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Supreme Court of the Federated States of Micronesia |
FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 2011-019
LUCIANA SORECH and MILO ABELLO,
Plaintiffs,
vs.
FSM DEVELOPMENT BANK,
Defendant.
__________________________________________ )
DECISION AND ORDER
Martin G. Yinug
Chief Justice
Decided: January 20, 2012
APPEARANCES:
For the Plaintiffs: Luciana Sorech, Milo Abello, both pro se
P.O. Box 588
Kolonia, Pohnpei FM 96941
For the Defendant: Nora E. Sigrah, Esq.
P.O. Box M
Kolonia, Pohnpei FM 96941
* * * *
HEADNOTES
Evidence - Judicial Notice
When portions of court files in other cases are introduced into evidence, a court may take judicial notice of all papers and pleadings
in those cases. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 154 n.1 (Pon. 2012).
Civil Procedure - Dismissal; Civil Procedure - Parties - Substitution of
Since an action will be dismissed as to a deceased party if no motion for substitution is made within 90 days after the suggestion
of death, when the court has not received a motion for substitution, and the plaintiffs do not appear to intend to file such a motion,
the court will dismiss the deceased party from the case and order that the caption in future filings reflect such dismissal. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 155 (Pon. 2012).
Civil Procedure - Motions; Civil Procedure - Pleadings - Amendment
Since a party may amend its pleading once as a matter of course at any time before a responsive pleading is served if the pleading
is one to which a responsive pleading is permitted, the plaintiffs were entitled to amend their complaint once as a matter of course
when the defendant filed a motion to dismiss the original complaint since a motion is not a pleading. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 155 (Pon. 2012).
Civil Procedure - Dismissal - Before Responsive Pleading; Civil Procedure - Summary Judgment
When a motion to dismiss presents matters outside the pleading and the court does not exclude those matters, the motion will be treated
as one for summary judgment and disposed of as provided in Rule 56, and all parties will be given reasonable opportunity to present
all material made pertinent to such a motion by that rule. When neither party has propounded discovery during the eight months after
the civil action's start, but the amended complaint contained copious amounts of exhibits, the parties have had reasonable opportunity
to present such evidence. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 155 (Pon. 2012).
Civil Procedure - Summary Judgment - Grounds
The court will grant the summary judgment requested if the pleadings, discovery, and affidavits show that there is no genuine issue
as to any material fact and that the Bank is entitled to judgment as a matter of law. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 155 (Pon. 2012).
Civil Procedure - Res Judicata
The doctrine of res judicata stands for the notion that a judgment entered in a cause of action conclusively settles that cause of
action as to all matters that were or might have been litigated and adjudged therein, and it bars relitigation by parties of all
matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits for which time
for appeal has expired. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 156 (Pon. 2012).
Civil Procedure - Res Judicata; Judgments - Stipulated
While a stipulated judgment may not give rise to the doctrine of res judicata, a later court contemplating a civil action based on
the same underlying facts may adopt the findings of fact in the stipulated judgment and any conclusions of law in the order granting
the stipulated judgment, and in so doing finally adjudicate the matter. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 156 (Pon. 2012).
Statutes of Limitation
The statute of limitation is 20 years for causes of action that impact land as such. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 157 (Pon. 2012).
Statutes of Limitation
When the original loan documents were executed over fourteen years ago, the statute of limitations has run on a cause of action based
on deception in their execution. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 157-58 (Pon. 2012).
Civil Procedure - Pleadings; Torts - Fraud
A party averring fraud or mistake must plead the circumstances constituting fraud or mistake with particularity. The extent of particularity
is governed by Rule 8(a). Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 158 (Pon. 2012).
Torts - Fraud
The elements of fraud are 1) a knowing or deliberate misrepresentation by the defendant 2) made to induce action by the plaintiff
3) with justifiable reliance by the plaintiff upon the misrepresentations 4) to the plaintiff's detriment. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 158 (Pon. 2012).
