Hauk v Mijares [2012] FMSC 9; 18 FSM Intrm. 185 (Chk. 2012) (13 February 2012)

FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2011-1004

G.T.E. HAUK,
Plaintiff,

vs.

ANNA MIJARES, officially and individually, CARLOS PAKINGAN, officially and individually, the BOARD OF DIRECTORS, and AWM, INC.,
Defendants.

_____________________________________________

ORDER OF DISMISSAL

Ready E. Johnny
Associate Justice

Decided: February 13, 2012

APPEARANCES:

For the Plaintiff: George Hauk, pro se

P.O. Box 1405

Weno, Chuuk FM 96942

For the Defendants: Stephen V. Finnen, Esq.

P.O. Box 1450

Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Dismissal - Lack of Jurisdiction; Constitutional Law - Case or Dispute
When the defendant has filed a summary judgment motion and a motion to dismiss for lack of jurisdiction, the court will consider the motion to dismiss first because if the court were to grant the motion to dismiss, any ruling the court made on the summary judgment motion would, at best, be an advisory opinion since it would have been made without jurisdiction and the FSM Supreme Court does not have the authority to render advisory opinions. Hauk v. Mijares, [2012] FMSC 9; 18 FSM Intrm. 185, 186-87 (Chk. 2012).

Civil Procedure - Dismissal - Lack of Jurisdiction; Jurisdiction - Diversity
When a fair reading of the complaint does not show a cause of action against the one diverse defendant, that person is thus merely a nominal party present only so that the plaintiff can plead the court's diversity jurisdiction. When the plaintiff has, for the sole purpose of attempting to create diversity of citizenship, named a person as a defendant against whom he asserts no cause of action or claim for relief, the court will dismiss the nominal diverse defendant from the case as improperly joined and then dismiss the complaint for lack of subject-matter jurisdiction because there was no actual diversity of citizenship when the case was filed. Hauk v. Mijares, [2012] FMSC 9; 18 FSM Intrm. 185, 187 (Chk. 2012).

Jurisdiction - Diversity
The court does not believe that it can exercise jurisdiction over every credit dispute between a customer and a local business merely because that business has a foreign accountant (or manager) who a plaintiff can name as a nominal, but diverse, defendant. Hauk v. Mijares, [2012] FMSC 9; 18 FSM Intrm. 185, 187 (Chk. 2012).

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COURT'S OPINION

READY E. JOHNNY, Associate Justice:

This comes before the court on the defendants' Motion for Summary Judgment; Motion to Dismiss, filed December 29, 2011; the Plaintiff's Opposition Motion to Defendants' Summary Judgment Motion and Motion to Dismiss, filed January 16, 2012; and the defendants' Reply Supporting Motion for Summary Judgment and Motion to Dismiss, filed February 6, 2012. The motion to dismiss is granted. The court's reasons follow.

I.

Hauk alleges that, until Anna Mijares abruptly canceled his P.O. on June 1, 2011 while he was shopping, he had maintained for several years a credit arrangement (commonly called a "P.O.") at the AWM, Inc. store which he has used to purchase groceries and other necessaries for his family and that when he sought Carlos Pakingan's assistance, Pakingan replied that it was all up to Mijares.

Hauk asserts that the defendants breached their contract with him causing damages including mental anguish and he seeks money awards for the breach, for gross negligence, and for punitive damages. Hauk pleads the FSM Supreme Court's jurisdiction on the basis of diversity of citizenship - Pakingan is a Philippine citizen.

The defendants move for summary judgment on the contract claims because, in their view, the authorization of a credit "purchase order" was at all times discretionary and that Hauk, who has the burden of proof, has not shown that there were any other contract terms they "breached" or even shown what terms that the alleged contract had. The defendants also move for summary judgment on the non-contract claims because Hauk's factual allegations allege, at most, a breach of contract and do not state a claim for gross negligence or for which the court could award punitive damages or other non-contract remedies.

Additionally, the defendants move to dismiss Carlos Pakingan as a defendant since he is not a real party in interest because he was not a party to any alleged contract Hauk may have had and because he did not have the authority to enter into any such contract, and, based on that dismissal, dismiss this case in its entirety. The defendants contend that the sole reason Pakingan was made a defendant was to create diversity jurisdiction and that since Pakingan was improperly joined at the suit's inception, the court lacked subject-matter jurisdiction to hear this case from its start.

II.

