Albert v George [2008] FMSC 31; 15 FSM Intrm. 574 (App. 2008) (14 April 2008)

FSM SUPREME COURT APPELLATE DIVISION
APPEAL CASE NO. K1-2007

KUN I. ALBERT,
Appellant,

vs.

WEBSTER GEORGE,
Appellee.

APPEAL CASE NO. K3-2007

GEORGESTON GEORGE,
Appellant,

vs.

WEBSTER GEORGE,
Appellee.
___________________________________

OPINION

Argued: March 25, 2008
Decided: April 14, 2008

BEFORE:

Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court
Hon. Dennis K. Yamase, Associate Justice, FSM Supreme Court
Hon. Ready E. Johnny, Associate Justice, FSM Supreme Court

APPEARANCES:

For the Appellants: Canney Palsis, Esq.
Micronesian Legal Services Corporation
P.O. Box 38
Tofol, Kosrae FM 96944

For the Appellee: Snyder H. Simon, Esq.
P.O. Box 1017
Tofol, Kosrae FM 96944

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HEADNOTES

Appellate Review  Briefs, Record, and Oral Argument

Two appeals may both set for oral argument at the same time when the issues were identical, the facts were virtually identical, the trial court decisions appealed from were virtually identical, and the trial court transcript was completely identical since the trial court (and counsel) dealt with both cases simultaneously. For these same reasons, both appeals may be considered and addressed in one opinion. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 577 (App. 2008).

Appellate Review  Briefs, Record, and Oral Argument

Under Appellate Rule 31(c) an appellee who fails to file a brief will not be heard at oral argument except by the court's permission. The court may permit an appellee to be heard when it cannot find any prejudice to the appellants and the appellee's participation at oral argument will be helpful. The appellee's participation may be restricted. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 577 (App. 2008).

Civil Procedure  Pleadings; Civil Procedure  Sanctions

An answer that denies all of a complaint's factual allegations is an answer in the nature of a general denial. General denials, while disfavored, are permissible when proper, but are subject to the obligations of honesty set forth in Rule 11. Counsel are cautioned that pleadings that deny facts known by the pleader to be true subject counsel to possible sanctions under Rule 11. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 577 n.1 (App. 2008).

Civil Procedure  Summary Judgment

When trial court judgments were issued without a trial, they were summary judgments. The trial court should therefore have applied the summary judgment standard to its rulings. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 579 (App. 2008).

Appellate Review  Standard of Review  Civil Cases; Civil Procedure  Summary Judgment

Trial court judgments issued without a trial are summary judgments to which the trial court should have applied the summary judgment standard to its rulings. The appellate court's standard of review of those rulings thus must be the one used to review summary judgments. It must apply de novo the same standard that a trial court uses in its determination of a summary judgment motion, which is that summary judgment is proper only when, viewing the facts in the light most favorable to the party against whom judgment is sought, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 579 (App. 2008).

Appellate Review  Standard of Review  Civil Cases

A trial court finding of fact is clearly erroneous when, after reviewing the entire body of the evidence and construing the evidence in the light most favorable to the appellee, the appellate court is left with the definite and firm conviction that a mistake has been committed. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 579 (App. 2008).

Appellate Review  Standard of Review  Civil Cases

Due process issues are generally questions of law. Questions of law are reviewed de novo by the appellate court. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 579 (App. 2008).

Civil Procedure  Summary Judgment; Constitutional Law  Due Process

There is no constitutional due process right to a trial if the matter may properly be resolved by summary judgment. Trial is a process used to resolve disputed issues of material fact. A court must deny a summary judgment motion unless, viewing the facts in the light most favorable to the party against whom judgment is sought, it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Thus a decision without trial would violate due process rights only if there was a genuine issue of material fact that would preclude summary judgment because that issue would need to be tried. It is also an abuse of the trial court's discretion to grant summary judgment if a genuine issue of material fact is present. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 579-80 (App. 2008).

