FSM Development Bank v Tropical Waters Kosrae, Inc [2012] FMSC 30; 18 FSM Intrm. 378 (Kos. 2012) (23 August 2012)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2012-2003

FSM DEVELOPMENT BANK,
Plaintiff,

vs.

TROPICAL WATERS KOSRAE, INC., CLAUDE PHILLIP, and RONALD BICKETT,
Defendants.
__________________________________________

ORDER DENYING DISMISSAL

Dennis K. Yamase
Associate Justice

Hearing: June 21, 2012
Decided: August 23, 2012

APPEARANCES:

For the Plaintiff: Nora E. Sigrah, Esq.

P.O. Box M

Kolonia, Pohnpei FM 96941

For the Defendants: Stephen V. Finnen, Esq.

P.O. Box 1450

Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure Ä Dismissal Ä Before Responsive Pleading
The appropriate standard for reviewing a Rule 12(b) motion to dismiss is for the court to assume the allegations in the complaint to be true and give the plaintiff the benefit of all reasonable inferences and grant the motion only if it appears to a certainty that no relief can be granted under any state of facts which could be proven in support of the claim. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 379 (Kos. 2012).

Banks and Banking; Statutes Ä Construction
Under a plain reading of the statute, the FSM Development Bank is not required to obtain permission on a case-by-case basis before starting collection actions for Federated Development Authority loans, and the court will not broaden the statute beyond the meaning of the law as written. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012).

Statutes Ä Construction
Statutes are not to be construed by singling out a particular phrase, because the court must construe the words and terms at issue in the context of the other language used in the statute. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012).

Statutes Ä Construction
A common maxim of statutory construction is that the expression of one thing means the exclusion of others. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012).

Statutes Ä Construction
When both general and specific statutes address a matter, the specific controls the subject. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012).

Banks and Banking; Statutes Ä Construction
A plain reading of the statutes, in context, includes a case-by-case requirement for refinancing FDA loans and by its specific inclusion excludes that requirement from collection efforts. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012).

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COURT’S OPINION

DENNIS K. YAMASE, Associate Justice:

On April 11, 2012, defendants Tropical Waters Kosrae, Inc., Claude Phillip, and Ronald Bickett (collectively "Tropical Waters") filed a motion to dismiss. The motion is denied for the following reasoning.

I. BACKGROUND

The defendants, citing Civil Procedure Rules 12(b)(1) and (6) move to dismiss the plaintiff’s complaint for its failure to state a claim upon which relief can be granted and the lack of subject matter jurisdiction. They rely on 30 F.S.M.C. 303(3)(a) and (b) and 303(5). The defendants argue that these subsections require that before the FSM Development Bank starts any collection efforts for Federated Development Authority ("FDA") authorized loans, the bank must first obtain specific approval from the FDA. The defendants contend that because the bank has failed to plead that it has obtained this approval, its complaint fails to state a claim upon which relief can be granted and that the court lacks jurisdiction over the case.

The bank asserts that, as pled in its complaint, 30 F.S.M.C. 303(5) gives it the necessary authority. In support it argues that because the statute mandates a case-by-case approval for renegotiating the financing terms of FDA loans and does not include the same mandate for collecting FDA loans, the bank is not required to obtain specific authority to collect on a FDA loan. The bank also contends that because the parties to the promissory note include only the bank and Tropical Waters, and not the FDA, the defendants lack standing to raise or enforce the rights of third parties.

II. Analysis

The appropriate standard for reviewing a Rule 12(b) motion to dismiss is for the court "to assume the allegations in the complaint to be true and give the plaintiff the benefit of all reasonable inferences" and grant the motion "‘only if it appears to a certainty that no relief can be granted under any state of facts which could be proven in support of the claim.’" Jano v. King, [1992] FMSC 27; 5 FSM Intrm. 388, 390 (Pon. 1992) (quoting Mailo v. Twum-Barimah, [1986] FMSC 19; 2 FSM Intrm. 265, 267 (Pon. 1986)). In paragraph one of the complaint, the bank alleges that its ability and authority arises out of Title 30 of the FSM Code. Compl. at 1. Subsections 303(3) and 303(5) provide:

(3) The Federated Development Authority shall be responsible for:

(a) Approving financing for the projects submitted for funding pursuant to section 309 of this chapter;

(b) Approving the actions by the Development Bank taken pursuant to subsection (5) of this section as the Federated Development Authority deems appropriate.

. . . .

(5) The Development Bank, pursuant to the direction of the Federated Development Authority, shall be responsible for administering all loans, loan guarantees, lease and sale-leaseback arrangements, and other similar financings, including the maintenance of all files on such financings, the monitoring of the progress of projects funded from such financings, collecting any repayments of such financings (including resort to property hypothecated to secure payments due under a financing, or legal action to enforce payment obligations), and, only with specific approval from the Federated Development Authority on a case-by-case basis, renegotiating the terms of such financing. Except as otherwise provided in this chapter, the authority and responsibilities of the Development Bank, with respect to the administration of the Fund, shall be executed by the President of the Development Bank pursuant to the guidelines, policies, and procedures, and general terms and conditions, prescribed by the Federated Development Authority and this chapter, and the Board of Directors of the Development Bank shall have no authority or responsibility with respect to the administration of the Fund.

30 F.S.M.C. 303(3) and (5).

The court concludes that, under a plain reading of the statute, the bank is not required to obtain permission on a case-by-case basis before starting collection actions for FDA loans. The court will not broaden the statute beyond the meaning of the law as written. Nena v. Kosrae, [2006] FMSC 5; 14 FSM Intrm. 73, 82 (App. 2006). Statutes are not to be construed by singling out a particular phrase, because the court must construe the words and terms at issue in the context of the other language used in the statute. See 1 F.S.M.C. 208. A common maxim of statutory construction is that the expression of one thing means the exclusion of others. E.g., Grigg v. Commonwealth, 297 S.E.2d 799, 803 (Va. 1982); see, e.g., Pacific Coast Enterprises v. Chuuk, [2000] FMCSC 8; 9 FSM Intrm. 543, 547 (Chk. S. Ct. Tr. 2000) (when an act lists 23 different prohibited gaming devices but makes no mention whatsoever of poker machines in the extended list, the legislature excluded such machines from the law’s application by failing to list them and the court will not include what the legislature excluded). When both general and specific statutes address a matter, the specific controls the subject. Setik v. FSM, [1992] FMSC 19; 5 FSM Intrm. 407, 411 (App. 1992).

These cannons of statutory construction explain and define the "approval" and "authority" requirements of Sections 303(3)(a) and (b). A plain reading of the statutes, in context, includes a case-by-case requirement for refinancing and by its specific inclusion excludes that requirement from collection efforts.

III. Conclusion

Accordingly, reviewing the facts alleged in the bank’s complaint in the light most favorable to it, the court is unable to conclude that the bank’s complaint fails to state a claim upon which relief can be granted. The defendants’ motion to dismiss is hereby denied.

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