Federated States of Micronesia v Katzutoku Maru [2007] FMSC 65; 15 FSM Intrm. 400 (Pon. 2007) (25 October 2007)

FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION. NO. 2004-053

FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

KATZUTOKU MARU, a fishing vessel, and HAGIWARA KENJI,
Defendants.
__________________________________________

ORDER

Andon L. Amaraich
Chief Justice

Decided: October 25, 2007

APPEARANCES:

For the Plaintiff: Pole Atanraoi, Esq.
FSM Assistant Attorney General
P.O. Box PS-105
Palikir, Pohnpei FM 96941

For the Defendants: Joseph S. Phillip, Esq.
P.O. Box 464
Kolonia, Pohnpei FM 96941

* * * *

HEADNOTES

Civil Procedure  Summary Judgment

Under FSM Civil Rule 56(c), the court must grant the summary judgment when the pleadings together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law, such as when the parties do not dispute the material facts, all of which are contained in the parties' stipulation. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 403 (Pon. 2007).

Marine Resources

No person shall use any fishing vessel for, and the crew and operator of any fishing vessel shall not engage in, commercial or non-commercial fishing or related activities in the exclusive economic zone unless it is in accordance with a valid and applicable permit. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 403 (Pon. 2007).

Equity  Estoppel

Under the doctrine of equitable estoppel, or estoppel in pais, a person may sometimes be precluded by his act or conduct or silence when he has a duty to speak, from asserting a right which he otherwise would have had. However, this equitable doctrine applies only when justice demands intervention on behalf of a person misled by the conduct of the party estopped. The equitable estoppel doctrine should be applied to Federated States of Micronesia governments when this is necessary to prevent manifest injustice and when the interests of the public will not be significantly prejudiced. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 403-04 (Pon. 2007).

Equity  Estoppel

No estoppel can arise from an act or a representation if it was not intended to have the effect claimed and if, from its nature or from the time when, or the circumstances under which, it was done or made, it would be unreasonable to attribute such effect to it or when the party claiming to have been misled was aware of the facts which he now insists the other party should have told him, or could reasonably have been expected to learn the facts. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 404 (Pon. 2007).

Agency; Marine Resources

When the defendants' local agent  prior to defendants' fishing activities on August 18th, 19th, and 20th  had actual knowledge that NORMA would not be issuing the fishing permit, the knowledge of the defendants' agent is imputed to the defendants under the law of agency. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 404 (Pon. 2007).

Marine Resources

The Marine Resources Act of 2002 gives NORMA broad discretion in the processing and approval of fishing permits. NORMA does not have a legal duty to process, let alone approve, an application for a fishing permit within one day after the submission of the application. Under 24 F.S.M.C. 108, the Executive Director is to review each application submitted and may, at his discretion, solicit views from appropriate persons in the states and hold public hearings when and where necessary. NORMA also has the discretion to grant or deny a permit under various circumstances, including denying applications when the Executive Director determines that the issuance of a permit would not be in the FSM's best interests. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 404 (Pon. 2007).

Marine Resources

Because NORMA does not have a legal duty to issue a fishing permit by an applicant's preferred effective date, a defense of unjustified withholding of the license because it was not issued on the applicant's preferred date is without merit. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 404 (Pon. 2007).

Marine Resources

A defendant commits a separate violation of section 907(1) for each day he engages in commercial fishing without a valid fishing permit. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 404-05 (Pon. 2007).

Marine Resources

When assessing civil penalties for violations of the Marine Resources Act of 2002, the court is required to take into account several factors, including among other things, the degree of culpability, any history of prior offenses, whether there are multiple violations which together constitute a serious disregard of conservation and management measure and such other matters as justice may require. FSM v. Katzutoku Maru, [2007] FMSC 65; 15 FSM Intrm. 400, 405 (Pon. 2007).

* * * *

COURT'S OPINION

ANDON L. AMARAICH, Chief Justice:

Pending before the Court are plaintiff's motion for summary judgment, filed on June 29, 2007, and defendants' cross motion for summary judgment, filed on July 19, 2007. For the reasons that follow, the Court grants plaintiff's motion for summary judgment with respect to liability of defendant Kenji only and denies defendants' cross-motion for partial summary judgment.

I. Procedural Background

During the status conference held in this matter on June 5, 2007, the parties indicated that the material facts in this case were not in dispute and that they would file a joint statement of stipulated facts, together with cross motions for summary judgment based thereon. On June 19, 2007, the parties filed a joint statement of stipulated facts. On June 29, 2007, plaintiff filed its motion for summary judgment. On July 19, 2007, defendants filed their response to plaintiff's motion for summary judgment and their cross-motion for partial summary judgment.

II. Factual Background[1]

The National Oceanic Resources Management Authority ("NORMA") is responsible for issuing fishing permits allowing vessels to engage in fishing operations in the FSM Exclusive Economic Zone. Before NORMA issues a permit, it performs a review of various items, including, among other things, the country of registration of the vessel, insurance status, and court cases against the vessel. At all relevant times, there was in place between NORMA and the Japan Fisheries Association a fishing agreement which established, among other things, the number of permits NORMA would grant to members of the Japan Fisheries Association. Another fishing agreement was in place between NORMA and Pacific Fisheries Service a/k/a Pacific Foods & Services during the period September 3, 2003 to September 3, 2004. That agreement allowed Pacific Fisheries Service to be the local agent for up to nine fishing vessels having permits issued by NORMA.