Appellate Review  Standard of Review  Civil Cases

When the ledger sheets, from which the trial court derived each judgment amount, were never authenticated by affidavit or by testimony and neither were their accuracy vouched for by affidavit, or testimony, or other evidence; when, even though the defendants may have agreed at the hearing to the ledger sheets' admissibility (i.e., authenticity), it is seriously doubtful that they could have agreed to the ledger sheets' accuracy since one defendant had not seen the business ledger and the other specifically questioned the accuracy of certain charges; and when, if they had been stipulating to the ledgers' accuracy, that would have been a waiver of any rights they had left since no other issues of fact or right to trial would have remained, the appellate court can only conclude that the defendants, when they left it up to the court "without waiving any rights" did not intend to, and did not, waive their rights to trial on disputed material facts, that is, on the amounts owed. The trial court's findings that the cases had been submitted to it for its decision, that is, that the facts including the ledger sheets' accuracy had been stipulated to, is thus clearly erroneous. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 580 (App. 2008).

Civil Procedure  Summary Judgment; Evidence  Burden of Proof

When the defendants did not stipulate to their ledger sheets' accuracy, that would have left one genuine issue of material fact before the court for trial because an open account is not self-proving. An open account must be supported by an evidentiary foundation to demonstrate the account's accuracy. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 581 (App. 2008).

Civil Procedure  Summary Judgment

Since, viewing the facts in the light most favorable to the party against whom judgment was sought, a genuine issue of material fact remained, it was improper for the trial court to grant summary judgment, that is, to grant judgment without a trial on the remaining factual issue. Once the trial judge had taken the cases under submission and reached this point, he ought to have determined that in each case the ledger sheet amounts' accuracy was a genuine issue of material fact, and, after ruling on the legal issues before him, set this factual issue for trial in each case. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 581 (App. 2008).

Appellate Review  Standard of Review  Civil Cases; Civil Procedure

When none of the trial court's rulings on legal issues, such as the existence of contracts and no liability for interest or attorney's fees, were appealed, they remain the law of each case on remand. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 581 n.2 (App. 2008).

Contracts

Where liability was conceded when the defendants listed as an undisputed fact in their pretrial briefs that they each had an "open/mutual account" with the plaintiff, but the extent of those liabilities were not conceded, trials on damages only, that is, only on the issue of each business ledger's accuracy, must be held. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 581 (App. 2008).

Evidence

If challenged, previous ledger pages constituting the rest of an open account may be needed to support a plaintiff's case for any items whose accuracy the defendant has not stipulated to because when a writing or recorded statement or part thereof is introduced by a party, an adverse party may require him at that time to introduce any other part or any other writing or recorded statement which ought in fairness to be considered contemporaneously with it. Albert v. George, [2008] FMSC 31; 15 FSM Intrm. 574, 581 (App. 2008).

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COURT'S OPINION

READY E. JOHNNY, Associate Justice:

Appeal No. K1-2007, by Kun I. Albert ("Kun") is from a $3,137 money judgment in Webster George's ("Webster") favor. Appeal No. K3-2007, by Georgeston George ("Georgeston"), is from a $2,091.11 money judgment in Webster George's favor. We vacate both trial court judgments and remand the matters to the Kosrae State Court for trial on damages. Our reasons follow.

I. Consolidation and Oral Argument

These appeals were both set for oral argument at the same time because, as will be seen below, the issues were identical, the facts were virtually identical, the trial court decisions appealed from were virtually identical, and the trial court transcript was completely identical since the court (and counsel) dealt with both cases simultaneously. For these same reasons, we have considered and addressed both appeals in this one opinion.

A November 23, 2007 single justice order in each appeal denied a request (not in the files) to enlarge time for Webster to file his brief. The orders noted that Webster had not filed a brief, recited the Appellate Rule 31(c) provision that "[a]n appellee who fails to file a brief will not be heard at oral argument except by permission of the court." Webster did not file a request that the denial of his requested enlargements be reviewed by a full panel, but at the call of the case, Webster's counsel moved orally for permission to be heard. Since we could not find any prejudice to Kun or Georgeston, we granted that request but restricted Webster's argument to only five minutes, not counting any time needed to answer any questions we might ask from the bench. We found Webster's participation at oral argument helpful.

II. Background and Procedural History

Kun and Georgeston each had an open charge accounts at Webster's store. After the store went out of business, they stopped making payments on their accounts. Kun and Georgeston had both been Webster's employees,[1] making allotments from their wages. Webster eventually sued Georgeston on his open account (Civ. No. 35-06) and Kun on his open account (Civ. No. 37-06). Discovery was conducted. During discovery, the last ledger sheet of Georgeston's account was provided to Georgeston. (But Kun's account ledger was not provided to Kun.) Trial in both cases was set for December 11, 2006. Webster subpoenaed three witnesses and Kun subpoenaed five witnesses for a total of three witnesses other than the parties themselves. Each side in each case submitted a pretrial brief on December 8, 2006.

