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     On April 17, 2002, Defendant Micronesia Petroleum Company ("MPC") filed a Motion for Summary Judgment. On April 25, 2002, Plaintiff filed an Opposition to the Motion for Summary Judgment and Cross Motion for Summary Judgment. On May 14, 2002, Defendant filed a Reply to Plaintiff’s Opposition, and an Opposition to Plaintiff’s Cross Motion for Summary Judgment. The motions for summary judgment were heard on May 21, 2002. Canney Palsis, MLSC, appeared for the Plaintiff. Defendant was represented by Andrea Hillyer. After the hearing, the Motions were taken under advisement.

     Based upon the information presented to this Court, arguments of counsel, the record in this matter, applicable law and in the interests of justice, the Defendant’s Motion for Summary Judgment is granted. The Plaintiff’s Cross Motion for Summary Judgment is denied. This Order sets forth the Court’s reasoning.

     KRCP Rule 56(c) provides the standard of review for a Motion for Summary Judgement. Summary judgment shall be granted if the pleadings, discovery responses under oath, and affidavits show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. In considering a summary judgment motion, the court must view the facts and inferences in a light that is most favorable to the party opposing the motion. FSM Dev. Bank v. Mudong, 10 FSM Intrm. 67 (Pon. 2001).

     The following facts are not disputed by the parties. Plaintiff resigned from his employment with Kosrae State Government in November 1999 to accept a position with the Defendant. Plaintiff was hired by former MPC General Manager Richard Reddy under an oral contract of employment. Former General Manager Reddy was terminated by the MPC Board of Directors in February 2000. Plaintiff was then offered a written employment contract by the Acting General Manager Weston Luckymis. Plaintiff refused to execute the written employment contract offered by the Defendant. On March 31, 2000, Defendant, through its Acting General Manager Weston Luckymis, gave the Plaintiff thirty days written notice of his termination, and thirty days pay during the notice period. Plaintiff was terminated as part of reduction in force, and not for misconduct or for cause. Plaintiff was not given an opportunity for a hearing on his termination notice. At the time of Plaintiff’s termination, there was no Manual of Administration which had been adopted by the MPC Board of Directors.

    Plaintiff filed this suit with the following causes of action: breach of contract, violation of Kosrae State Code, Section 7.1315, and violation of the due process guarantees under the FSM Constitution and the Kosrae State Constitution.

     Defendant argues that it is entitled to summary judgment on all four causes of action. Defendant argues that the oral employment contract between Plaintiff and former General Manager did not give Plaintiff any assurance of continued employment. The oral employment contract also did not given Plaintiff any rights with respect to termination, notice of termination or right to a hearing prior to termination. Therefore, Defendant did not breach the oral employment contract with the Plaintiff by

his termination.

     Defendant argues that the Kosrae State Code, Title 18, specifically exempts MPC employees from the State Public Service System Act. MPC is granted by law, the authority to retain and terminate employees as appropriate. Defendant argues that the Board’s failure to adopt a Manual of Administration does not make Title 18 of the Kosrae State Code applicable to MPC.

     Finally, Defendant argues that the due process constitutional provisions are not applicable to MPC because the Plaintiff’s employment with MPC was not a property right protected under the FSM and Kosrae State Constitutions. Plaintiff did not have any governmental assurance of continued employment or dismissal only for specified reasons. The Plaintiff did not have any assurance of continued employment by law, regulation, formal contract or by an authorized supervisor. Therefore, there has been no violation of due process.

     Plaintiff, in response, argues that he had an oral contract of employment made with the former General Manager, Richard Reddy. Plaintiff argued that the oral contract gave him an assurance of continued employment. Plaintiff argues that due to his oral contract with former General Manager Reddy, he could only be terminated for cause.

     Plaintiff claims that the Defendant violated state law because it did not adopt a Manual of Administration, as required by Kosrae State Code, Section 7.1315. Due to the Defendant’s failure to adopt a Manual of Administration, Plaintiff argues that provisions of the State Public Service System Act, at Kosrae State Code, Title 18, should be applied to MPC.

     Finally, Plaintiff claims that his termination violated constitutional due process because the termination notice did not give Plaintiff an opportunity to appear and challenge his termination. Plaintiff argues that because MPC is wholly owned by Kosrae State, his employment with MPC is a protected property right. Therefore, Plaintiff was entitled to notice and an opportunity for a hearing prior to his termination. Plaintiff argues that his termination without an opportunity for hearing is a due process violation. Plaintiff claims that based upon these facts and law, Plaintiff is entitled to summary judgment.

