Federated States of Micronesia v Fu Yuan Yu 096 [2008] FMSC 41; 16 FSM Intrm. 1 (Pon. 2008) (16 June 2008)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2008-011

FEDERATED STATES OF MICRONESIA,
Plaintiff,

vs.

FU YUAN YU 096, a fishing vessel,
LEN RUIWEN,
captain of the fishing vessel, and
FU ZHOU HONG DONG MARINE INDUSTRY CO., LTD.,
Defendants.

ORDER AND MEMORANDUM

Dennis K. Yamase
Associate Justice

Decided: June 16, 2008

APPEARANCES:

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

For the Defendants: Andrea Hillyer, Esq.
P.O. Drawer D
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure  Dismissal
On a motion to dismiss brought under FSM Civil Rule 12(b), all of the allegation of the complaint are taken as true, and viewed in the light most favorable to the claimant. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 2 (Pon. 2008).

Jurisdiction  Personal
Exploitation of any economic resources in the FSM, is one of the grounds for personal jurisdiction in the FSM's long-arm statute. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 3 (Pon. 2008).

Jurisdiction  Personal
A corporation submits itself to the personal jurisdiction of the FSM Supreme Court if by an agent it engages in the exploitation of economic resources within the FSM exclusive economic zone. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 3 (Pon. 2008).

Marine Resources
A vessel owner is included within the definition of operator of a vessel and an operator is prohibited from fishing in the FSM's exclusive economic zone without a permit and is also mandated to keep fishing gear stowed except in an area where the vessel is permitted to fish. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 3 (Pon. 2008).

Jurisdiction  Personal; Marine Resources; Statutes  Construction
While there is no statutory definition of exploitation of an economic resource, these words' plain meaning leads to the conclusion that it includes fishing because the FSM's fisheries are undoubtedly a natural resource, marine in character, that are subject to economic exploitation as a result of the market demand for fish. It follows that fishing in the FSM EEZ constitutes the exploitation of a natural resource that subjects a party to the personal jurisdiction of the FSM Supreme Court. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 3 (Pon. 2008).

Civil Procedure  Dismissal; Civil Procedure  Service; Jurisdiction  Personal
When a defendant has been improperly served, the court lacks jurisdiction over the defendant and the case will be dismissed without prejudice, but, since a dismissal under Rule 12(b)(5) is without prejudice, a court will often quash service instead of dismissing the case so that only service need be repeated. FSM v. Fu Yuan Yu 096[2008] FMSC 41; , 16 FSM Intrm. 1, 3 (Pon. 2008).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

On April 2, 2008, the defendant Fu Zhou Hong Dong Marine Industry Co., Ltd., ("Fu Zhou") filed its motion to dismiss the complaint in this matter. Also on that date, the remaining defendants filed their answer and counterclaim.

Fu Zhou filed its motion pursuant FSM Civil Rule 12(b), and specifically subparagraphs (2), (4), and (5), which provide respectively for the dismissal of the complaint where there is lack of personal jurisdiction over a defendant; where there is insufficient process; and where there is insufficient service of process. On a motion to dismiss brought under FSM Civil Rule 12(b), all of the allegation of the complaint are taken as true, and viewed in the light most favorable to the claimant. John v. Chuuk Public Utility Corp., [2007] FMSC 29; 15 FSM Intrm. 169, 171 (Chk. 2007).

The complaint alleges that Fu Zhou is the owner and operator of the defendant vessel Fu Yuan Yu 096. It further alleges that Fu Zhou is jointly and severally liable along with the other defendants for a violation of 24 F.S.M.C. 907, fishing without a valid fishing permit, and 24 F.S.M.C. 910, failure to properly stow fishing gear. The complaint also seeks the seizure and forfeiture of the vessel and the vessel's catch pursuant 24 F.S.M.C. 801. In seeking to dismiss the complaint as to Fu Zhou on the basis of lack of personal jurisdiction, Fu Zhou asserts that Fu Zhou is a company resident in the People's Republic of China; that Fu Zhou has no license agreement or foreign fishing agreement with the FSM; and that Fu Zhou has no licensed registered agent in the FSM. It urges that it does not reside in the FSM; that it does not engage in business in the FSM; and has no contacts in the FSM. Fu Zhou also asserts that the complaint does not allege that it is engaged in the exploitation of any economic resources in the FSM, which is one of the grounds for personal jurisdiction in the FSM's long-arm statute, 4 F.S.M.C. 204. It effectively contends that exploitation of economic resources is the only basis upon which this court has personal jurisdiction over it. With regard to the claims of lack of process and insufficient service of process, Fu Zhou urges that only a copy of the complaint without the summons was served, and that only its counsel, who is not its registered agent, was served.