Kun's brief stated that if there was ledger available, Kun would be willing to stipulate to it if and when the ledger was made available. Def.'s Pretrial Br. at 3, Civ. No. 37-06 (Dec. 8, 2006). Kun listed the amount due as one issue remaining to be litigated and stated "that if there is in fact a ledger available for the defendant, there may likely to be some discrepancies as noted in other cases, which the defendant may also assert." Id. at 3-4. Kun's brief also listed as an undisputed fact that he had an open account with Webster and had made payments on it against an undetermined amount due. Id. at 4. Webster's brief in Kun's case had the last page of the ledger sheet of Kun's account attached as an exhibit. Georgeston's brief questioned the accuracy of various entries in that ledger sheet, but stated that the ledger sheet was admissible. Def.'s Pretrial Br. at 2, 4, Civ. No. 35-06 (Dec. 8, 2006). Georgeston's brief also listed as an undisputed fact that he had an open account with Webster and had made payments on it against an undetermined amount due, id. at 6, and that only one issue of fact remained to be litigated, the amount Georgeston owed, id. at 4.

No trials were held. When the cases were both called for trial at the same time, the trial judge asked if there was anything else other than the briefs, and defense counsel, who represented both Kun and Georgeston, stated, "Trial, your honor." Tr. at 2 (Dec. 11, 2006). The judge then announced that he was accepting the ledger sheets. Defense counsel objected that there had not been any testimony regarding those ledgers and that attorney's fees were also an issue. The judge then stated that the law had right things about attorney's fees and interest and that he could take the case as submitted. Id. at 3. Webster's counsel consented to that. Id. Defense counsel objected that a ledger sheet had been filed after the discovery deadline, and so was not timely and before the court. Id. at 4. Defense counsel stated his concern was not to waive any rights. Id. at 5. The judge then said,

both of you know that the Court wants to proceed on the merits of this kind of matters or issues concerning money. So other than that in your motion we can mood [sic] that out hearing from you right---standing right there and then I will rule on the brief accepting the ledgers provided as evidence in this matters on both sides. I mean I can tell, I can read the ledger for your---what you are asserting and also what he is asserting.

ATTORNEY PALSIS [Kun and Georgeston]: With that, Your Honor, as I have said, without waiving any rights,---I will leave it up to Court to make its decision.

COURT: You?

ATTORNEY SIMON [Webster]: so do I.

COURT: Okay, thanks these matters will be under advisement for me to decide the outcome for this the way I see as submitted by you.

Tr. at 5-6 (Dec. 11, 2006). That ended the proceeding.

On February 12, 2007, the trial judge issued a written Memorandum of Decision; Judgment in each case. Those memorandums both stated that: "At the time of trial, the parties agreed to submit the matter for the Court's decision based on the existing files, records, and proceedings. I took the matter under advisement." Memos. at 1 (Feb. 12, 2007). In Kun's case, the judge found that there was an open account, that this constituted a contract, and that Kun's failure to pay anything on the account after October 4, 2002, constituted a breach of that contract. The judge awarded Webster $3,137, the last amount listed as the running total on Kun's ledger sheet. And in Georgeston's case, the judge found that there was an open account, that this constituted a contract, and that Georgeston's failure to pay anything on the account after July 13, 2001, constituted a breach of that contract. The judge awarded Webster $2,091.11, the last amount listed as the running total on the ledger sheet. The judge did not award any attorney's fees or prejudgment interest in either case. Kun and Georgeston then appealed. Webster did not cross-appeal the denial of attorney's fees and interest in either case.

III. Issues Presented

Kun contends that the trial judge's $3,137 award to Webster without a trial deprived Kun of 1) his right to due process, 2) was not supported by substantial evidence and is clearly erroneous, and 3) is an abuse of the court's discretion. Georgeston presents the exact same issues in regard to the trial judge's $2,091.11 award against him.

IV. Standard of Review

Since the trial court judgments were issued without a trial, they were summary judgments. The trial court should therefore have applied the summary judgment standard to its rulings. Thus, our standard of review must be the one used to review summary judgments. We apply de novo the same standard that a trial court uses in its determination of a summary judgment motion. Summary judgment is proper only when, viewing the facts in the light most favorable to the party against whom judgment is sought, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Rosario v. College of Micronesia-FSM, [2003] FMSC 10; 11 FSM Intrm. 355, 358 (App. 2003); Bualuay v. Rano, [2002] FMSC 30; 11 FSM Intrm. 139, 149 (App. 2002).