     Defendant, in its Reply, argues that Plaintiff’s Cross Motion is untimely since it was filed after the deadline for pre-trial motions, April 18, 2002. Defendant concludes by arguing that there are no material issues in dispute and that based upon applicable law, Defendant is entitled to judgment as a matter of law.

     Both Plaintiff and Defendant seek summary judgment on all four causes of action: breach of contract, statutory violation of Kosrae State Code, Section 7.1315, violation of due process under the Kosrae State Constitution and FSM Constitution. Each cause of action is examined in turn.

A. Breach of Contract.

     Plaintiff was hired by former General Manager Richard Reddy under a verbal employment. After Reddy was terminated, Plaintiff was offered a written employment contract by MPC to execute, which Plaintiff refused to do so. Plaintiff was then terminated on March 31, 2000 by the Acting General Manager. Plaintiff was given thirty days written notice and thirty days pay.

     Plaintiff argued that he was given assurances of continued employment in his verbal employment

with Reddy. However, Plaintiff did not submit any affidavits or any other competent evidence to support this factual allegation. Argument alone cannot create a disputed fact that will defeat summary judgment. Nahnken of Nett v. United States, 7 FSM Intrm 581 (App. 1996). Plaintiff failed to show that he had an assurance of continued employment through actions of a supervisor with authority to establish terms of employment. Edwin v. Kosrae, 4 FSM Intrm 292 (Kos. S. Ct. Tr. 1990).

     Even assuming that former General Manager Reddy did give verbal assurances of continued employment to the Plaintiff, those verbal assurances ended with Reddy’s termination. Kosrae State Code, Section 7.1303 sets out the legal characteristics and capacity of the Defendant. Section 7.1303(8) authorizes MPC to retain and terminate the services of employees, agents, attorneys, auditors, and independent contractors upon such terms and conditions as the Corporation deems appropriate. After Reddy was terminated, he was no longer employed by MPC as its General Manager, and his authority to retain employees for MPC ended. Under Kosrae State Code, Section 7.1303(8), MPC is authorized to hire and fire its employees, for such reasons as it deems appropriate. Termination "for cause" is not required. An employee may be terminated for other reasons, as MPC deems appropriate, including a reduction in force for financial reasons. Under these provisions, KSC, Title 7, Chapter 13, does not provide any continued assurance of employment for the Plaintiff. Plaintiff was not subject to dismissal for only specified reasons stated by statute or regulation. The statute permits dismissal of an employee as MPC deems appropriate.

      Plaintiff did not have any right to continued employment based upon formal contract. Plaintiff did not have any formal written contract with Defendant. Plaintiff had an oral contract of employment with former General Manager Reddy. This oral contract of employment was then terminated by the Acting General Manager under the authority of Kosrae State Code, Section 7.1303(8).

     Plaintiff argued that the Acting General Manager was not authorized to terminate Plaintiff’s employment. Kosrae State Code, Section 7.1308 provides that "during any period when the position of General Manager is vacant, the position is temporarily filled from within the organization . . . ." On February 14, 2000, Weston Luckymis was hired as the Assistant General Manager for MPC. On February 17, 2000, Mr. Luckymis was appointed by the Board of Directors of MPC to serve as Acting General Manager of MPC. Aff. of Weston Luckymis, Ex. B to Def.’s Response to Interrogatories (Apr. 30, 2002).

     The position of the General Manager was still vacant on March 31, 2000, the date of Plaintiff’s termination. Pursuant to Kosrae State Code, Section 7.1308, the position of General Manager was temporarily filled from within MPC by appointment of the Assistant General Manager, Weston Luckymis. Mr. Luckymis was appointed to the position of Acting General Manager by the Board of Directors on February 17, 2000, and remained in that position on March 31, 2000, the date of Plaintiff’s termination. The Acting General Manager, pursuant to Kosrae State Code, Section 7.1308 and Section 1303(8), was authorized to fulfill the duties of the General Manager, such as management of the day to day business of MPC. The Acting General Manager was authorized to control the services of MPC employees, including the termination of the Plaintiff’s employment with MPC. Kos. S.C. § 7.1309. The reduction in force which caused the termination of Plaintiff’s employment, was approved by the Board of Directors. Aff. of Weston Luckymis, Ex. B to Def.’s Motion for Summary Judgment (Apr. 15, 2002). The appointment of Mr. Luckymis as Acting General Manager of MPC, the reduction in force and the termination of Plaintiff’s employment by the Acting General Manager were completed in accordance with law.

     Plaintiff, when he resigned from Kosrae State Government employment in 1996, voluntarily left a position subject to the protections of the Executive Service System law and regulations. Plaintiff voluntarily accepted a position with MPC based only upon a verbal employment agreement. Plaintiff

voluntarily accepted the risks of employment based only upon a verbal agreement.