Torts - Fraud
Collateral fraud, also known as extrinsic fraud, is a fraud that is collateral to the issues being considered in the case. Fraud is
regarded as extrinsic when it prevents a party from having a trial or from presenting all of his case to the court, or when it operates
upon matters pertaining not to the judgment itself but to the manner in which it is procured, so that there is not a fair submission
of the controversy. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 160 (Pon. 2012).
Civil Procedure - Summary Judgment - Grounds - Particular Cases; Torts - Fraud
When, even assuming the plaintiffs' allegations are true, they do not state that a plaintiff relied upon the misrepresentations the
plaintiffs allege to be the basis of the collateral fraud, much less that her reliance induced her to act to her detriment, and when
they do not state that the defendant prevented her from having a trial or from presenting her case to the court, the court, viewing
the facts and inferences in the light most favorable to the plaintiffs, cannot but conclude that the defendant is entitled to judgment
as a matter of law. Sorech v. FSM Dev. Bank, [2012] FMSC 4; 18 FSM Intrm. 151, 160 (Pon. 2012).
* * * *
COURT'S OPINION
MARTIN G. YINUG, Chief Justice:
This matter comes before the court on a number of filings: the defendant's July 1, 2011 motion to dismiss the Complaint; a suggestion of death filed October 14, 2011; the plaintiffs'November 14, 2011 opposition to the motion to dismiss; the plaintiffs' November 14, 2011 Amended Complaint; a November 17, 2011 reply by defendant FSM Development Bank ("the Bank") to the plaintiffs' opposition to the motion to dismiss; and the Bank's December 16, 2011 motion to dismiss the Amended Complaint.
I. Background
The court in Civil Action No. 2009-054, involving the same parties in the same postures (except for Erleen Abello, who is not a party here), laid out the undisputed facts in its Decision and Order of May 19, 2011.[1] This court summarizes as follows:
On October 9, 1997, plaintiff Milo Abello ("Abello") and his wife executed a promissory note ("the Note") to the Bank for a principal amount of $75,884, which note required monthly payments of $1,113. When Abello failed to make the payments, the Bank initiated Civil Action No. 2003-008 ("the 2003 case"), in which it also named plaintiff Luciana Sorech ("Sorech"). On June 26, 2006, the parties filed a stipulation to entry of judgment and a joint motion for entry of a stipulated order in aid of judgment. Abello and Sorech were represented by counsel, and both signed the stipulated order in aid of judgment. The court entered both the judgment and the order in aid thereof on July 6, 2006. On September 10, 2009, the Bank moved the court to amend the order in aid. On December 1, 2009, Sorech and Abello and his wife initiated Civil Action No. 2009-054 ("the 2009 case") against the Bank and defendant Peter Aldis ("Aldis"), alleging: (1) intentional interference with property and property rights; (2) conversion; and (3) predatory lending practices. The Bank and Aldis filed a motion for summary judgment in that case on April 7, 2010, which the court, after a hearing on May 12, 2011, granted on May 19, 2011.[2] In doing so, the court found that "the material allegations in Plaintiffs' complaint are barred by the doctrine of res judicata." Decision and Order at 8 (Civil Action No. 2009-054). On May 17, 2011, without waiting for the court's decision and order in the 2009 case, two of the plaintiffs initiated the present matter.
The plaintiffs here have made two sets of allegations, as set forth in the Complaint of May 17, 2011, and the Amended Complaint of November 14, 2011.
The Complaint alleges: (1) "constructive fraud"; (2) "collateral fraud"; (3) fraud in the inducement as to Sorech; (4) "failure to disclose"; (5) breach of contract for the Bank's failure to fund the loan which was the subject of the Note; (6) breach of good faith and fair dealing; (7) violation of 34 F.S.M.C. 103(13) ("engaging in any act or practice which is unfair or deceptive to the consumer"); and (8) unjust enrichment.