If the court were to grant the motion to dismiss, any ruling the court made on the summary judgment motion would, at best, be an advisory opinion since it would have been made without jurisdiction. The FSM Supreme Court does not have the authority to render advisory opinions. Kosrae v. Jim, [2010] FMSC 14; 17 FSM Intrm. 97, 99 (App. 2010); Kosrae v. Benjamin, [2010] FMSC 17; 17 FSM Intrm. 1, 4 (App. 2010); Zhang Xiaohui v. FSM, [2007] FMSC 30; 15 FSM Intrm. 162, 167-68 (App. 2007); Allen v. Kosrae, [2007] FMSC 17; 15 FSM Intrm. 18, 23 (App. 2007); Christian v. Urusemal, [2006] FMSC 25; 14 FSM Intrm. 291, 294 (App. 2006); Fritz v. National Election Dir., [2003] FMSC 37; 11 FSM Intrm. 442, 444 (App. 2003); FSM v. Koshin 31[2008] FMSC 71; , 16 FSM Intrm. 15, 21 (Pon. 2008); People of Rull ex rel. Ruepong v. M/V Kyowa Violet, [2007] FMSC 26; 15 FSM Intrm. 133, 134-35 (Yap 2007); Sipos v. Crabtree, [2005] FMSC 37; 13 FSM Intrm. 355, 365 (Pon. 2005); Estate of Mori v. Chuuk, [2003] FMSC 43; 12 FSM Intrm. 24, 26 (Chk. 2003). The court will therefore consider the motion to dismiss first.

III.

The only factual allegation in the Complaint that involves Pakingan is that:

Plaintiff Hauk spent about three hours in the ordeal, even requesting defendant's daughter Shellyann Mori, defendant Pakingan, and employee "Petewon" to come to the rescue but all mentioned that it was up to defendant Mijares, and that they could not do anything amid [sic] her decision not to release plaintiff Hauk's "P.O.", especially defendant Mijares was asleep.

Complaint para. 11 (June 10, 2011). The complaint does not allege that Hauk had a contract with Pakingan that Pakingan breached. The only act that Pakingan is alleged to have committed is to have informed Hauk that decisions regarding credit were "up to" Mijares - that Pakingan did not have the authority to do what Hauk wanted unless approved by Mijares. Hauk's credit agreement was with AWM, Inc. Mijares had and exercised the ultimate authority to grant or withhold credit. Pakingan (an accountant) was just an AWM, Inc. employee, and, according to Hauk's Complaint, not the only employee who informed Hauk that further credit had to be approved by Mijares and that she had denied it.

A fair reading of the Complaint does not show a cause of action against Pakingan. No relief sought against him personally. Pakingan's affidavit, which is not rebutted by any other evidence, states that he is an accountant at AWM, Inc. and that it was Mijares's decision not to permit Hauk to make any further purchases on credit although he was free to make cash purchases. Pakingan is thus merely a nominal party who is present so that the plaintiff can plead the court's diversity jurisdiction.

In Wilson v. Pohnpei Family Headstart Program, Inc., [1996] FMSC 48; 7 FSM Intrm. 411, 413-14 (Pon. 1996), when the plaintiffs improperly pleaded as a party a diverse citizen (a foreign insurance company) and removed the matter from state court, the FSM Supreme Court dismissed the improper diverse citizen and then remanded the case to state court as improvidently removed because the FSM Supreme Court did not have subject-matter jurisdiction since the plaintiffs had no claim or cause of action against the insurance company until after they had obtained a judgment against the (insured) defendants. The court then "expressed its concern over the possibility that the parties . . . attempted d the insurancerance company as a co-defendant for the sole purpose of creating diversity of citizenship" in that action and noted that it would "continue to guard against any such actions." Id. at 414.

This case is analogous. Hauk has, for the sole purpose of attempting to create diversity of citizenship, named a defendant against whom he asserts no cause of action or claim for relief. The court does not believe that it can exercise jurisdiction over every credit dispute between a customer and a local business merely because that business has a foreign accountant (or manager) who a plaintiff can name as a nominal, but diverse, defendant.

IV.

Accordingly, defendant Carlos Pakingan is dismissed from this case as improperly joined and Hauk's complaint is therefore dismissed for lack of subject-matter jurisdiction because there was no actual diversity of citizenship when the case was filed. This dismissal is without prejudice to any action Hauk may pursue in the Chuuk State Supreme Court.

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