In response, the FSM urges that this court has personal jurisdiction because the complaint alleges that Fu Zhou was engaged in illegal fishing in the FSM's Exclusive Economic Zone. According to the FSM, fishing constitutes exploitation of an economic resource such that Fu Zhou has subjected itself to the personal jurisdiction of this court under 4 F.S.M.C. 204(1)(d). With regard to the service question, the FSM alleges that it was "led to believe" that counsel for the other named defendants was also Fu Zhou's counsel as well. The FSM does not address Fu Zhou's contention that its counsel was served only with a copy of the complaint, and not the summons. FSM Civil Rule 4(d) requires that the summons and complaint be served together.

Section 204(1)(d) of Title 4 of the F.S.M. Code provides that a corporation submits itself to the personal jurisdiction of this court if by an agent it engages in "[t]he exploitation of economic resources within the exclusive economic zone of the Federated States of Micronesia." The complaint alleges that Fu Zhou was the owner of the defendant vessel, and as such was also an operator of the vessel, since 24 F.S.M.C. 102(47) includes an owner within its definition of "operator." Both of the statutory provisions under which the FSM pursues claims against Fu Zhou include "operator" in their operative language. Section 907(1) prohibits an operator from fishing in the FSM's exclusive economic zone without a permit, while 24 F.S.M.C. 910(1) mandates that an operator keep fishing gear stowed except in an area where a vessel is permitted to fish. Thus the complaint alleges that Fu Zhou, as an operator, was at relevant times engaged in fishing.

Fu Zhou's motion to dismiss rests on the assertion that the complaint does not allege that it was engaged in exploitation of an economic resource. However, as just noted, the complaint does allege that Fu Zhou was engaged in fishing. While no statutory definition of exploitation of an economic resource appears evident, the plain meaning of these words leads to the conclusion that it does include fishing. "Exploitation" is defined as "utilization or working of a natural resource." Webster's New Collegiate Dictionary 400 (1980). The FSM's fisheries are undoubtedly a natural resource, marine in character, that are subject to economic exploitation as a result of the market demand for fish. It follows that fishing constitutes the exploitation of a natural resource that subjects Fu Zhou to the personal jurisdiction of this court pursuant to 4 F.S.M.C. 204(1)(d). Fu Zhou's motion to dismiss for lack of personal jurisdiction under FSM Civil Rule 12(b)(2) is denied.

Fu Zhou also moves to dismiss on the basis that service on Fu Zhou's counsel was not adequate service on Fu Zhou itself. Further, Fu Zhou alleges that the service that did occur, which was upon Fu Zhou's counsel, was insufficient, because counsel was served only with a copy of the complaint, and not a summons. In response, the FSM asserts that Fu Zhou's counsel was also its agent for service of process for the reason that the FSM was "led to believe that the current counsel for the Defendant in this matter was also counsel for Defendant Fu Zhou Cong Marine Industry Co. Ltd." Resp. to Mot. to Dismiss Compl. at 2. This assertion does not offer an adequate explanation why, without more, Fu Zhou's counsel should be deemed its agent for service of process. Thus service on Fu Zhou was insufficient under FSM Civil Rule 12(b)(5). Where a defendant has been improperly served, the court lacks jurisdiction over the defendant and the case will be dismissed without prejudice. Berman v. Santos, [1994] FMSC 31; 6 FSM Intrm. 532, 534 (Pon. 1994). However, since a dismissal under Rule 12(b)(5) is without prejudice, a court will often quash service instead of dismissing the case so that only service need be repeated. Reg v. Falan, [2003] FMSC 28; 11 FSM Intrm. 393, 399 (Yap 1999). That approach is appropriate in the instant case. Accordingly, service on Fu Zhou is quashed.

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