Helgenberger v FSM Development Bank [2013] FMSC 2; 18 FSM Intrm. 498 (App. 2013) (10 January 2013)

FSM SUPREME COURT APPELLATE DIVISION

APPEAL CASE NO. P5-2010
Civil Action No. 2002-004

YALMER HELGENBERGER and MARILYN HELGENBERGER,
Appellant,

vs.

FSM DEVELOPMENT BANK,
Appellee.
__________________________________________

OPINION

Argued: June 12, 2012
Decided: January 10, 2013

BEFORE:

Hon. Martin G. Yinug, Chief Justice, FSM Supreme Court
Hon. Dennis K. Yamase, Associate Justice, FSM Supreme Court
Hon. Cyprian Manmaw, Temporary Justice, FSM Supreme Court*

*Chief Justice, State Court of Yap, Colonia, Yap

APPEARANCES:

For the Appellants: Salomon M. Saimon, Esq.

Micronesian Legal Services Corporation

P.O. Box 129

Kolonia, Pohnpei FM 96941

For the Appellee: Michael J. Sipos, Esq.

P.O. Box 2069

Kolonia, Pohnpei FM 96941

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HEADNOTES

Appellate Review - Decisions Reviewable; Appellate Review - Standard - Civil Cases
Although, ordinarily, an issue must be raised at the trial level for it to be preserved for appeal, whether a court has subject-matter jurisdiction is an issue that may be raised at any time. Helgenberger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 500 (App. 2013).

Jurisdiction - Exclusive FSM Supreme Court
The FSM Development Bank is an instrumentality of the national government and part of the national government for the purposes of FSM Const. art. XI, § 6(a), which the FSM Supremupreme Court trial division exclusive jurisdiction over cases in which the national government is a party. Helrger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 500 (App. 2013).

Property - Mo - Mortgages
A mortgagee does not have title to the land, only a lien. Helgenberger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 500 (App. 2013).

Appellate Review - Dismissal; Jurisdiction - FSM Supreme Court Exclusive
When the property was lawfully transferred and this transfer is not a part of what is being appealed because the appellants are appealing the minimum sale price and when the mortgagee does not have title to the land but only a lien, the court will reject the appellants' claim of lack of subject-matter jurisdiction based on the exception for where an interest in land is at issue. Helgenberger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 500 (App. 2013).

Debtors' and Creditors' Rights - Orders in Aid of Judgment
The trial court did not err in denying the defendants' motion to raise the minimum bid price when the motion was filed after the sale was held and the defendants were appealing the sale price but not the sale itself and the sale was conducted 56 days after the amended order in aid of judgment setting a minimum sale price was entered. Helgenberger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 500-01 (App. 2013).

Constitutional Law - Due Process - Notice and Hearing
It is a due process violation and constitutional error for a court to base its decision, in whole or in part, on evidence of which a party has not had both notice and the opportunity to be heard, but when the defendants were served with all documents since the beginning of the matter and had the opportunity to respond but failed to do so, their claim for a violation of due process has no merit. Helgenberger v. FSM Dev. Bank, [2013] FMSC 2; 18 FSM Intrm. 498, 501 (App. 2013).

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COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

I. Background

This is an appeal of a post judgment proceeding. A construction loan agreement was entered into between the Appellee FSM Development Bank (FSMDB) and Appellant Yalmer and Marilyn Helgenberger (Helgenbergers) on October 4, 1993 in the amount of $775,000 for the construction of the Skylite Hotel. The trial court entered a partial summary judgment for $969,540.27 against the Helgenbergers on October 6, 2005 for default on the loan. On August 18, 2009, the original order of sale for the hotel was entered. On May 13, 2010, the order was amended deleting the phrase "with no reserve price," setting the minimum bid price at $120,000.

The auction sale was held on July 8, 2010, where Feliciano Perman (Perman) was determined to be the highest bidder. On July 30, 2010, Perman completed full payment of $151,999, which was received by FSMDB on the same day. Also on July 30, 2010, the Helgenbergers, through their attorney, filed a motion to amend the May 13th order to raise the minimum amount. This motion was denied in an order entered on August 9, 2010. On August 17, 2010, the court issued an order confirming the sale to Perman. This order instructed the FSMDB to submit a final order, which was filed on August 25, 2010.

On September 6, 2010, the Helgenbergers filed the current notice of appeal and motion to stay. The motion to stay was denied and that order is reported in FSM Dev. Bank v. Helgenberger, [2010] FMSC 38; 17 FSM Intrm. 266 (Pon. 2010). The Helgenbergers filed their appellate brief on April 6, 2011, and the FSMDB filed its motion to dismiss this appeal on May 6, 2011. The Helgenbergers did not file an opposition to the FSMDB's motion to dismiss.