The Amended Complaint alleges, in addition to the original Complaint, which it claims to have but did not actually attach to the Amended Complaint: (1) violation of 34 F.S.M.C. 103(12) and (13) ("engaging in any other conduct which similarly creates a likelihood of confusion or of misunderstanding" and "engaging in any act or practice which is unfair or deceptive to the consumer"); (2) violation of 6 F.S.M.C. 1409 ("Orders in aid of judgment-Application."); (3) violation of 6 F.S.M.C. 1415(1)-(3) ("Exemptions [from attachment and execution]."); (4) unjust enrichment; (5) conversion; and (6) "disparagement of property title and interests, slander of title."
II. The Suggestion of Death
The Bank filed a Suggestion of Death on October 14, 2011, with regard to Aldis, who passed away on October 2, 2011.[3] The suggestion was served by first class mail on October 14, 2011. The plaintiffs implicitly acknowledged receipt of the suggestion through their declaration that "Def. Peter P. Aldis is dismissed from this case." Pls.' Opp'n Mot. Dismiss Compl. An action shall be dismissed as to the deceased party if no motion for substitution is made within 90 days after the suggestion of death. FSM Civ. R. 25(a)(1). The deadline for a motion of substitution would have been January 12, 2012, or 90 days after October 14, 2011. The court has not received a motion for substitution, and the plaintiffs, through their presumption to act as the court in "dismissing" Aldis, do not appear to intend to file such a motion. The court therefore hereby dismisses Aldis from this matter, and hereby orders that the caption in future filings in this matter reflect such dismissal.
III. The Amended Complaint
A party may amend its pleading once as a matter of course at any time before a responsive pleading is served, if the pleading is one to which a responsive pleading is permitted. FSM Civ. R. 15(a). Although the Bank filed a motion to dismiss the Original Complaint on July 1, 2011, a motion is not a pleading. SeeBank of the FSM v. Truk Trading Co., [2009] FMSC 8; 16 FSM Intrm. 281, 284 (Chk. 2009) (delineating the seven pleadings permitted by the rules of civil procedure). Therefore, Sorech and Abello were entitled to amend their complaint once as a matter of course.
The Bank filed its motion to dismiss the Amended Complaint on December 16, 2011, pursuant to an order of this court granting enlargement of time to file a response to the Amended Complaint. In lieu of an Answer, the Bank asserts that the Amended Complaint failed to state a claim upon which relief can be granted by the court. FSM Civ. R. 12(b)(6). The motion to dismiss, like the Amended Complaint, presents matters outside the pleading-specifically, they present the records of the 2003 and 2009 cases. The court will not exclude these matters; therefore, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by that rule. FSM Civ. R. 12(b). The court shall grant the judgment requested if the pleadings, discovery, and affidavits show that there is no genuine issue as to any material fact and that the Bank is entitled to judgment as a matter of law. FSM Civ. R. 56. Neither party has to date propounded discovery, eight months after the commencement of this civil action. Further, the Amended Complaint contained within it copious amounts of exhibits, albeit numbered in an apparently haphazard fashion. The court finds that the parties have had reasonable opportunity to present such evidence.
A. Genuine Issues of Material Facts
The Bank does not assert issues of material facts in this matter. Rather, it asks the court to take judicial notice of "decisions and matters of public record in Civ[il] Action Nos. 2003-008 and 2009-054." Mot. Dismiss Am. Compl. at 5. The court agrees. See note 1 above. Thus, in weighing the evidence, wherever the plaintiffs here submit facts which contradict findings in those cases without asserting new evidentiary bases for such contradicting facts, the court will defer to the findings in those cases. Because the Bank does not assert other issues as to the material facts, and because the court takes judicial notice of the record in those cases, there is no genuine issue of material fact for the purpose of considering the Bank's summary judgment motion.
B. Judgment as a Matter of Law
The Bank asserts that it is entitled to judgment as a matter of law because the claims in the Amended Complaint are barred on the grounds of res judicata, litigation privilege, statute of limitations, FSM Civ. R. 9(b), and lack of standing.
