Cite as Narruhn v. Chuuk,11 FSM Intrm. 48 ( Chk. S. Ct. Tr. 2002)

[11 FSM Intrm. 048]

CSSC-CA-NO. 28-93

Hearings: September 20, 2001, May 15, 2002
Decided: July 5, 2002

APPEARANCES:

HEADNOTES

Judgments

Payments on judgments are credited first to accrued interest, and then to principal. Interest accrues as simple interest. Narruhn v. Chuuk, 11 FSM Intrm. 48, 52 (Chk. S. Ct. Tr. 2002).

Debtors' and Creditors' Rights) Orders in Aid of Judgment

It is generally within the Chuuk State Supreme Court's power to issue an order in aid of judgment. This power derives from the court's power to issue all writs for equitable and legal relief. Narruhn v. Chuuk, 11 FSM Intrm. 48, 53 (Chk. S. Ct. Tr. 2002).

Debtors' and Creditors' Rights – Orders in Aid of Judgment

In deciding whether to issue an order in aid of judgment, the court is presented with two issues: 1) the debtor's ability to pay, and 2) the fastest manner in which the debtor can reasonably pay the judgment based upon the finding of ability to pay. Narruhn v. Chuuk, 11 FSM Intrm. 48, 53 (Chk. S.

[11 FSM Intrm. 049]

Ct. Tr. 2002).

Debtors' and Creditors' Rights – Orders in Aid of Judgment

As a matter of law, the court cannot issue an order directing the state to pay money absent an appropriation therefor. The inquiry, then, is how, when funds are available to pay judgments, the court can assist a judgment creditor in getting his judgment paid in the fastest manner. Narruhn v. Chuuk, 11 FSM Intrm. 48, 53 (Chk. S. Ct. Tr. 2002).

Debtors' and Creditors' Rights – Orders in Aid of Judgment

In addressing the question of how best to assure payment of a judgment in "the fastest manner," the court is mindful of the fact that it has wide latitude in crafting an order in aid of judgment. While the court cannot direct the Legislature to appropriate money to pay a judgment, it does have the authority to compel the Director of Treasury, and the Governor, through mandamus, to meet their non-discretionary duty to pay judgments in a fair and non-discriminatory manner. Narruhn v. Chuuk, 11 FSM Intrm. 48, 54 (Chk. S. Ct. Tr. 2002).

Judgments

Any person or entity authorized by law to pay the state's debts, in the absence of legislation to the contrary, must use money appropriated by the Legislature to pay judgments against the state in the order in which the judgments were entered, paying the oldest judgment in full before any payments are made on the next oldest judgment. Narruhn v. Chuuk, 11 FSM Intrm. 48, 54 (Chk. S. Ct. Tr. 2002).

Constitutional Law – Chuuk – Executive Powers; Separation of Powers – Chuuk

Neither the Director of Treasury nor the Governor may use or direct the use of monies appropriated to pay judgments against the state for any purpose other than to pay judgments. Narruhn v. Chuuk, 11 FSM Intrm. 48, 54 (Chk. S. Ct. Tr. 2002).

Constitutional Law – Chuuk – Executive Powers; Separation of Powers – Chuuk

Money appropriated to pay judgments against the state may not be used to pay "settlements" or "claims" against the state which have not been reduced to judgment. Narruhn v. Chuuk, 11 FSM Intrm. 48, 54 (Chk. S. Ct. Tr. 2002).

Debtors' and Creditors' Rights – Orders in Aid of Judgment

A judgment creditor needing continuing medical care resulting from a state employee's negligent or wilful conduct, may apply to the court for specific relief, and assuming funds have been appropriated for payment of the state's judgment debts which remain undisbursed and available, any such judgment creditor shall receive payment on his or her judgment regardless of the judgment's date of entry. Narruhn v. Chuuk, 11 FSM Intrm. 48, 54 (Chk. S. Ct. Tr. 2002).