Several issues are raised by the Helgenbergers. The first issue is the court's subject matter jurisdiction in this matter. The second issue is the denial of the Helgenbergers' motion to raise the minimum selling price of the property at hand. The third issue raised is a due process violation claim with regard to the court's denial of the Helgenbergers' motion to raise the selling price.

II. Analysis

The Helgenbergers' first claim is that because the FSMDB is an instrumentality of the FSM national government, and pursuant to FSM Const. art. XI, § 6(hich states, "The trial dial division of the Supreme Court has original and exclusive jurisdiction . . . in cases in which the national government is a party exwhere an interest in land is at issue," this court lacks suks subject matter jurisdiction over this matter.

Although, ordinarily, an issue must be raised at the trial level for it to be preserved for appeal, whether a court has subject matter jurisdiction is an issue that may be raised at any time. Hartman v. FSM, [1993] FMSC 53; 6 FSM Intrm. 293, 296 (App. 1993). Thus, this issue is properly before this court.

The FSMDB is an instrumentality of the national government and part of the national government for the purposes of FSM Const. art. XI, § 6(a)ing the trial division sion of the Supreme Court exclusive jurisdiction over cases in which the national government is a party. 30 F.S.M.C. 101; FSM Dev. Bank v. Estate of Nanpei, 2 FSMm. 217, 221 (Pon. 1986). Th). The issue at hand is the exception under FSM Const. art. XI, § 6(a), which states "except where an interest in land is at issue."

Here, the transaction has to do with the sale of the building itself. The propeas lawfully transferred to Perman on August 25, 2010, however, this transfer is not a part part of what is being appealed here because the Helgenbergers are appealing the minimum sale price. Also, the FSMDB, as the mortgagee, does not have title to the land, only a lien. Therefore, the Helgenbergers' claim for lack of subject matter jurisdiction based on this exception is rejected.

The issue of setting the minimum sale price to $832,990 was discussed in FSM Dev. Bank v. Helgenberger, [2010] FMSC 38; 17 FSM Intrm. 266 (Pon. 2010). In that case, the court held that the figure proposed by the Helgenbergers was merely a subjective estimate of the property's value in 1993 when the mortgage was executed, and that this figure did not set the minimum price should the property come under foreclosure. The Appellants are appealing the sale price, but not the sale itself. Thus, the sale was conducted on July 8, 2010, nearly 56 days after the amended order was entered to include a minimum sale price.

Payment in full was made by the highest bidder on July 30, 2010. Instead of challenging the sale price, the Appellants should have brought forth their claims of wishing to make payments on the agreement prior to the original order of sale entered on August 18, 2009, or at some point before the auction sale on July 8, 2010. Appellants' Br. at 3. Accordingly, we find that the court below did not err in its decision to deny the Helgenbergers' motion to raise the minimum price.

The Helgenbergers are only appealing the court's August 9, 2010 denial of the Appellant's motion to raise the selling price. The order to confirm the sale to Perman issued on August 17, 2010, and the order transferring the land to Perman on August 25, 2010, remain unchallenged by the Helgenbergers. Had the Helgenbergers appealed the orders involving Perman, this court could decide these issues on its merits.

The Helgenbergers raise a constitutional due process violation with regard to the court's denial of their motion to raise the minimum price. It is a due process violation and constitutional error for a court to base its decision, in whole or in part, on evidence of which a party has not had both notice and the opportunity to be heard. Heirs of Jerry v. Heirs of Abraham, [2008] FMSC 30; 15 FSM Intrm. 567, 573 (App. 2008).

The record shows that the Helgenbergers, through their former and current attorneys, were served with all the pleadings pertaining to this matter since its commencement in 2005, and was afforded opportunities to respond to everything that has transpired since then.

As indicated above, this appeal was made after the sale of the property was conducted, a highest bidder determined, and the full payment made to the FSMDB. The Helgenbergers had from May 13, 2010, when the sale price was amended, to add a minimum price, up until the sale conducted on July 8, 2010, to oppose the sale of the property, pursuant to FSM Civil Rule 6, but did not do so. Because we find that the Helgenbergers were served with all documents since the beginning of this matter, and had the opportunity to respond but failed to do so as discussed above, we determine that their claim for a violation of due process has no merit.

III. Conclusion

For the reasons outlined above, the FSMDB's motion for dismissal is hereby granted.

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