People of Tomil ex rel. Mar v MC Jumbo Rock Carrier III [2009] FMSC 43; 16 FSM Intrm. 610 (Yap 2009) (10 November 2009)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2009-3002

THE PEOPLE OF THE MUNICIPALITY OF TOMIL, YAP, by and through CHIEF STEVEN MAR, CHIEF ALEX GILTAMNGIN, and CHIEF ROBERT FITHING,
Plaintiffs,

vs.

M/C JUMBO ROCK CARRIER III and M/T PAGBILAO I,
in rem, their engines, masts, bowsprits, boats, anchors, chains, cables, rigging, apparel, furniture and all necessaries thereunto pertaining;

and

IDHI PORTS & SHIPPING, INC.,
In Personam Defendant.

_______________

ORDER PARTIALLY DISMISSING COUNTERCLAIMS

Dennis K. Yamase
Associate Justice

Decided: November 10, 2009

APPEARANCES:

For the Plaintiffs: Joseph C. Razzano, Esq. (pro hac vice)
Teker Torres & Teker, P.C.
Suite 2A, 130 Aspinall Avenue
Hagatna, Guam 96910

For the Defendants: Manuel N. Camacho, Esq. (pro hac vice)
Camacho & Associates
No. 7 Interior I Capitol Hills Drive
Old Balara, Dilman, Quezon City
1109 Philippines

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HEADNOTES

Civil Procedure  Pleadings
A compulsory counterclaim is any claim which at the time of serving the pleading the pleader has against any opposing party if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Pleadings
A claim against someone who is not an opposing party cannot be a counterclaim. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Dismissal; Civil Procedure  Pleadings
A "counterclaim" against non-parties will be dismissed since a third-party complaint, not a counterclaim, is the proper vehicle for defendants to raise claims against non-parties. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Dismissal; Civil Procedure  Pleadings
The legal standard for the dismissal of a counterclaim is the same as that for the dismissal of a complaint. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Dismissal; Civil Procedure  Pleadings
A counterclaim may be dismissed as a matter of law for two reasons: 1) lack of a cognizable legal theory or 2) insufficient facts under a cognizable legal theory. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Dismissal; Civil Procedure  Pleadings
An ad damnum clause that is properly considered as a part of the counterclaimants' prayer or demand for the relief sought under Rule 8(a)(3), and not as a part of the counterclaim's factual basis under Rule 8(a)(2), may be disregarded when testing the sufficiency of a counterclaim since the court will only award relief to which the party in whose favor it is rendered is entitled even if the party has not demanded such relief in the party's pleadings. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

Civil Procedure  Dismissal; Civil Procedure  Pleadings
A counterclaim cannot be dismissed simply because the counterclaimant has failed to state precisely all elements that give rise to the alleged legal basis for recovery; otherwise, a party's counterclaim could be lost by its attorney's failure to draft the counterclaim properly despite the counterclaim's potential validity and it would also effectively eliminate the "notice" pleading theory embedded in the Civil Procedure Rules. People of Tomil ex rel. Mar v. M/C Jumbo Rock Carrier III, 16 FSM Intrm. ---, --- (Yap 2009).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

On October 14, 2009, the plaintiffs filed their Motion to Dismiss Counterclaim. The defendants filed an opposition and the plaintiffs filed a reply in response. The motion is granted in part. The reasons follow.

I.

The defendant set out their counterclaim in two paragraphs, which read:

21. For the filing of this baseless, malicious, and grossly-exaggerated claim, plaintiff should be made to pay the defendants' damages in the amount of USD 10,000 for every day that the vessel remains seized.

22. For the damage to the corals, liability squarely lies on the harbor pilot Tafleiching and ultimately on the State of Yap as the employer of Tafleiching, with no liability whatsoever on the part of the defendants. In addition, defendants barge suffered damage estimated in the sum of US$50,000.00.

Defs.' Answer with Affirmative Defenses & Countercl. 21, 22 (Aug. 12, 2009).

II.

The plaintiffs contend that, since the court's September 23, 2009 order granted the defendants leave to file a third-paomplaint against the Department of Public Works and Transpoansportation of the State of Yap and against harbor pilot Dominic Tafleiching, paragraph 22 must be dismissed. The defendants insist that it must remain since it is a compulsory counterclaim.

A compulsory counterclaim is "any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party's claim . . . ." FSM Civ. R. 13(a). Yap and harbor pilot Tafleiching are not opposing parties. Any claim against them cannot be a counterclaim.