On October 21, 2003, NORMA issued a fishing permit in the name of "Kenji Hagiwara" for the vessel Katzutoku 1 for the period October 21, 2003 through January 20, 2004. Defendants' local agent during that period was Pacific Fisheries Service. After the expiration of that permit, defendants changed their local agent to the FSM National Fisheries Corporation. On May 12, 2004, NORMA issued another fishing permit in the name of "Hagiwara, Kenji" for the vessel Katzutoku 1 for the period May 12, 2004 through August 11, 2004.

Defendants subsequently changed their local agent back to Pacific Fisheries Service. On August 16, 2004, defendants, acting through Pacific Fisheries Service, submitted to NORMA an application for a third fishing permit. NORMA received the application on August 16, 2004. Defendants' application requested that the permit have a "preferred effective date" of August 17, 2004.

On August 17, 2004  one day after it received defendants' application  NORMA orally informed defendants' local agent that the fishing permit would not immediately issue due to the objection of Kinkatsukyo a/k/a National Offshore Tuna Fisheries Association, a member of the Japan Fisheries Association. The reason Kinkatsukyo objected to issuance of the permit was that the Katzutoku 1 was already listed on Kinkatsukyo's longline registration list for August 10, 2004 through August 9, 2005. NORMA, therefore, held off on issuing the permit to defendants out of concern that doing so would breach its agreement with the Japan Fisheries Association, of which Kinkatsukyo was a member.

Defendant Kenji  without an effective fishing permit  engaged in fishing operations, using the Katzutoku 1, within the FSM Exclusive Economic Zone on August 18th, 19th, and 20th, 2004. By letter dated August 24, 2004, NORMA informed defendants' local agent that the Katzutoku 1 was registered under the Japan Fisheries Associations and that NORMA would need to confer with the Japan Fisheries Association to determine whether issuing a permit to defendants would violate the agreement between NORMA and the Japan Fisheries Association. On August 25, 2004, Kinkatsukyo, informed NORMA that it no longer objected to issuance of the permit to defendants. NORMA issued the fishing permit in the name of "Hagiwara, Kenji" for the vessel Katzutoku 1 on August 27, 2004.

Plaintiff filed the present action against defendants on September 8, 2004.

II. Legal Analysis

Under FSM Civil Rule 56(c), the Court must grant the summary judgment when "the pleadings . .&. together with the affidaffidavits, if any, show that there is no genuine issue as to any material fact and that the moving par entitled to a judgment as a matter of law." In this case, the parties do not dispute the mthe material facts, all of which are contained in the parties' stipulation.

Plaintiff's motion for summary judgment asks the Court to enter judgment against defendants in a sum not to exceed one million dollars for each violation of 24 F.S.M.C. 907(1).[2]

24 F.S.M.C. 907(1) states:

No person shall use any fishing vessel for, and the crew and operator of any fishing vessel shall not engage in, commercial or non-commercial fishing or related activities in the exclusive economic zone without a valid and applicable permit as required pursuant to sections 103, 104 or 117 of chapter 1 of this subtitle.

In turn, 24 F.S.M.C. 103 states in pertinent part: "No domestic fishing, commercial pilot fishing, foreign fishing or such other fishing or related activity as may be prescribed shall be allowed in the exclusive economic zone unless it is in accordance with: (1) a valid and applicable permit issued under authority conferred by this subtitle . .;. ." There is no diso dispute that defendant Kenji, as operator of the Katzutoku 1, conducted fishing operations without a valid permit from NORMA gust 19th, and 20th, 2004. Defendants contend, howeveowever, that they did not violate section tion 907(1) for two reasons. Defendants' first argument is that "Plaintiff is barred under the doctrine of estoppel from withholding the Permit on August 17, 2007, because defendant has been continuously been granted [sic] Permit without objection from the Japan Tuna Fisheries Association [sic]. And previously, NORMA had issued its two Permits on the requested effective date." Defendants do not cite any case law or any other authority in support of their argument.

Defendants' estoppel argument is without merit. "Under the doctrine of equitable estoppel, or estoppel in pais, a person may sometimes be precluded by his act or conduct or silence when he has a duty to speak, from asserting a right which he otherwise would have had. However this equitable doctrine applies only when justice demands intervention on behalf of a person misled by the conduct of the party estopped." Etpison v. Perman, [1984] FMSC 3; 1 FSM Intrm. 405, 417 (Pon. 1984). "[T]he equitable estoppel doctrine should be applied to governments in the Federated States of Micronesia where this is necessary to prevent manifest injustice and where the interests of the public will not be significantly prejudiced." KCAA v. Tuuth, [1991] FMSC 35; 5 FSM Intrm. 118, 120 (Pon. 1991). However, "no estoppel can arise from an act or a representation if it was not intended to have the effect claimed and if, from its nature or from the time when, or the circumstances under which, it was done or made, it would be unreasonable to attribute such effect to it." Carlos Etscheit Soap Co. v. Epina, [1997] FMSC 5; 8 FSM Intrm. 155, 164 (Pon 1997). Moreover, "where the party claiming to have been misled was aware of the facts which he now insists the other party should have told him, or could reasonably have been expected to learn the facts." Etpison, 1 FSM Intrm. at 417.

