Mori v Hasiguchi [2009] FMSC 20; 16 FSM Intrm. 382 (Chk. 2009) (25 March 2009)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2008-1111

EMMANUEL "MANNY" MORI,
Plaintiff,

vs.

MYRON HASIGUCHI, ELSA LAGRADILLA, and TRUK TRANSPORTATION CO., INC.,
Defendants.



TRUK TRANSPORTATION CO., INC.,
Counter-Claimant,

vs.

EMMANUEL "MANNY" MORI,
Counter-Defendant,



TRUK TRANSPORTATION CO., INC.,
Third-Party Plaintiff,

vs.

BARNEY OLTER,
Third-Party Defendant.

________________________

ORDER GRANTING STAY

Ready E. Johnny
Associate Justice

Decided: March 25, 2009

APPEARANCES:

For the Plaintiff: Sabino Asor, Esq.
P.O. Box 95
Weno, Chuuk FM 96942

For the Defendants: Stephen V. Finnen, Esq.
P.O. Box 1450
Kolonia, Pohnpei FM 96941

For the Third-Party Defendant: Tino Donre, Esq.
Micronesian Legal Services Corporation
P.O. Box 129
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure  Venue; Courts
The general rule is that the lawsuit filed first has priority over any other case involving the same parties and issues, even if filed later before a court that could also take jurisdiction. The rule, however, is not absolute, but is a principle of sound judicial administration that the first-filed suit should have priority absent special circumstances. Mori v. Hasiguchi, [2009] FMSC 20; 16 FSM Intrm. 382, 384 (Chk. 2009).

Civil Procedure  Venue; Courts
The court with jurisdiction over the first-filed case may exercise its discretion to stay proceedings, under the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. The first-filed rule is neither absolute nor mechanically applied but advances the inherently fair concept that the party that commenced the first suit generally ought to be the party to obtain its choice of venue. Mori v. Hasiguchi, [2009] FMSC 20; 16 FSM Intrm. 382, 384 (Chk. 2009).

Mandamus and Prohibition
A writ of procedendo is a high prerogative writ of extraordinary nature that is an order from a superior court to an inferior court to proceed to judgment without trying to tell the inferior court what its judgment should be. It was the earliest remedy for refusal or neglect of justice by the courts, and, in many jurisdictions, the writ has become obsolete, and a writ of mandamus may be sought instead. Mori v. Hasiguchi, [2009] FMSC 20; 16 FSM Intrm. 382, 385 n.1 (Chk. 2009).

Civil Procedure  Venue; Courts
When this suit and a later-filed suit were both filed in the FSM Supreme Court trial division but in different venues, the first in Chuuk and the second in Pohnpei; when the defendants are all present in Chuuk but have adopted a position analogous to an interpleader in that they are subject to competing claims for the same property and will comply with any court determination about its ownership; when the central issue to be resolved before any final judicial order is whether a bill of sale is enforceable or should be rescinded or reformed; and when this central issue is directly joined in the Pohnpei suit where the stock transfer and the events surrounding it took place, where the transferor and transferee both reside, and where the evidence and witnesses are present, this, at least to resolve this crucial central issue, would (based on judicial economy and economy of time and effort for counsel and for the litigants) favor a Pohnpei venue if it can be resolved there without undue delay. Since, even though complete relief for all the parties in this case cannot be granted in the Pohnpei suit, the Pohnpei suit should expeditiously resolve this suit's central issue without imposing hardship on the parties and leave this court to dispose of the peripheral issues, adjudication of this first-filed action will be stayed pending the resolution of the later-filed FSM Supreme Court suit in Pohnpei. Mori v. Hasiguchi, [2009] FMSC 20; 16 FSM Intrm. 382, 385-86 (Chk. 2009).

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COURT'S OPINION

READY E. JOHNNY, Associate Justice:

This comes before the court on the third-party defendant's Motion to Stay Prosecution of the Case, in which the defendants join. The motion is granted. The court's reasons follow.

