Stephen v State of Chuuk [2011] FMSC 42; 18 FSM Intrm. 22 (Chk. 2011) (23 September 2011)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2005-1007

FOUSTINO STEPHEN,
Plaintiff,

vs.

STATE OF CHUUK,
Defendant.
___________________________________

ORDER IN AID OF JUDGMENT

Dennis K. Yamase
Associate Justice

Hearings: June 28, September 7, 2011
Decided: September 23, 2011

APPEARANCES:

For the Plaintiff: Stephen V. Finnen, Esq.

P.O. Box 1450

Kolonia, Pohnpei FM 96941

For the Defendant: Joses R. Gallen, Esq.

Attorney General

Office of the Chuuk Attorney General

P.O. Box 1050

Weno, Chuuk FM 96942

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HEADNOTES

Contracts - Damages; Judgments
Damages are contractual in nature when they arose either from the various lease agreements between the plaintiff and the state or from the settlement agreement between them even though the settlement agreement included a claim for a state court partial (and thus probably not final and enforceable) judgment for some of the unpaid periods of the leases because this court used the parties' memorandum of understanding for its determination of damages. Thus the damages judgment in this case was not based on a state court "judgment" but on the parties' contractual stipulation about the amount the state owed the plaintiff as of March 9, 2006. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25 & n.1 (Chk. 2011).

Civil Rights; Constitutional Law - Due Process; Contracts - Breach
As a general proposition, a governmental entity's breach of a contract, without more, does not constitute a civil rights or due process violation. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25 (Chk. 2011).

Constitutional Law - Taking of Property; Torts - Governmental Liability; Torts - Trespass
When a tort claim - trespass - that the state occupied and continues to occupy the plaintiff's property to the exclusion of all others rises to the level of a constitutional claim and a civil rights violation, it is a taking of the plaintiff's property without just compensation. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25 (Chk. 2011).

Jurisdiction - Pendent
Arising from the same nucleus of operative fact is a requirement for the court's pendent jurisdiction. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25 n.3 (Chk. 2011).

Civil Procedure - Joinder and Severance
A plaintiff may join in one action all the claims it has against the party being sued. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25 n.3 (Chk. 2011).

Debtors' and Creditors' Rights - Orders in Aid of Judgment
When Chuuk's deficiencies in addressing its judgment debt stem not so much from bad faith as it does from general fiscal ineptitude and from the lack of a sense of urgency or of a judgment's importance, the court will not doubt that Chuuk has made good faith efforts to address its debt problems and to reduce its overall debt. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 25-26 (Chk. 2011).

Debtors' and Creditors' Rights - Orders in Aid of Judgment
The court will not make six and a half years after a civil rights judgment the magic date after which the judgment-holder can begin to seek the judgment's collection through extraordinary measures. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 26 (Chk. 2011).

Debtors' and Creditors' Rights - Orders in Aid of Judgment
When Chuuk has a limited ability to make some payment on the judgment but does not have the ability to pay the judgment in full at one time; when, if the court were to garnish the funds held in Chuuk's current account with the FSM for the full amount, it is unlikely that the garnished funds would satisfy the judgment but it is certain that such a garnishment would seriously hinder Chuuk's ability to function since the Chuuk Legislature, having estimated the amount that would be available from this source, has appropriated such sums for various vital uses, the court characterized the judgment's size as unwieldy as there is a strong public interest in Chuuk having sufficient fiscal resources to maintain a minimum level of basic and essential public services such that the public's health, safety, and welfare are not jeopardized and it would be an onerous burden on Chuuk's governmental operations to evict Chuuk from part of its warehouse. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 26 (Chk. 2011).

Attachment and Execution - Garnishment; Debtors' and Creditors' Rights - Orders in Aid of Judgment
Since the trial court can, on application, endeavor to find a workable way in which to eventually pay the judgment as quickly as reasonably possible and issue writs for less than the full judgment amount, the court will issue a writ of garnishment for compensation for the taking of the plaintiff's retained property during two years, and if no further payments are made on the judgment within the next six months, the plaintiff may then apply for another writ of garnishment. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 26 (Chk. 2011).