1. Res judicata
The doctrine of res judicata stands for the notion that a judgment entered in a cause of action conclusively settles that cause of action as to all matters that were or might have been litigated and adjudged therein. Berman v. FSM Supreme Court (II), [1995] FMSC 2; 7 FSM Intrm. 11, 16 (App. 1995). The doctrine bars relitigation by parties of all matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits for which time for appeal has expired. Iriarte v. Etscheit, [1998] FMSC 3; 8 FSM Intrm. 231 (App. 1998). All of the plaintiffs' claims in this matter, in both the Original and Amended Complaints, and as in the 2009 case, relate to the loan and the loan documents, and could have been raised in the 2003 case. In that matter, the plaintiffs, with advice of counsel, stipulated with the Bank to entry of judgment and to an order in aid thereof. National case law suggests two approaches to stipulated judgments. On one hand, some cases suggest that a stipulated judgment is not a judicial determination, but is a contract between the parties entering into the stipulation. See, e.g.,FSM Dev. Bank v. Kaminanga, [2008] FMSC 50; 16 FSM Intrm. 45, 48 (Chk. 2008); Mailo v. Chuuk, [2005] FMSC 42; 13 FSM Intrm. 462, 467-68 (Chk. 2005). On the other hand, in at least one case, the court, borrowing from a state court opinion, held that a "basic jurisprudential principle dictates that a stipulated judgment will be entered only if it is well grounded both in law and in fact." Estate of Mori v. Chuuk, [2003] FMSC 43; 12 FSM Intrm. 24, 26 (Chk. 2003). These views are not incompatible: while a stipulated judgment is not in se a judicial determination, a court may enter the stipulated judgment only if it is well grounded both in law and in fact. Therefore, while a stipulated judgment may not give rise to the doctrine of res judicata, a later court contemplating a civil action based on the same underlying facts may adopt the findings of fact in the stipulated judgment and any conclusions of law in the order granting the stipulated judgment, and in so doing finally adjudicate the matter. A subsequent court may then deem a matter thus finally adjudicated as res judicata.
The court has adopted the findings of fact in the 2003 and 2009 cases by taking judicial notice of their records. See "A. Genuine Issues of Material Fact" and note 1 above. However, the court cannot find that the stipulated judgment in the 2003 case was a final adjudication as to the merits of the underlying case, and therefore concludes that the stipulated judgment in that matter has no res judicata effect on this matter. Nevertheless, the court in the 2009 case has entered a final judgment on the claims of intentional interference with property and property rights, conversion, and predatory lending practices, and the Decision and Order of May 19, 2011 is for purposes of res judicata a valid judicial determination on the merits of the Complaint in that matter, which overlaps significantly with the Amended Complaint in this matter.
The court is aware of the differences between this Decision and Order and the Decision and Order in the 2009 case with respect to the res judicata analyses of the stipulated judgment in the 2003 case. However, the court is also aware that the plaintiffs have filed a Notice of Appeal in the 2009 case, which will afford the Appellate Division an opportunity better to elucidate the question of the res judicata effect of stipulated judgments in our jurisdiction, a question never before addressed by the Appellate Division. The court looks forward to such guidance, and should the court in the 2009 case be overturned, plaintiffs will have an opportunity to relitigate those causes of action in that case. Nevertheless, that court has pronounced a final judgment, and the causes of action in that matter are res judicata in this matter.
For these reasons, the court hereby dismisses the following causes of action as barred by the doctrine of res judicata: Original Count VII and Amended Count I, violation of 34 F.S.M.C. 103(12) and (13) ("engaging in any other conduct which similarly creates a likelihood of confusion or of misunderstanding" and "engaging in any act or practice which is unfair or deceptive to the consumer"), which is the same cause of action as Count III of the 2009 case; Amended Count V (conversion), which is the same cause of action as Count II of the 2009 case; and Amended Count VI ("disparagement of property title and interests, slander of title"), which is the same cause of action as Count I of the 2009 case.