In the present case, the application form submitted on behalf of defendants contained a space where defendants could insert a "Permit Effective Date." The application plainly indicated that this was a "preferred effective date" and not a guaranteed effective date. There was no representation by NORMA that it would issue the permit to defendants by August 17, 2004, defendants' preferred effective date. Moreover, NORMA informed defendants' local agent on August 17, 2004 that the permit would not be issued on that date. Defendants' local agent  prior to defendants' fishing activities on August 18th, 19th, and 20th  had actual knowledge that NORMA would not be issuing the fishing permit. The knowledge of defendants' agent is imputed to defendants under the law of agency. See FSM v. Ting Hong Oceanic Enterprises, [1997] FMSC 40; 8 FSM Intrm. 166, 180 (Pon. 1997). Because NORMA never represented that it would issue a fishing license on the date defendants requested as their preferred effective date and because defendants had imputed knowledge, by virtue of their local agent, that NORMA would not issue the fishing permit by August 17, 2004, the doctrine of equitable estoppel does not apply.

Defendants next defense is that "the withholding of defendants' Permit was unjustified under the circumstances appearing from August 17, 2004 to August 27, 2004." While defendants' argument is far from lucid, it appears defendants' argument is based on their view  without any reference to case law or statute  that NORMA had a legal duty to issue the fishing permit on August 17, 2004  the date requested by defendants in the application. The Court cannot agree.

The Marine Resources Act of 2002 gives NORMA broad discretion in the processing and approval of fishing permits. Contrary to defendants' contention, NORMA does not have a legal duty to process, let alone approve, an application for a fishing permit within one day after the submission of the application. Under 24 F.S.M.C. 108 the Executive Director is to review each application submitted and "may, at his discretion, solicit views from appropriate persons in the States and hold public hearings when and where necessary." Section 109 of Title 24 also gives NORMA discretion to grant or deny a permit under various circumstances, including denying applications where "the Executive Director determines that the issuance of a permit would not be in the best interests of the Federated States of Micronesia." Because NORMA did not have a legal duty to issue the fishing permit by defendants' preferred effective date, the Court determines that defendants' defense of unjustified withholding is without merit. The Court denies defendants' cross-motion for summary judgment for the same reason.

As indicated above, the parties do not dispute that defendant Kenji, as operator of the Katzutoku 1, engaged in fishing operations in the FSM Exclusive Economic Zone without a valid fishing permit on August 18th, 19th, and 20th, 2004. The Court, having determined that defendants' defenses are without merit, concludes defendant Kenji violated 24 F.S.M.C. 907(1). The Court further determines, pursuant to 24 F.S.M.C. 901(2), that defendant Kenji committed a separate violation of section 907(1) for each day he engaged in commercial fishing without a valid fishing permit, for three violations in total.

In addition to its request that the Court conclude defendants are liable for violating 24 F.S.M.C. 907(1), plaintiff has asked the Court to enter judgment in a sum not to exceed one million dollars for each violation. The parties have not yet directly addressed the factors the Court must take into consideration when assessing civil penalties for violations of the Marine Resources Act of 2002. 24 F.S.M.C. 901(3) requires the Court to take into account several factors, including among other things, "the degree of culpability, any history of prior offenses, whether there are multiple violations which together constitute a serious disregard of conservation and management measure and such other matters as justice may require."

Having concluded that defendant Kenji is liable for civil penalties for three separate violations of 24 F.S.M.C. 907(1), the Court directs the parties to file briefing and submit any evidence addressing the amount of civil penalties in light of the factors set forth in 24 F.S.M.C. 901(3). Each party shall file their submission no later than November 15, 2007. Any responses shall be filed no later than November 30, 2007. A hearing will take place on December 19, 2007.

III. Conclusion

For the foregoing reasons, the Court grants plaintiff's motion for summary judgment with respect to liability of defendant Kenji only and denies defendants' motion for summary judgment. The parties shall file briefing and submit any evidence addressing the amount of civil penalties that the Court should assess in light of the factors set forth in 24 F.S.M.C. 901(3). Each party is to file their submission no later than November 15, 2007. Any responses shall be filed no later than November 30, 2007. A hearing will take place on December 19, 2007.

* * * *

---

^[1]The operative facts are set forth in the parties’ June 19, 2007 stipulation and the attachments thereto.
^[2]The Court notes that while the complaint prays for the seizure and forfeiture of the Katzutoku 1 pursuant to 24 F.S.M.C. 801(1) and the forfeiture of perishable articles and/or their value pursuant to 24 F.S.M.C. 802(1), plaintiff’s motion for summary judgment does not ask the Court for this relief or otherwise address these claims.