FSM Development Bank v Tropical Waters Kosrae, Inc [2013] FMSC 12; 18 FSM Intrm. 569 (Kos. 2013) (14 February 2013)

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 CONCERNING MOTION TO WITHDRAW

Dennis K. Yamase
Associate Justice

Decided: February 14, 2013

APPEARANCE:

For the Defendants: Stephen V. Finnen, Esq.

P.O. Box 1450

Kolonia, Pohnpei FM 96941

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HEADNOTES

Attorney and Client - Withdrawal of Counsel
The FSM ethical rules governing attorney conduct when seeking to withdraw provide that, except when ordered by a tribunal to continue representation not-withstanding good cause for terminating the representation, a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the client's inter-ests, or if the representation will result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571 (Kos. 2013).

Debtors' and Creditors' Rights - Secured Transactions
A pre-judgment possession hearing should be an expedited proceeding because the statute provides that a secured party is entitled to an expedited hearing upon application for a pre-judgment order granting the secured party possession of the collateral. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571 (Kos. 2013).

Debtors' and Creditors' Rights - Secured Transactions
A motion to dismiss that was a matter of first impression, had to be carefully considered and denied before the court could proceed with a pre-judgment possession hearing. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571 (Kos. 2013).

Attorney and Client - Withdrawal of Counsel
When a lawyer is permitted to withdraw because maintaining the litigation has become too costly, finding substitute counsel may well prove to be difficult or even impossible. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571 (Kos. 2013).

Attorney and Client
Although the court must first look to FSM sources of law and circumstances, when an FSM court has not previously construed an FSM ethical rule which is identical or similar to a U.S. counterpart, the court may look to U.S. sources for guidance in interpreting the rule. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571-72 n.1 (Kos. 2013).

Attorney and Client - Withdrawal of Counsel; Debtors' and Creditors' Rights - Secured Transactions
The court will deny an attorney's motion to withdraw for financial reasons when substitute counsel certainly cannot be found in time for the pre-judgment possession hearing or the depositions and the pre-judgment possession cannot and will not be delayed because it is statutorily an expedited proceeding. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 571-72 (Kos. 2013).

Attorney and Client - Appearance; Business Organizations - Corporations
Since a corporation can only be represented by counsel, any possibility that a corporation could proceed pro se is precluded. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 572 (Kos. 2013).

Attorney and Client - Withdrawal of Counsel
An attorney's motion to withdraw as counsel may be denied when the legal issue before the court is difficult for a pro se litigant to adequately address. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 572 (Kos. 2013).

Attorney and Client - Withdrawal of Counsel
Although the financial burden on counsel's law firm may constitute good cause, a court may order that he continue the representation and that he will not be permitted to withdraw because, given the statutorily-required expedited nature of the proceedings, counsel's withdrawal cannot be accomplished without material adverse effect on the defendants, but with this in mind, counsel may renew his motion to withdraw at a later date if the situation warrants. FSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2013] FMSC 12; 18 FSM Intrm. 569, 572 (Kos. 2013).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

This comes before the court on a motion to withdraw as counsel of record made by the defendants' counsel and supported with his affidavit. Defendants' counsel seeks permission to withdraw as counsel of record because his clients are behind in the payment of his fees and have not responded to his requests for payment since a partial payment in December for billing for June 2012. Counsel thus contends that it would place an unreasonable financial burden on his law office to continue to represent the defendants. He notes that it is costly to travel to Kosrae and that the flight schedules would require that he stay on Kosrae for five nights and he does not have other clients there for whom he can perform other remunerative work and thus spread out the travel costs. Counsel asserts that if he cannot withdraw he will, before the case is over, be compelled to travel to Kosrae for lengthy stays at least twice more - once for the depositions at the end of February and again for trial at some as yet unknown future date. Counsel further asserts that his withdrawal can be effected without material adverse effect on the defendants because, while the plaintiff, the FSM Development Bank, has made discovery requests, the defendants' counsel has not yet received the responses from his clients. Counsel also contends that there will be no adverse effect on the defendants since he is also moving for an enlargement of time before he withdraws.

The FSM ethical rules governing attorney conduct when seeking to withdraw provide that:

Except as stated in paragraph (c), a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the inter-ests of the client, or if: . . . (5) the repration will rell result in an unreasonable financial burden on the lawyer or has been rendered unreasonably difficult by the client.