COURT'S OPINION

WANIS R. SIMINA, Associate Justice:

I. Procedural History

This action for negligence against the State of Chuuk was filed by Plaintiff on February 16, 1993. On September 7, 1993, Defendant filed with the Court an "Offered [sic] of Judgment," signed on June 30, 1993 by Deputy Attorney General Kachuo Eko on behalf of Chuuk State, and by Richard Eaz, then counsel for Plaintiff. Defendant offered and Plaintiff accepted that judgment be entered in favor of

[11 FSM Intrm. 050]

Plaintiff and against the Defendant in the total sum of $40,000.00, plus interest at nine percent (9%) per annum which the Defendant in the document promised "to pay in full such sum in the most expeditious manner as possible." Judgment was rendered by the Court pursuant to the stipulated Offer of Judgment on September 15, 1993. As a result of an oversight in the office of the Clerk of the Court, the judgment was not entered as required by CSSC Civil Rule 58. The written judgment provided that Plaintiff have judgment against Defendant in the sum of $40,000.00, and that "Defendant pays [sic] the herein judgment sixty (60) days from the date hereof." The judgment was not paid as ordered. No further action in this matter was taken until May, 2001.

Plaintiff herein originally filed his Motion for Order in Aid of Judgment, and related pleadings, on May 3, 2001. Hearing on the motion was then scheduled for May 29, 2001. On that date, the Chuuk State Attorney General, Ready Johnny, appeared for the Defendant. Neither Plaintiff nor his counsel of record appeared, despite having been duly served with notice of the hearing. The motion was denied without prejudice to refiling due to the failure of Plaintiff to appear at the properly noticed hearing. Defendant Chuuk State was aware of the form of the dismissal without prejudice, having been present at the hearing through its Attorney General. There is no Certificate of Service of the Order Dismissing Action [sic] Without Prejudice in the Court's file.

On June 13, 2001, more than two weeks after the hearing date, Plaintiff filed his Motion for Enlargement of Time to continue the hearing scheduled for May 29, 2001. The motion for enlargement was dated May 18, 2001. No reason was given for the delay in filing the Motion for Enlargement.

On June 14, 2001, Plaintiff re-filed his Motion for Order in Aid of Judgment. The Motion and related pleadings included a Certificate of Service indicated personal delivery of the renewed motion on Maketo Robert of the Office of the Attorney General on June 14, 2001.

Hearing on the renewed motion was noticed for July 16, 2001. Prior to the hearing, at the request of Plaintiff, subpoenas duces tecum were issued by the Clerk of the Court directed at various Chuuk State government officials, including Nakama Sana, the Acting Director of Treasury, the Speaker of the House of Representatives and President of the House of Senate of the Chuuk State Legislature. Service of the subpoenas was duly made, with proper return of service.

At the hearing on July 16, 2001, counsel for the Plaintiff appeared. No appearance was made on behalf of Defendant Chuuk State, and none of the persons subpoenaed by the Court to appear at the hearing were present. Counsel for Plaintiff represented to the Court that he had been contacted "by a member of the Legislature" indicating that they intended to file a motion. No motion had been filed. During a break in the proceedings, the Court was informed that the Attorney General, who had received notice of the hearing, and Nakama Sana, under subpoena to appear, were in Pohnpei. The Court had never been notified that Defendant Chuuk State would not be represented at the hearing, or that the Attorney General and the Director of Finance were unavailable. At the request of Plaintiff, the hearing was rescheduled for September 20, 2001, and the Defendant and subpoenaed parties were given notice of an order to show cause regarding their failure to appear as required at the July 16, 2001 hearing.