     Plaintiff has not shown any assurances of continued employment by contract. Plaintiff has not shown any other assurances of continued employment by law or regulation. Kosrae State Code, Title 7, Chapter 13 does not provide any assurances of continued employment with MPC. Accordingly, there are no issue of material fact and the Defendant is entitled to judgment as a matter of law on this first cause of action of breach of contract.

B. Violation of Kosrae State Code, Section 7.1315.

     Plaintiff argues that the MPC Board of Directors failed to adopt a Manual of Administration as required by law, and due to this failure, and that because MPC is an instrumentality of the Kosrae State Government, the Kosrae State Public Service System procedures should be applied to MPC, and in particular to the termination of the Plaintiff. Kosrae State Code, Section 7.1315 requires the MPC Board of Directors to adopt a Manual of Administration. The Manual of Administration would include rules and regulations governing the selection, promotion, performance, evaluation, demotion, suspension and dismissal of employees of Defendant MPC. It is undisputed that the Board failed to adopt a Manual of Administration and that no Manual of Administration was adopted at the time of Plaintiff’s termination.

     Kosrae State Code, Section 7.1315 does not set a time limit for the Board to adopt the Manual of Administration. Therefore, there has not been a violation of statute. Compare Kos. S.C. tit. 11, ch. 21, § 11.2102, which requires the Governor to adopt a building code. To date, no building code has been adopted.

     It would be in the best interests of the Defendant’s employees to have a Manual of Administration adopted. The MPC Board of Directors could have contracted a consultant to have the Manual of Administration drafted, instead of waiting for former General Manager Reddy to prepare the Manual. While these actions would have been desirable, they were not required by law. The MPC Board’s failure to adopt a Manual of Administration was not a violation of law. State law does not allow application of the State Public Service System and regulations to employees of MPC. This Court could not find any provision in Kosrae State Code, Title 7, Chapter 13 which would make the Public Service System Act applicable to MPC. Contrary to the Plaintiff’s argument, MPC is specifically exempted from application of the State Public Service System under Kosrae State Code, Section 18.102(3).

     There has been no violation of Kosrae State Code, Section 7.1315, based upon the MPC Board’s failure to adopt a Manual of Administration. Plaintiff’s second cause of action must fail. There are no issues of material fact and the Defendant is entitled to judgment as a matter of law on this second cause of action.

C. Due Process Violations.

      Plaintiff claims violations of the due process guarantees provided by the FSM Constitution and the Kosrae State Constitution. The wording of the due process provisions in both the FSM and Kosrae Constitutions are identical: "A person may not be deprived of life, liberty, or property without due process of law, or be denied the equal protection of the laws." FSM Const. art. IV, § 3; Kos. Const. art. II, § 1(b).

     The due process clause has been interpreted by the FSM Supreme Court as it is applicable to government employment. Government employment that is "property" within the meaning of the due

process clause cannot be taken without due process. To be property protected under the Constitution, there must be a claim of entitlement based upon governmental assurance of continual employment or dismissal for only specified reasons. Suldan v. FSM (II), 1 FSM Intrm. 339 (Pon. 1983). An expectation of continued government employment is a property interest qualifying for protection under the due process clause. Falcam v. FSM, 3 FSM Intrm. 194 (Pon. 1987). The National Public Service Law and Public Service Regulations establish an expectation of continued employment of non-probationary employees, therefore dismissal is subject to due process. Semes v. FSM, 4 FSM Intrm. 66 (App. 1989).

     Our Court has also ruled on due process requirements applicable to employment that is a property interest: "To be property protected under the FSM and Kosrae State Constitutions, the employment rights must be based on governmental assurance of continual employment or dismissal for only specified reasons as stated in statute, regulations, formal contract or actions of a supervisory person with authority to establish terms of employment." Edwin v. Kosrae, 4 FSM Intrm. 292 (Kos. S. Ct. Tr. 1990).

     In this case, there is no assurance of continued employment with MPC given by statute. Kosrae State Code, Section 7.1303(8) provides that MPC may: "Retain and terminate the services of employees, agents, attorneys, auditors, and independent contractors upon such terms and conditions as the Corporation deems appropriate." (emphasis added). This section does not provide any assurance of continued employment with MPC.

     There is also no assurance of continual employment provided by regulations, as no regulations had been adopted at the time of Plaintiff’s termination from employment.

     There is no assurance of continued employment provided by formal contract because there was no formal contract of employment between the Plaintiff and Defendant. Plaintiff refused to execute a formal written employment contract offered by the Defendant.