I.

The plaintiff, Emmanuel "Manny" Mori, filed this action seeking a judgment ordering the defendants to transfer to his name 2,160 shares of Truk Transportation Co., Inc. ("Transco") stock that he had allegedly purchased from Barney Olter but which Transco and its corporate officers and employees refused to transfer to him on the corporation's books. The defendants then filed a third-party complaint against Olter seeking a declaration whether Olter or Mori was the legal owner of the 2,160 shares.

Olter then filed suit in the FSM Supreme Court in Pohnpei seeking rescission or reformation of the stock sale to Mori and alleging fraud and deceit. Olter v. Mori, Civ. No. 2009-011 (Jan. 26, 2009) ("the Pohnpei suit"). Mori, the next day, filed a motion in this case to amend his complaint to add two Pohnpei residents (neither of them Olter) as defendants and a claim that those two and the other defendants had conspired to interfere with the stock transfer to him. On February 25, 2009, the court granted the motion to amend the complaint and gave Mori until March 17, 2009 to file and serve the amended complaint. The amended complaint was not filed. The original complaint remains Mori's operative pleading.

II.

The basis for the motion to stay is that the third-party defendant, Barney Olter, after he was joined as a third-party defendant and served the third-party complaint, filed suit in the FSM Supreme Court in Pohnpei against Mori (Olter and Mori both being resident in Pohnpei) and that since both parties are resident in Pohnpei and the stock sale took place there, the Pohnpei suit would efficiently resolve the matter leaving only this court to implement the FSM Pohnpei court's ruling by ordering the Transco corporate records to reflect the ownership as determined in Pohnpei. Mori opposes any stay on the ground that it would not enhance judicial economy; that the first-filed suit in Chuuk should have preclusive effect; and that the Pohnpei suit will only cause delay.

III.

The general rule is that the lawsuit filed first has priority over "any other case involving the same parties and issues, even if filed later before a court that could also take jurisdiction." Election Comm'r v. Petewon, [1994] FMCSC 2; 6 FSM Intrm. 491, 498 (Chk. S. Ct. App. 1994). The rule, however, is not absolute, but is a principle of sound judicial administration that the first-filed suit should have priority absent special circumstances. Kahn v. General Motors Corp., [1989] USCAFED 648; 889 F.2d 1078, 1081 (Fed. Cir. 1989). "The court with jurisdiction over the first-filed case may exercise its discretion to stay proceedings, under 'the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.'" Rineer v. United States, 79 Fed. Cl. 765, 767 (2007) (quoting Landis v. North Am. Co., [1936] USSC 140; 299 U.S. 248, 254[1936] USSC 140; , 57 S. Ct. 163, 166[1936] USSC 140; , 81 L. Ed. 153, 158 (1936)). The first-filed rule is neither absolute nor mechanically applied but advances the inherently fair concept that the party that commenced the first suit generally ought to be the party to obtain its choice of venue. Id.

In State ex rel. Smith v. Friedman, 257 N.E.2d 386, 388 (Ohio 1970), the Ohio Supreme Court denied a petition for a writ of procedendo[1] that sought to compel a trial court that had stayed a partition action pending the outcome of a subsequently-filed divorce proceeding to lift the stay and proceed to judgment without awaiting the outcome of the later-filed case. That court noted that "whether a stay of proceedings shall be granted until the determination of another case ordinarily lies within the sound discretion of the court." Id. at 387. The writ was denied and the stay upheld because complete relief could be accorded the parties in the later-filed case while the earlier case would grant only partial relief that might be made ineffective by relief granted in the later case.