Debtors' and Creditors' Rights - Orders in Aid of Judgment; judgments
The parties are free to stipulate how any payment on a judgment should be applied - what part of the judgment it should be applied to - but that in the absence of such an agreement, the court would usually presume any payment to be a general payment on the judgment as a whole. Stephen v. Chuuk, [2011] FMSC 42; 18 FSM Intrm. 22, 27 (Chk. 2011).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

This came before the court on June 28, 2011 and on September 7, 2011, to hear plaintiff Foustino Stephen's post-judgment motion, filed May 27, 2011, in which Stephen seeks payment of his August 12, 2008 Amended Judgment of $113,397.67 and the State's eviction from his property. The hearings were conducted pursuant to the appellate division's instructions that when deciding any renewed request for an order in aid of judgment, the court should consider: 1) (and determine, if need be) the judgment's nature, whether in contract or tort and whether it is based on a civil rights cause of action; 2) whether the judgment-debtor has acted in good or bad faith in its attempts to satisfy the judgment; 3) the length of time the judgment has gone unsatisfied; 4) the debtor's ability to pay; and 5) the balance of interests. Stephen v. Chuuk, [2011] FMSC 15; 17 FSM Intrm. 453, 463 (App. 2011).

I. Analysis

A. Judgment's Nature

When, in March before the appellate division rendered its opinion, the judgment-debtor State of Chuuk, through its debt relief commission, made a $10,000 payment on Stephen's judgment, this court noted that it may be unnecessary to determine whether and to what extent Stephen's judgment was a civil rights judgment since, at this stage of the proceedings, the only reason to make such a determination would be to determine whether Stephen was entitled to the preferential and prioritized collection methods that can be used to satisfy a civil rights judgment. If Chuuk gave Stephen's judgment priority over the many other judgments against it and over other debts not reduced to judgment and continued to make payments on Stephen's judgment, it would have been unnecessary to determine to what extent this was a civil rights judgment entitled to priority and enhanced enforcement because Stephen would be receiving the same priority he would otherwise have been afforded. Thus, determining the judgment's precise nature would merely have been an academic exercise without purpose.

However, since Chuuk has not made any further payments on the judgment in the six months following its one $10,000 payment or proposed a concrete timetable for the judgment's satisfaction, the court cannot presume that this judgment will be paid as quickly or quicker than a civil rights judgment. The court must therefore consider the judgment's nature.

Damages incurred by Stephen through March 9, 2006, were contractual in nature. They arose either from the various lease agreements between Stephen and Chuuk or from the settlement agreement[1]concluded on May 3, 2006, while this litigation was pending, for all of Stephen's claims. As a general proposition, a governmental entity's breach of a contract, without more, does not constitute a civil rights or due process violation. FSM v. GMP Hawaii, Inc., [2009] FMSC 31; 16 FSM Intrm. 479, 484 (Pon. 2009); Island Dev. Co. v. Yap, [1999] FMSC 23; 9 FSM Intrm. 18, 20 (Yap 1999); Talley v. Lelu Town Council, [2001] FMKSC 4; 10 FSM Intrm. 226, 237 (Kos. S. Ct. Tr. 2001). Thus, Stephen's damages through March 9, 2006 were primarily contractual in nature and do not form the basis of a civil rights claim[2] and the damages award does not, by itself, form a civil rights judgment.

Stephen's damages after May 10, 2004, arise from a tort claim - trespass - that Chuuk occupied and continues to occupy Stephen's property to the exclusion of all others. This tort claim thus rises to the level of a constitutional claim and a civil rights violation - a taking of Stephen's property without just compensation.[3] The damages incurred since May 10, 2004 are certainly a civil rights claim and the court's award of those damages is a civil rights judgment although the claims for the period from May 10, 2004 to March 9, 2006, were included in the parties' settlement agreement.

B. Judgment-Debtor's Good or Bad Faith

The court does not doubt that Chuuk has made good faith efforts to address its debt problems and to reduce its overall debt. Chuuk's deficiencies in addressing its judgment debt, and this judgment in particular, stem not so much from bad faith as it does from general fiscal ineptitude. It may also stem from the lack of a sense of urgency or of the importance of a judgment of this nature.