At the hearing on September 20, 2001, the Chuuk State Attorney General, Ready Johnny, appeared on behalf of Chuuk State. Chuuk State argued orally, without filing any memorandum of points and authorities in support of its argument, that because the prior motion had been dismissed "for want of prosecution," the Court did not have jurisdiction to hear the matter without conducting a prior hearing on Plaintiff's right to "reopen" the matter, claiming the lack of such a hearing constituted a violation of the due process rights of Defendant Chuuk State. Even if Chuuk State had not been served a copy of the order of the Court filed on May 31, 2001, which specifically provided that the motion

[11 FSM Intrm. 051]

filed on May 3, 2001 was dismissed "without prejudice for refiling," the Attorney General was aware of the order, as he was present at the hearing on May 29, 2001.

Despite having been subpoenaed to appear, the Speaker of the House of Representatives and the President of the House of Senate of the Chuuk State Legislature did not appear in person at the hearing. An appearance was made on their behalf by Johnny Meippen from the Office of Legislative counsel, who argued orally, again without filing any memorandum of points and authorities in support of their position, that under the "separation of powers" doctrine the Court did not have the power to issue subpoenas to these legislative leaders.

In order to permit the Defendant and subpoenaed persons to more fully set forth their arguments, the Court ordered the matter continued to November 15, 2001, and directed that memoranda in opposition to the motion, and in opposition to the subpoenas, could be filed by the Attorney General and the Office of Legislative Counsel. The order was signed by the Court on September 24, 2001, and a Return of Service reflects service of the order on counsel present at the September 20, 2001 hearing. No memoranda were ever filed by any party or subpoenaed person. Prior to the new date for hearing, a new subpoena was issued to Nakama Sana. The Court files do not reveal renewal of the subpoenas directed to the President of the House of Senate or the Speaker of the House of Representatives.

For reasons not revealed by the Court file, there is no record of any hearing having taken place as scheduled on November 15, 2001. The Court next scheduled a hearing on this motion for March 1, 2002. On timely motion of the Plaintiff for enlargement of time, the hearing was rescheduled for May 8, 2002. At the request of Plaintiff, the hearing was again continued from May 8, 2002 to May 15, 2002. Finally, on May 15, 2002, more than a year after the initial Motion for Order in Aid of Judgment had been filed, a hearing was held at which both the Plaintiff and Defendant Chuuk State appeared ready to address the issues raised by the motion. Instead Defendant made another effort to impede progress in this case.

For the first time since judgment was rendered on September 7, 1993, and after a year spent in procedural machinations relating to everything other than the issues raised by the motion, Defendant Chuuk State asserted at the hearing that there was no judgment in this case, because the judgment had not been entered in conformity with CSSC Civil Rule 58. Rather than delay the proceeding once again, the Court gave Plaintiff an opportunity to move the Court for entry of the judgment nunc pro tunc to the date of rendition of the judgment, September 15, 1993, and to permit Defendant Chuuk State the opportunity to formally oppose the motion. The hearing then proceeded on the issues raised by the Motion for Order in Aid of Judgment.

Plaintiff filed his Motion for Judgment Nunc Pro Tunc on May 20, 2002. Defendant Chuuk State filed its opposition to the motion on May 27, 2002, and Plaintiff filed his reply on June 4, 2002. The Court granted the motion for entry of judgment nunc pro tunc by order dated and entered on June 12, 2002. The matter then stood submitted on the issues raised by Plaintiff's Motion for Order in Aid of Judgment, based on the evidence introduced at the hearing on May 15, 2002.

The Court has taken the time and effort to set forth the procedural history relative to the instant motion in order to point out some of the difficulties presented when the parties, and the Court, fail to properly address their respective responsibilities in the litigation process. Surely, the Court must assume some responsibility for failing to ensure the proper entry of the judgment at the time it was rendered. The Court also assumes some responsibility for failing to ensure service of certain orders made during this lengthy process.