     Finally, there is no assurance of continued employment provided by the actions of a supervisory person with authority to establish terms of employment. The Acting General Manager Weston Luckymis did not provide any assurance of continued employment to the Plaintiff.

     The due process clause may only be invoked through state action. The due process clause prevents governmental authorities from depriving individuals of property interests without first giving an opportunity to be heard. The clause protects against governmental rather than private deprivations of property. The party alleging a due process violation has the burden of showing that the defendant is a state actor and that the conduct in question was a state action. Alik v. Kosrae Hotel Corp., 5 FSM Intrm. 294 (Kos. 1992). See also Semwen v. Seaward Holding, Micronesia, 7 FSM Intrm. 105 (Chk. 1995) (Defendant is private entity. Due process protections do not apply).

     In the Alik case, the State of Kosrae was a shareholder of a private corporation. The Court held that actions of a private corporation which is partly owned by a government is not "state action" for purposes of due process analysis. Alik, 5 FSM Intrm. at 298. The Plaintiff, who was terminated from employment, was not entitled to notice and an opportunity for hearing pursuant to the due process clause. The Defendant was granted judgment as a matter of law.

     In this case, Defendant MPC is a government financed enterprise. MPC is a chartered corporation, pursuant to Kosrae State Code, Title 7, Chapter 13. At the time of the termination of employment of the Plaintiff, MPC was wholly owned by the Kosrae State Government. Kosrae State Code, Sections 7.1302 and 7.1303 set forth the responsibilities, duties, powers, legal characteristics

and capacity of the Defendant MPC. Based upon these provisions, it is clear that the Legislature intended that MPC be operated as a private business. For example, MPC is established as entity that may sue and be sued, MPC may sell shares of its stock, MPC may adopt bylaws and rules, there is a board of directors, MPC may hold real and personal property, and MPC may borrow money. Also state law provides that MPC retain and terminate employees upon such terms and conditions as MPC deems appropriate. It is MPC that is authorized by law to hire and fire its employees: not the Kosrae state government.

      The statutory provisions of Title 7, Chapter 13, further provide that any judgments or settlement of claims or actions against MPC may be paid out of reserves or insurance held by MPC and the doctrine of sovereign immunity of the State of Kosrae is expressly recognized. In other words, the State of Kosrae is not responsible for payment of MPC claims or judgments. The assets of MPC are not assets of the State of Kosrae, and the debts of MPC are not debts of the State of Kosrae. Kosrae State Code, Section 7.1304 expressly provides that the debts and obligations of MPC are not debts and obligations of Kosrae State Government and the Government is not responsible for any such debts or obligations. Finally, the General Manager of MPC is hired by the Board Directors and not the State of Kosrae. Kos. S.C. § 7.1308. Likewise, the Comptroller and General Counsel for MPC are hired by the General Manager of the Corporation and not the State of Kosrae. Kos. S.C. § 7.1310.

     These statutory provisions intend and ensure that MPC is run as a corporation with its own management and employees, and not as an agency of Kosrae State Government. While the Kosrae State Government remains the sole shareholder of MPC, the Kosrae State Government does not assume the debts of MPC, does not own the assets of MPC and has no control over the day to day operations of MPC, such as petroleum sales operations and employee matters.

     Based upon these facts and statutory provisions, MPC is not a "state actor." The termination of the Plaintiff was therefore not a "state action." Under the holding in Alik v. Kosrae Hotel Corp., the party alleging a due process violation has the burden of showing that the defendant is a state actor and that the conduct in question was a state action. Here, the Plaintiff has not satisfied his burden showing that MPC is a state actor and that the termination of the Plaintiff was a state action. The due process clause may only be invoked through state action. Here, there was no state action. Therefore, the constitutional due process protections do not apply to the Plaintiff’s termination of employment. MPC was not required to provide Plaintiff with an opportunity for hearing prior to his termination. The Plaintiff was not entitled to notice and an opportunity for hearing pursuant to the due process clause. There has been no violation of the constitutional due process protections.

     Plaintiff’s third and fourth causes of action must fail. There is no issue of material fact and the Defendant is entitled to judgment as a matter of law on the due process claims, under both the FSM Constitution and the Kosrae State Constitution.

     Defendant has met the standard for the granting of summary judgment on all four causes of action under KRCP Rule 56. There are no issues of material fact and the Defendant is entitled to judgment as a matter of law of all four causes of action alleged in the Complaint. Accordingly, Defendant’s Motion for Summary Judgment is granted. Plaintiff’s Cross-Motion for Summary Judgment is denied. The Complaint is dismissed with prejudice.

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