C. Judgment's Age

Stephen's judgment is a little over three years old. Stephen urges the court to consider not only the judgment's age but the age of the underlying damage claims. Chuuk urges conformance with the Menry Davis litigation, Davis v. Kutta, [2003] FMSC 25; 11 FSM Intrm. 545, 549 (Chk. 2003), a personal injury civil rights case, in which the court did not resort to the extraordinary remedy of a writ of garnishment until six and a half years after judgment.

The court can give some weight to the underlying claims' age but not much since the court is bound by the appellate division's instruction that stated that the trial court should consider the judgment's age. The court will also not make six and a half years after a civil rights judgment the magic date after which the judgment-holder can begin to seek the judgment's collection through extraordinary measures.

This factor does not impel a decision either way.

D. Debtor's Ability to Pay and Balance of Interests

These two factors (Chuuk's ability to pay and the balance of interests) will be discussed together because they are closely interrelated in this case. Chuuk has a limited ability to make some payment on the judgment. It does not have the ability to pay the judgment in full at one time. If the court were to garnish the funds held in Chuuk's current account with the FSM (derived from Chuuk's share of income and import taxes) for the full amount, it is unlikely that the garnished funds would satisfy the judgment. It is certain, however, that such a garnishment would seriously hinder Chuuk's ability to function since the Chuuk Legislature, having estimated the amount that would be available from this source, has appropriated such sums for various vital uses. For these very reasons, the court earlier characterized the judgment's size as unwieldy. Furthermore, there is a strong public interest in Chuuk having sufficient fiscal resources to maintain a minimum level of basic and essential public services such that the public's health, safety, and welfare are not jeopardized. Part of Chuuk's supply department warehouse sits on Stephen's retained lot. It would be an onerous burden on Chuuk's governmental operations to evict Chuuk from part of its warehouse.

II. Remedies and Order in Aid

Fortunately, the appellate division has implied that the trial court can, on application, endeavor to find a workable way in which to eventually pay the judgment as quickly as reasonably possible and, presumably issue writs for less than the full judgment amount.

The court, in its July 17, 2008 Order Granting Judgment determined that the fair annual value and the measure of continuing damages of the State's taking of Stephen's retained land was $5,390 per year. Thus, as compensation for the taking during the two years from March 9, 2006 through March 8, 2008, Chuuk was liable for $10,780. A writ of garnishment will issue herewith for that sum. If no further payments are made on Stephen's judgment within the next six months, Stephen may then apply for another writ of garnishment.

III. Miscellaneous Matter

Stephen, during the hearing, also asked that the court rule on the nature of Chuuk's $10,000 March payment - what part of the judgment it should be applied to. The court notes that the parties are free to stipulate how this $10,000 payment, or how any payment, should be applied, but that in the absence of such an agreement, the court would usually presume any payment to be a general payment on the judgment as a whole.

IV. Conclusion

For the reasons stated above, a writ of garnishment for $10,780, directed to the FSM national government, will issue herewith.

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^[1] The settlement agreement (as well as Stephen’s complaint) included a claim for a state court [partial and thus probably not final and enforceable] judgment for some of the unpaid periods of the leases. This amount was included, without analysis, in this court’s judgment because the parties had stipulated to its inclusion in their memorandum of understanding [settlement agreement] that liquidated (agreed to the amount of) Stephen’s damages up through March 9, 2006 ($128,514.88) and required Chuuk’s immediate release of three of the four lots that were the subject of the lawsuit. Those three lots were released and $30,000 was paid toward Stephen’s claim. When the next agreed payment did not occur, this case proceeded to judgment. The court used the parties’ memorandum of understanding as part of its determination of damages. Thus the judgment in this case is not based on a state court "judgment" but on the parties’ contractual stipulation about the amount the state owed Stephen as of March 9, 2006.

^[2] This is not entirely true since part of Stephen’s claims that were liquidated by the memorandum of understanding were claims for trespass and taking after May 10, 2004, when Stephen’s leases all expired.

^[3] This civil rights claim is the basis of this court’s jurisdiction over this lawsuit. 11 F.S.M.C. 701(3). Even if Stephen’s breach of contract claims, although clearly related, were not considered to arise from the same nucleus of operative fact as the civil rights claim, a requirement for the court’s pendent jurisdiction, a plaintiff may still join in one action all the claims it has against the party being sued. FSM Civ. R. 18(a).