The Kahn court recognized several situations where the first suit should be stayed or restrained in favor of a later suit. 889 F.2d at 1081. These included where it would prevent a wrong or injustice; where forum shopping alone motivated the choice of venue for the first suit; and where what it called a customer action suit was the first-filed suit. Id. The present suit is roughly analogous to a "customer action" suit. In a "customer action" suit, the plaintiff is suing someone who is merely the retailer of the accused goods but the later suit involves the manufacturer of the goods accused of being faulty. Id. In the present suit, Mori is suing Transco and its officers and employees to be recognized as the current owner of 2,160 shares acquired from Olter. Transco is merely the issuer of the shares and the record-keeper of who owns them. It does not claim to own them. But Olter disputes whether Mori should be recognized as the owner or receive the benefits of ownership. The crucial dispute is between Olter and Mori.

This suit and the later-filed Pohnpei suit were both filed in the FSM Supreme Court trial division but in different venues. Mori choose the Chuuk venue because that is where the defendants he named were located since he did not name Olter, the stock's transferor, as a party. Olter choose the Pohnpei venue where the transfer to Mori took place, where the events surrounding the transfer took place, and where the evidence and witnesses to the transfer are present.

The defendants in this action, Transco, Hasiguchy, and Lagradilla, are all present in Chuuk but have adopted a position analogous to an interpleader  they are subject to competing claims for the same property, the benefits that derive from the ownership of the 2,160 Transco shares, and do not want to be potentially subject to inconsistent judgments and would prefer that the competing claimants contest that dispute between themselves without the defendants' involvement. See Bank of the FSM v. Aisek, [2005] FMSC 20; 13 FSM Intrm. 162, 164 (Chk. 2005). They assert that they will comply with any court determination about the ownership of the 2,160 shares and conform Transco's corporate ownership records and benefits accordingly.

The central issue to be resolved before any final judicial order is whether the bill of sale of stock from Olter to Mori is enforceable or should be rescinded or reformed. This central issue is directly joined in the Pohnpei suit between Olter and Mori. All of the evidence and witnesses regarding the sale are present on Pohnpei (as is the defendants' counsel, although as far as known, none of the defendants herein have been made parties to the Pohnpei suit). This would favor a Pohnpei venue,[2] at least to resolve this crucial central issue. Judicial economy and economy of time and effort for counsel and for the litigants would recommend that that issue be resolved in that venue if it can be done without undue delay. No reason is apparent why the Pohnpei suit cannot move forward with relative dispatch and be resolved in the near future leaving this court to only resolve remaining relatively minor issues surrounding and dependent upon the central issue and involving parties in this case that are not parties to the Pohnpei suit. Thus, although complete relief for all the parties in this case cannot be granted in the Pohnpei suit, the Pohnpei suit should expeditiously resolve this suit's central issue without imposing hardship on the parties and leave this court to dispose of the peripheral issues.

IV.

Accordingly, adjudication of this first-filed action is hereby stayed pending the resolution of subsequently-filed Civil Action No. 2009-011 by the FSM Supreme Court in Pohnpei. The parties may submit, and defendants Elsa Lagradilla and Truk Transportation Co., Inc. shall submit, no later than April 15, 2009, their views on whether this court should order that any dividends earned by the 2,160 Transco shares at issue in this case and that become payable while litigation is pending, should be paid into the court's registry and placed in an interest-bearing account to abide the outcome of this and the Pohnpei litigation.

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^[1]A writ of procedendo is a high prerogative writ of extraordinary nature that is an order from a superior court to an inferior court to proceed to judgment without trying to tell the inferior court what its judgment should be. 62B AM. JUR. 2D Procedendo § 1, at 728 (1990). It we eahe earliest remedy for refusal or neglect of justice by the courts. BLACK’S LAW DICTIONARY 1083 (5th ed. 1979) (citinIn re Press Printers & Publishers, 12 F.2d 660, 664 (3d Cir. 1926). In many jurisdurisdictions, the writ has become obsolete, see 62B AM. JUR. 2D Procedendo § 2 (19and a writ of mandamusdamus may be sought instead.
^[2]When the court inquired of the parties whether venue for this case ought to be transferred topei, no party responded favd favorably.