However, much of the delay in obtaining a hearing on the issues presented by the original motion

[11 FSM Intrm. 052]

is, in the Court's opinion, directly related to failure of Plaintiff's counsel to appear at the original hearing, despite proper notice, and the tactics of counsel for Chuuk State and the Chuuk State Legislature, which in the Court's mind were intended to divert the Court from its task in this matter. Matters were raised by both counsel without prior notice, and without proper briefing. Arguments were made which cannot be supported in law. Defendant Chuuk State failed to appear at the hearing on July 16, 2001, despite clear notice, and the Acting Director of Treasury apparently wilfully failed to respond to a lawfully issued subpoena to appear. When given the opportunity to file memoranda of law on the issues raised by these counsel orally and without prior notice, neither counsel availed himself of the opportunity to do so. It appears that many of the arguments of Defendant Chuuk State and of the leaders of the Legislature were made solely with the intent to delay the Court in its efforts to rule on the instant motion.

The Court need not at this time respond to each argument thus raised, in order to point out their deficiencies. Suffice it to say that in the future, the Court will take a very dim view indeed of such arguments, and will respond accordingly, where necessary.

II. Evidence in Support of and in Opposition to Motion

At the hearing on May 15, 2002, Plaintiff introduced evidence establishing that a judgment in his favor in the sum of $40,000.00 had been rendered on September 15, 1993, and that the judgment was to accrue interest at the rate of nine percent (9%) per annum. Plaintiff also introduced evidence that despite demands, only $6,720.00 had been paid in satisfaction of the judgment since it was rendered.1 Defendant failed to introduce any evidence that payments were made which would have reduced the annual simple interest calculation by reducing the amount of principal owed on the judgment.

Since payments on judgments are credited first to accrued interest, and then to principal, Senda v. Creditors of Mid-Pacific Constr. Co., 7 FSM Intrm. 664, 670-71 (App. 1996), it is clear that the no part of the original judgment has been paid. Interest accrues as simple interest, id. at 670, which in the instant case means that annual interest on the judgment is $3,600.00 per year. Assuming a 365 day year, daily interest on the judgment accrues at the rate of $9.86 per day. According to the Plaintiff, the interest owed on the judgment as of the May 15, 2002 hearing date was $31,000.00. The Court calculates the total accrued interest, prior to credit for payments made, at $31,186.12.2 Thus, the amount owed on the judgment as of May 15, 2002, after subtracting $6,720.00 in payments previously made, is $64,466.12, and interest continues to accrue at the rate of $9.86 per day from that date.

In opposition to the motion, Nakama Sana, Director of the Treasury, testified that Chuuk State has current judgment debt in excess of $10 million. In addition to this testimony, the Court takes judicial notice, Chk. Evid. R. 201, of the "Interim Report of the Chuuk State and FSM Joint Financial Stabilization Program (FSP) Task Force," dated March 29, 2002. The report indicates, at page 4, that Chuuk State has obligations to over 800 "claimants" for court judgments, settlements, and "claims," totally approximately $10.2 million.

[11 FSM Intrm. 053]

Director Sana also testified that $250,000.00 had been appropriated in FY 2002 for payment of judgments, and that the sum had been totally disbursed by April, 2002. He further testified that the goal of the current administration is to have all debt paid by the end of FY 2004, although he offered no testimony on how the administration intended to pay in excess of $10 million in judgment debt within two and a half years. The Court finds this testimony to be "wishful thinking," at best.

III. Discussion of Issues Presented by the Motion

It is generally within the power of the Court to issue an order in aid of judgment. This power derives from the power of the Chuuk State Supreme Court to issue all writs for equitable and legal relief. Chk. S.L. No. 190-08, § 4. See Kama v. Chuuk, 9 FSM Intrm. 496, 497-98 (Chk. S. Ct. Tr. 1999). In deciding whether to issue an order in aid of judgment, the Court is presented with two issues: (1) the debtor's ability to pay, and (2) the fastest manner in which the debtor can reasonably pay the judgment based upon the finding of ability to pay. Kama, 9 FSM Intrm. at 498.