FSM MRPC R. 1.16(b). Paragraph (c) provides "[w]rderedo so b so b so by a ty a tribunal, a lawyer shall continue representation not-withstanding good cause for terminating the repretion." FSM MRPC R. 1.16(c). See alsoFSM v. Jano, [2000] FMSC 43; 9 FSM Intrm. 470a, 470b (Pon (Pon. 2000); Dereas v. Eas, [2004] FMCSC 5; 12 FSM Intrm. 629, 631 (Chk. S. Ct. Tr. 2004).

The bank has scheduled depositions on Kosrae for the last week of February. The court has set, for that same week, a hearing on the bank's application for pre-judgment possession of certain Tropical Waters Kosrae, Inc. equipment in which the bank asserts that it has a perfected security interest. This pre-judgment possession hearing has been delayed for far too long, especially considering that it should have been an expedited proceeding. 33 F.S.M.C. 1053. The statute provides that "a secured party . . . sha entito anto an expedixpedited hearing upon application for a pre-judgment order granting the secured party possession of the collateral." The hearing was initially delayed by the defendants' cessftion to dismiss biss based ased on a minor technicality, seeFSM Dev. Bank v. Tropical Waters Kosrae, Inc., [2012] FMSC 30; 18 FSM Intrm. 378, 380 (Kos. 2012), which, as a matter of first impression, had to be carefully considered and decided before the court could proceed further. The pre-judgment possession hearing can be delayed no longer. No continuance or enlargement of time for the pre-judgment possession hearing will be granted and the defendants' request for such is denied. The pre-judgment possession hearing and the depositions will accordingly proceed as scheduled. Withdrawal of counsel at this juncture would materially compromise the defendants' interests.

In Beal Bank S.S.B. v. Salvador, [2003] FMSC 8; 11 FSM Intrm. 349, 350 (Pon. 2003), an attorney's motion to withdraw after advising his clients at depositions was denied because the record contained no evidence that defendants had discharged him at the depositions' end, or had withdrawn their authorization for him to represent them in all aspects of the proceeding; because a client's failure to contact counsel had no effect on representation especially when counsel had provided no evidence of his efforts to contact the client; because counsel's failure to secure a fee agreement between himself and his clients was not a basis for terminating representation; and because the case was ready for trial, and withdrawal of counsel at that juncture would materially compromise defendants' interests.

The court is aware of the travel costs this may cause counsel to incur since the court itself must bear similar expenses. The court notes, however, that "[w]hen a lawyer is permitted to withdraw on the ground that maintaining the litigation has become too costly, finding substitute counsel may well prove to be difficult or even impossible." Haines v. Liggett Group, Inc., 814 F. Supp. 414, 428 (D.N.J. 1993).[1] Substitute counsel certainly cannot be found in time for the pre-judgment possession hearing or the depositions and the pre-judgment possession cannot and will not be delayed. Once the scheduled hearings and deposition are concluded, the defendants may, given enough time, be able to locate substitute counsel before trial.

The court notes that Tropical Waters Kosrae, Inc. is a corporation and that a corporation can only be represented by counsel. FSM Telecomm. Corp. v. Helgenberger, [2011] FMSC 11; 17 FSM Intrm. 407, 410-11 (Pon. 2011). Thus, any possibility that the corporation could proceed pro se is precluded. Id. at 411. Furthermore, the issue of a plaintiff-creditor's right to pre-judgment possession is a legal issue which should require a legal practitioner's attention. In Lee v. Han, Order at 2 (Civ. No. 2003-1023 Sept. 28, 2005), the court denied Attorney Park's motion to withdraw because the legal issue [forum non conveniens] that the court had asked his client to brief would have been difficult for a pro se litigant to adequately address. The same result seems appropriate here. Also, defendant Ron Bickett is in California and defendant Claude Phillip died in late 2012. Thus, neither can appear pro se. Therefore, since new counsel cannot be found and become adequately prepared by the last week in February, counsel's attendance is necessary and withdrawal will not be permitted.

Accordingly, although the financial burden on counsel's law firm may constitute good cause, the court hereby orders that he continue the representation and that he will not be permitted to withdraw because, given the statutorily-required expedited nature of the proceedings, counsel's withdrawal cannot be accomplished without material adverse effect on the defendants. With this in mind, counsel may renew his motion to withdraw at a later date if the situation warrants.

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^[1] Although the court must first look to FSM sources of law and circumstances, when an FSM court has not previously construed an FSM ethical rule which is identical or similar to a U.S. counterpart, the court may look to U.S. sources for guidance in interpreting the rule. See, e.g., Marsolo v. Esa, [2011] FMSC 19; 17 FSM Intrm. 480, 484 n.2 (Chk. 2011); In re Extradition of Jano, 6 FSM Intrm. 26, 27 n.1 (App. 1993).