The court's rulings that the parties had submitted the matter to it for its decision would appear to be a factual finding. Thus the clearly erroneous standard would apply to whether Kun had submitted the matter to the court without a trial, that is, whether Kun had stipulated to the ledger sheet's accuracy. A trial court finding of fact is clearly erroneous when we, after reviewing the entire body of the evidence and construing the evidence in the light most favorable to the appellee, are left with the definite and firm conviction that a mistake has been committed. Pohnpei v. AHPW, Inc., [2006] FMSC 1; 14 FSM Intrm. 1, 24 (App. 2006). Due process issues are generally questions of law. Questions of law we review de novo. Sigrah v. Kosrae, [2004] FMSC 10; 12 FSM Intrm. 320, 324 (App. 2004); Kosrae v. Skilling, [2003] FMSC 2; 11 FSM Intrm. 311, 315 (App. 2003).

V. Analysis

Kun and Georgeston contend that they never waived their rights to trial and that the judge's decisions without trial violated their rights to due process of law. They further contend that the decisions were clearly erroneous because the evidence they were based on  the ledger sheets  was never properly admitted into evidence and therefore there was insufficient evidence upon which the trial judge could have made the rulings that he did. They also contend that the court abused its discretion by not holding trials.

There is no constitutional due process right to a trial if the matter may properly be resolved by summary judgment. Trial is a process used to resolve disputed issues of material fact. A court must deny a summary judgment motion unless, viewing the facts in the light most favorable to the party against whom judgment is sought, it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Taulung v. Kosrae, [1998] FMSC 9; 8 FSM Intrm. 270, 272 (App. 1998). Thus a decision without trial would violate Kun's or Georgeston's due process rights only if there was a genuine issue of material fact that would preclude summary judgment because that issue would need to be tried. It is also an abuse of the trial court's discretion to grant summary judgment if a genuine issue of material fact is present.

We turn first to what took place at the December 11, 2006 hearing. Kun contends as a fact that he did not waive his right to trial. Kun and Georgeston clearly stated that they were not waiving any rights. What is unclear is what they might have been agreeing to when they left it up to the court to make its decision. Kun's pretrial brief conceded that a ledger was admissible, if one was available, Def.'s Pretrial Br. at 3, Civ. No. 37-06 (Dec. 8, 2006), and further listed as an undisputed fact: "Defendant had an open account with the plaintiff; defendant made several payments against the account through allotments; defendant does not have a copy of plaintiff business ledger that would enable him to know and understand how much he owes and what constitutes such amount," id. at 4. In his pretrial brief, Georgeston did offer, to stipulate to the ledger sheet's admissibility. Def.'s Pretrial Br. at 4, Civ. No. 35-06 (Dec. 8, 2006). But Georgeston also questioned the accuracy of an $800.59 charge, dated "4/13/99-7/5/99," for unspecified goods or services and an undated charge of $165, described as "VCR" listed after his last payment on July 13, 2001. Id. at 2, 5.

The ledger sheets, from which the trial court derived each judgment amount, were never authenticated by affidavit or by testimony and neither was its accuracy vouched for by affidavit, or testimony, or other evidence. While Kun and Georgeston may have agreed at the December 11, 2006 hearing to the ledger sheets' admissibility (i.e., authenticity) when they left it up to the court to make its decision without waiving any of their rights, we seriously doubt that they could have been agreeing to the ledger sheets' accuracy. In his pretrial brief filed only three days earlier, Kun did offer to stipulate to Webster's business ledger's admissibility, if it were available. Def.'s Pretrial Br. at 3, Civ. No. 37-06 (Dec. 8, 2006). But Kun also stated that if the business ledger were available, it would enable him to know what Webster was claiming he owed and what constituted that amount. Id. at 4. This would be difficult in Kun's case since the last ledger sheet contained only a few payments by Kun against a balance brought forward without any indication of what transactions underlay the balance brought forward. Georgeston's position is even stronger. In his case, while he did offer, in his pretrial brief, to stipulate to the ledger sheet's admissibility, Def.'s Pretrial Br. at 4, Civ. No. 35-06 (Dec. 8, 2006), he also specifically questioned the accuracy of an unspecified $800.59 charge and of an undated charge of $165, id. at 2, 5.