2. Litigation privilege
The Bank asks the court to adopt the doctrine of litigation privilege; however, the court finds the Bank's explanation of this doctrine wanting in detail. As far as the court can make out, the Bank appears to be asking the court to dismiss Amended Count VI ("disparagement of property title and interests, slander of title") under this doctrine, because the so-called litigation privilege appears to apply to communications[4] to third parties. However, the Bank argues that the litigation privilege provides it with "absolute immunity to all of Plaintiffs' claims asserted in this suit." Mot. Dismiss Am. Compl. at 14.
Because the court dismisses this matter on other grounds, the court declines the Bank's invitation to adopt the litigation privilege in this matter.
3. Statute of limitations.
Title 6, Chapter 8 of the FSM Code governs statutes of limitations in general. The Bank specifically invokes section 803 (2 years) against Amended Counts I, II, V and VI, as they appear to the Bank to be based in tort, and section 805 (6 years) against Amended Count IV.
a. 6 F.S.M.C. 802. The statute of limitation is 20 years for actions on judgments and for recovery of land or interests therein. Amended Counts IV (unjust enrichment through fraudulent concealment of documents and actions), V (conversion) and VI ("disparagement of property title and interests, slander of title") impact land as such. The statute of limitations has not run as to these counts.
b. 6 F.S.M.C. 803, 804. The statute of limitations is 2 years for actions in personal injury, against police officers, personal slander, and wrongful death, and actions involving an estate of a deceased person. No cause of action in the Amended Complaint comes under this limitation.
c. 6 F.S.M.C. 805. The statute of limitations for all other causes of action is 6 years. Amended Count I (violations of 34 F.S.M.C. 103(12) and (13)) pertains to the original loan instruments, which were executed over 14 years ago; therefore the statute of limitations has run. Amended Counts II (violation of 6 F.S.M.C. 1409) and III (violation of 6 F.S.M.C. 1415(1)-(3)) pertain to the June 8, 2011 Order of Assignment and the October 27, 2011 Amended Order of Assignment in the 2003 case; these causes of action are still within the statute of limitations.
For these reasons, the court hereby dismisses Amended Count I as barred by the statute of limitations.
4. Rule 9(b).
A party averring fraud or mistake must plead the circumstances constituting fraud or mistake with particularity. FSM Civ. R. 9(b). The Bank argues that the plaintiffs have failed to do so. The elements of fraud are (1) a knowing or deliberate misrepresentation by the defendant (2) made to induce action by the plaintiff (3) with justifiable reliance by the plaintiff upon the misrepresentations (4) to the plaintiff's detriment. Arthur v. Pohnpei, [2009] FMSC 41; 16 FSM Intrm. 581, 597 (Pon. 2009). The extent of particularity is governed by Rule 8(a). Id. Thus, a plaintiff may plead fraud in short and plain statements, but must plead each element, or facts from which the court can make out the elements.
The plaintiffs alleged fraud in Amended Counts I (violation of 34 F.S.M.C. 103(12) and (13)), II (violation of 6 F.S.M.C. 1409), III (violation of 6 F.S.M.C. 1415(1)-(3)), IV (unjust enrichment through fraudulent concealment of documents and actions) and V (conversion through fraudulent claims). Count VI (disparaging true nature of land by false descriptions and misrepresentation) may also come under the ambit of Rule 9(b).
The plaintiffs' main assertions of fact with respect to fraud as to the original loan agreements consist of repeated accusations that the Assignment of Lease and Consent was fabricated by the Bank, improperly notarized, and then inserted surreptitiously into Abello's loan case file. Am. Compl., generally. Even assuming these allegations are true, the plaintiffs do not state what action by the plaintiff in reliance upon the alleged misrepresentations the Bank thus induced. If, as the plaintiffs claim, the Assignment of Lease and Consent was inserted without Abello's knowledge three months after he allegedly thought his loan documents had closed, it is a logical impossibility for him to have relied on such alleged misrepresentation.
