statute. And, also without going into the counterclaims’ merits, the national government has waived its sovereign immunity, 6 F.S.M.C. 702, for the defendants’ counterclaims.

Nonetheless, no bond will be required from the government. First, the defendants have not complied with Rule E(6)(d)’s prerequisite for countersecurity. Countersecurity will only be required of a plaintiff when there are counterclaims against "any plaintiff for whose benefit such security has been given," FSM Mar. R. E(6)(d), and the defendants have not yet given any security for the government’s benefit.

But even if the defendants had already posted security for the government’s benefit, no bond would be required of the national government. The sovereign immunity waiver applies to the government’s ultimate liability, not to whether it can be required to post security. Title 24^[1] also does not provide for the government to be required to provide counter security. The civil procedure rules specifically exempt the government from being required to post a bond when the government appeals a money judgment against it. FSM Civ. R. 62(e). It would be a peculiar anomaly if the government were required to post a bond for the court to adjudicate the defendants’ counterclaims, but if the defendants prevailed and obtained a money judgment, the government could then appeal that money judgment without a bond. Rule E(6)(d) requires countersecurity "unless the court, for cause shown, directs otherwise." For the reasons given above, the court directs that no countersecurity be given.

Accordingly, the defendants’ Motion for Counter-Security is denied.

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[2006] FMSC 51; [14 FSM Intrm. 375]

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^[1] Although the court does not believe that there is a conflict between the Supplemental Admiralty and Maritime Rules and Title 24, if there is, then Title 24 must prevail. The Constitution permits the Chief Justice to promulgate procedural rules, which Congress may amend by statute. FSM Const. art. XI). Therefore, since ince Congress has the authority to amend or create procedural rules by statute (and when Congress has enacted a procedural rule, it is valid the Chief Justice does not have the authority to amend Cond Congressionally-enacted statutes, if the statute applies and the statute and the rule conflict, the statute must prevail. FSM v. Wainit, [2004] FMSC 15; 12 FSM Intrm. 376, 383 (Chk. 2004).