Lee v. Manufacturers & Traders Trust Co., 219 F.R.D. 265 (W.D.N.Y. 2004), a case cited by the plaintiffs, is instructive. In Lee, the defendant asserted counterclaims against persons who were not parties, at least in the capacity the counterclaims were asserted  the defendant counterclaimed against the trustees of a retirement plan in their personal capacities while the trustees had sued only in their official capacities as the retirement plan's representatives. The Lee court noted that "the pleaded counterclaims are asserted against the wrong party." Id. at 266. It therefore dismissed the counterclaims but gave the defendant leave to file a third-party complaint. Id.

In this case, paragraph 22 purports to assert a "counterclaim" against harbor pilot Tafleiching and the State of Yap. The court has already granted the defendants leave to file a third-party complaint against Dominic Tafleiching and the State of Yap. The defendants have not yet supplied the court clerk with summonses for the clerk to issue so that the defendants may then have those summonses and their third-party complaint served, pursuant to Civil Procedure Rule 4, on the State of Yap and on Dominic Tafleiching as third-party defendants. The court would expect that the defendants will take these steps in the immediate future.

Further, even if the defendants fail to effect service and thus fail to bring the third-party defendants before the court, the court concludes that a third-party complaint, not a counterclaim, is the only through which the defendants can seek the relief asserted in paragraph 22. Accordingly, the counterclaim in paragraph 22 is dismissed since a third-party complaint, not a counterclaim, is the proper vehicle for the defendants to raise claims against the non-parties, Dominic Tafleiching and the State of Yap.

III.

The paragraph 21 claim is asserted against the opposing parties. It may therefore be raised as a counterclaim. The legal standard for the dismissal of a counterclaim is the same as that for the dismissal of a complaint.

A counterclaim "may be dismissed as a matter of law for two reasons: (1) lack of a cognizable legal theory or (2) insufficient facts under a cognizable legal theory." Fuchs v. Tokyu Corp., 181 F. Supp. 2d 1131, 1132 (D. Haw. 2001). Although inartfully pled, paragraph 21 appears to plead an abuse of process or a wrongful arrest or similar legal theory.

The plaintiffs contend that paragraph 21 fails to comply with Civil Procedure Rule 8(a)(2)'s requirement that the pleader provide "a short and plain statement of the claim showing that the pleader is entitled to relief." The plaintiffs contend that paragraph 21 fails to set forth sufficient factual matter why the defendants would be entitled to $10,000 per day damages.

The $10,000 per day clause is properly considered, not as part of the counterclaim's factual basis under Rule 8(a)(2), but as an ad damnum clause that is a part of the counterclaimants' prayer or demand for the relief sought under Rule 8(a)(3). As such, the amount sought may be disregarded since the court will only award "relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings." FSM Civ. R. 54(c); see also Nakamura v. Mori, [2009] FMSC 6; 16 FSM Intrm. 262, 267 & n.2 (Chk. 2009) (an ad damnum clause asserting a certain figure for damages may be disregarded in testing the sufficiency of a pleading).

The plaintiffs also contend that the defendants' anemic allegations in paragraph 21 could not raise a claim for entitlement for relief. But "a counterclaim cannot be dismissed simply because the [counterclaimant] has failed to state precisely all elements that give rise to the alleged legal basis for recovery." General Acquisition, Inc. v. Gencorp Inc., 766 F. Supp. 1460, 1465 (S.D. Ohio 1990); see also McDonnell Douglas Corp. v. SCI Technology, Inc., 933 F. Supp. 822, 824 (E.D. Mo. 1996). Otherwise, a party's counterclaim could be lost by its attorney's failure to draft the counterclaim properly despite the counterclaim's potential validity and it would also effectively eliminate the "notice" pleading theory embedded in the Civil Procedure Rules. General Acquisition, Inc., 766 F. Supp. at 1465.

Thus, although the defendants' factual allegations are sparse, the paragraph 21 counterclaim, when read together with the rest of the answer, puts the plaintiffs on notice that the defendants claim damages for the plaintiffs' alleged "baseless, malicious, and grossly-exaggerated claim" by which the plaintiffs continued or prolonged the arrest of the defendant vessels. Therefore, although this is a close case, the paragraph 21 counterclaim will survive a Rule 12(b)(6) dismissal motion.

Accordingly, the plaintiffs' motion to dismiss the defendants' counterclaims is granted as to the paragraph 22 "counterclaim" and denied as to the paragraph 21 counterclaim. The defendants' added request to approve the proposed letter of undertaking and to release the arrested vessels is considered in a separate order based on other filings.

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