The plaintiffs' main assertions of fact with respect to fraud as to the orders of assignment consist of allegations that the Bank misrepresented facts to the court in the 2003 case in characterizing Sorech's property, and that such misrepresentations constitute a fraud upon the court and the public. Am. Compl., generally. Even assuming these allegations are true, the plaintiffs do not state what action such misrepresentation by the Bank induced the plaintiffs to take in reliance upon that misrepresentation. The court is unimpressed that the plaintiffs are more cognizant today of the character of that property than they were when they had the opportunity to oppose the Bank's motions for the order and amended order of assignment.
Finally, with respect to the plaintiffs' accusations that the Bank has perpetrated a fraud upon the court and the public: if the plaintiffs' true concern is with the harm done to the court and the public, the proper approach would have been to object in the 2003 case or to request the Secretary of Justice to investigate and, if appropriate, prosecute the Bank; if the plaintiffs' true concern is for their own satisfaction, the proper approach would have been to object in the 2003 case. In alleging fraud now in an independent civil action, and in the manner they did, the plaintiffs have failed to allege fraud with particularity as required by Rule 9(b).
Therefore, the court hereby finds and concludes that the Bank is entitled to judgment as a matter of law, and hereby dismisses the Amended Complaint in its entirety.
IV. The Original Complaint
The court has now disposed of the new material in the Amended Complaint, and now proceeds to analyze the Original Complaint, whose counts were supposedly realleged in the Amended Complaint.
The Bank filed its motion to dismiss the Complaint on July 1, 2011, pursuant to an order of this court granting enlargement of time to file a response to the Complaint. In lieu of an Answer, the Bank asserts that the Complaint failed to state a claim upon which relief can be granted by the court. FSM Civ. R. 12(b)(6). The motion to dismiss the Complaint presents matters outside the pleading-specifically, they present the records of the 2003 and 2009 cases. The court will not exclude these matters; therefore, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56. FSM Civ. R. 12(b). The court finds that the parties have had reasonable opportunity to present such evidence.
A. Genuine Issues of Material Facts
The Bank does not assert issues of material facts in this matter. Rather, it asks the court to take judicial notice of "decisions and matters of public record in Civil Action Nos. 2003-008 and 2009-054." Mot. Dismiss Compl. at 5-6. The court has done so. See note 1 above. Because the Bank does not assert other issues as to the material facts, and because the court takes judicial notice of the record in those cases, there is no genuine issue of material fact.
B. Judgment as a Matter of Law
The Bank asserts that it is entitled to judgment as a matter of law because the claims in the Complaint are barred on the grounds of res judicata, statute of limitations, and FSM Civ. R. 9(b).
1. Res judicata
The court discussed the doctrine of res judicata in III.B.1, above, including its effect on the Original Complaint, i.e., its action to bar Original Count VII.
2. Statute of limitations.
The Bank specifically invokes section 803 (2 years) against Original Counts I, II, III, IV, VI and VII, as they appear to the Bank to be based in tort, and section 805 (6 years) against Original Counts V and VIII.
a. 6 F.S.M.C. 802. The statute of limitation is 20 years for actions on judgments and for recovery of land or interests therein. Original Count II (collateral fraud based on wrongful foreclosure) impacts land as such. The statute of limitations has not run as to this count.
b. 6 F.S.M.C. 803, 804. No cause of action in the original complaint comes under this limitation.
c. 6 F.S.M.C. 805. The statute of limitations for all other causes of action is 6 years. Original Counts I and III through VIII pertain to the original loan instruments, which were executed over 14 years ago, or to events occurring before the filing of the 2003 case, nearly 9 years ago; therefore the statute of limitations has run.
For these reasons, the court hereby dismisses Original Counts I and III through VIII as barred by the statute of limitations.
3. Rule 9(b)
The rules governing Rule 9(b) analysis are discussed in III.B.4, above. The plaintiffs alleged fraud in Original Counts I (constructive fraud), II (collateral fraud), III (fraud in the inducement as to Sorech), IV (failure to disclose), VI (breach of good faith and fair dealing through fraudulent scheme to conceal and misrepresent the nature of the loan), and VII (violation of 34 F.S.M.C. 103(13)). Because the court has dismissed Original Counts I and III through VIII as barred by the statute of limitations, the court here limits its Rule 9(b) analysis to Count II.