At a minimum, Kun, by refusing on December 11, 2006, to waive any of his rights, could not have stipulated to his last ledger sheet's accuracy, especially since he apparently had not seen it before December 8, 2006, and since the ledger sheet only listed nine payments or credits from June 1, 1998 to October 4, 2002, and did not list any of the charges against his account. Similarly Georgeston could not have stipulated to the last ledger sheet's accuracy, especially since he had specifically disputed two particular entries on that page he found suspicious. If they had been stipulating to the ledgers' accuracy, that would have been a waiver of any rights they had left since no other issues of fact or right to trial would have remained. We can only conclude that Kun and Georgeston, when they left it up to the court "without waiving any rights" did not intend to, and did not, waive their rights to trial on disputed material facts, that is, on the amounts owed. The trial court's findings that the cases had been submitted to it for its decision, that is, that the facts including the ledger sheets' accuracy had been stipulated to, is thus clearly erroneous.

These would not be such close cases if defense counsel had expressed himself more clearly on just what it was he was not waiving. We believe much difficulty may have been averted if counsel had simply stated that Kun and Georgeston were not waiving trial on the material issues of fact, in particular, on the amounts owed. Furthermore, the trial judge could, and probably should, have inquired into just what rights it was that Kun and Georgeston were not waiving. In the future, counsel would be well-advised to state clearly that a trial is needed on material factual issues, and leave it at that.

Since Kun and Georgeston did not stipulate to their ledger sheets' accuracy, that would have left one genuine issue of material fact before the court for trial because an open account is not self-proving. An open account must be supported by an evidentiary foundation to demonstrate the account's accuracy. FSM Telecomm. Corp. v. Worswick, [1999] FMSC 22; 9 FSM Intrm. 6, 15 (Yap 1999). Here, it was not. No affidavits or testimony supported its accuracy. Kun and Georgeston never had the opportunity to cross-examine Webster's witnesses, who, having been subpoenaed, would presumably have testified about the accounts' accuracy. They were not able to present their own witnesses or other evidence about the accounts' inaccuracy.

Since, viewing the facts in the light most favorable to the party against whom judgment was sought, a genuine issue of material fact remained, it was improper for the trial court to grant summary judgment, that is, to grant judgment without a trial on the remaining factual issue. Once the trial judge had taken these cases under submission and reached this point, he ought to have determined that in each case the ledger sheet amounts' accuracy was a genuine issue of material fact, and, after ruling on the legal issues[2] before him, set this factual issue for trial in each case.

Liability was conceded when Kun and Georgeston listed as an undisputed fact in their pretrial briefs that they each had an "open/mutual account" with Webster. The extent of those liabilities were not. We therefore vacate the judgments and remand the matters to the Kosrae State Court for trials on damages only, that is, only on the issue of each business ledger's accuracy. The previous ledger pages constituting the rest of the open accounts may be needed to support Webster's cases for any items whose accuracy Kun or Georgeston have not stipulated to because "[w]hen a writing or recorded statement or part thereof is introduced by a party, an adverse party may require him at that time to introduce any other part or any other writing or recorded statement which ought in fairness to be considered contemporaneously with it." Kos. Evid. R. 106.

VI. Conclusion

Accordingly, the Kosrae State Court judgments are vacated and the matters remanded for the State Court to try the issue of the amount owed by Kun I. Albert to Webster George on Kun Albert's open account with Webster George and for the State Court to try the issue of the amount owed by Georgeston George to Webster George on Georgeston George's open account with Webster George.

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^[1]Kun’s and Georgeston’s answers each denied that either had a charge account at Webster’s store and that either was Webster’s employee. Each answer also denied all of the complaint’s factual allegations. The answers were thus in the nature of general denials. General denials, while disfavored, are permissible when proper, but are subject to the obligations of honesty set forth in Rule 11. See Kos. Civ. R. 8(b); cf. Marar v. Chuuk, [2000] FMSC 27; 9 FSM Intrm. 313, 314 n.1 (Chk. 2000). Counsel are cautioned that pleadings that deny facts known by the pleader to be true subject counsel to possible sanctions under Kosrae Civil Procedure Rule 11.
^[2]None of the rulings on these legal issues, the existence of contracts and no liability for interest or attorney’s fees, were appealed. Thus, on remand, they remain the law of each case.