The plaintiffs assert that the Bank wrongfully filed a motion to foreclose Sorech's property, because she was not a party to the promissory note, and therefore the Bank had no privity of either contract or estate with her properties; that the Bank pursued invalid claims with full knowledge of the invalidity; that the Bank perjured itself before the court during a hearing on December 1, 2010 in testifying that the Bank's security documents were properly executed; and that the Bank interfered with and slandered Sorechs's rights, title and interest to one of her parcels. Compl. at 5-7.
Collateral fraud, also known as extrinsic fraud, is a fraud that is collateral to the issues being considered in the case. Black's Law Dictionary 267 (pocket ed. 1996). A venerable source describes extrinsic fraud thus:
Fraud is . .&# regarded as extrinsic wsic where it prevents a party from having a trial or from presenting all of his case to the court, or where it operates upon matters perng not to the judgment itself but to the manner in which itch it is procured, so that there is not a fair submission of the controversy.
37 Am. Jur. 2dFraud and Deceit§ 5 (1968).
Even assuming these allegations are true, the plaintiffs do not state that Sorech relied upon the misrepresentations the plaintiffs allege to be the basis of the collateral fraud, much less that her reliance induced her to act to her detriment. Nor do the plaintiffs state that the Bank prevented Sorech from having a trial or from presenting her case to the court. Indeed, the facts that the Bank named Sorech as a defendant in the 2003 case, and that Sorech was a signatory to the stipulation and joint motion for entry of the stipulated judgment and order in aid thereof, demonstrate that the Bank went out of its way to include Sorech in judicial proceedings. Thus, even viewing the facts and inferences in the light most favorable to the plaintiffs, the court cannot but conclude that the Bank is entitled to judgment as a matter of law with regard to Original Count II. Therefore, the court hereby dismisses Original Count II.
Therefore, the court hereby finds and concludes that the Bank is entitled to judgment as a matter of law, and hereby dismisses the Original Complaint in its entirety.
V. Conclusion
The court has dismissed both the Original and Amended Complaints in their entireties, and therefore the court hereby dismisses this matter with prejudice.
* * * *
[1] When portions of court files in other cases are introduced into evidence, a court may take judicial notice of all papers and pleadings in those cases. Rudolph v. Louis Family, Inc., [2005] FMSC 18; 13 FSM Intrm. 118, 125 n.2 (Chk. 2005). Accordingly, the court takes judicial notice of the record in Civil Action Nos. 2003-008 and 2009-054, pursuant to both the plaintiffs’ and the Bank’s request. Mot. Dismiss Am. Compl. at 1; Mot. Dismiss Compl. at 2; Compl. at 4.
[2] The plaintiffs also filed an amended complaint on August 11, 2010, which the court did not appear to acknowledge. The amended complaint in Civil Action No. 2009-054 alleged: (1) constructive fraud; (2) collateral fraud; (3) fraud in the inducement; (4) failure to disclose; (5) breach of contract; and (6) breach of good faith and fair dealing. Civil Action No. 2009-054, Am. Compl. Since the Bank did file an Answer in that case, however, on December 21, 2009, the plaintiffs were not entitled to amend their complaint as a matter of course, and should have obtained leave of court.
[3] The Suggestion was filed under FSM Civil Rule 25(a)(1), which deals with motions for substitution. The correct citation should have been to FSM Civ. R. 25(a)(2).
[4]See, e.g., Cal. Civ. Code § 47(b)(2) (2012) ("A privileged publication or broadcast is one made in any . . . judicialeeding . .�. .
."); Rickenbach v. FargoFargo,, 635 F. Supp. 2d 389, 401 (D.N.J. 2009) (the litigation privilege "is applicable to any
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