These are not normal circumstances, however. Rather than seeking assistance against a private judgment debtor, the judgment debtor in this case is Chuuk State. It is indisputable, as a matter of law, that this Court cannot issue an order directing the payment of money by Chuuk State absent an appropriation therefor. To do so would be in violation of Article VIII, § 2 of the Chuuk State Constitution3 and the Chuuk State Judiciary Act, Chk. S.L. No.190-08, § 4.4 Judah v. Chuuk, 9 FSM Intrm. 41, 42 (Chk. S. Ct. Tr. 1999); Kama, 9 FSM Intrm. at 497-98; Billimon v. Chuuk, 5 FSM Intrm. 130, 136 (Chk. S. Ct. Tr. 1991).

The fact that the Court cannot direct the Legislature to appropriate money to pay this judgment, and cannot direct the Executive to pay this judgment absent funds appropriated therefore, does not end the inquiry, however. Despite the fact that it is clear that there are no funds available in FY 2002 with which to pay the judgment at issue here, the testimony of Director Sana and the representations of the Attorney General both lead the Court to the conclusion that the Governor of Chuuk State intends to ask the Legislature for an appropriation to pay debts of the state, including judgments, in FY 2003. The inquiry, then, is how, when funds are available to pay judgments, the Court can assist this judgment creditor in getting his judgment paid in "the fastest manner."

In deciding this question, the Court is mindful of certain relevant and important facts. First, this judgment has been outstanding without significant payment since September, 1993. Second, payments on claims and judgments to others were made in FY 2002, without any payment being made on this judgment, despite the fact that it is almost nine years old. From these facts, the Court must conclude that the current method of paying the judgment debts of the state is arbitrary, to say the least, and may be capricious and discriminatory to the rights of holders of judgments older than those upon which payments were actually made in FY 2002. Judgment creditors of Chuuk State should be able to expect that their judgments will be paid without unreasonable delay, as funds become available, and that there is a fair and equitable manner of determining which judgments should be paid, and when. To the extent that the Legislature has thus far declined to enact legislation addressing this question, this Court feels compelled to fill the void left by the inaction of the legislative body.

[11 FSM Intrm. 054]

In addressing the question of how best to assure payment of this judgment in "the fastest manner," the Court is mindful of the fact that it has wide latitude in crafting an order in aid of judgment. Louis v. Kutta, 8 FSM Intrm. 312, 319 (Chk. 1998). While the Court cannot direct the Legislature to appropriate money to pay this judgment, it does have the authority to compel the Director of Treasury, and the Governor, through mandamus, to meet their non-discretionary duty to pay judgments in a fair and non-discriminatory manner. Chk. S.L. No. 190-08 – 4; In re Main, 4 FSM Intrm. 255, 258 (Pon. 1984); Election Commissioner v. Petewon, 6 FSM Intrm. 491, 496 (Chk. S. Ct. App. 1994). It is the opinion of this Court that the fairest and most equitable way to obtain satisfaction of this almost nine year old judgment in "the fastest manner" is to require that payment of judgments, from funds made available for that purpose by the Legislature, be made in a manner which insures that judgments are paid in the order in which the judgments were entered. In other words, the Court finds that the Governor of Chuuk State, the Director of Treasury, and any other person or entity authorized by law to pay debts of Chuuk State, in the absence of legislation to the contrary, must use money appropriated by the Legislature to pay judgments against Chuuk State in the order in which the judgments were entered, paying the oldest judgment in full before any payments are made on the next oldest judgment. The Court further finds that neither the Director of Treasury nor the Governor of Chuuk State may use or direct the use of monies appropriated to pay judgments for any purpose other than to pay judgments. In other words, money appropriated to pay judgments against the State of Chuuk may not in the future be used to pay "settlements" or "claims" against the state which have not been reduced to judgment by the Chuuk State Supreme Court or the Supreme Court of the Federated States of Micronesia. To the extent the Governor wishes to have "settlements" or "claims" against Chuuk State which have not been reduced to judgment paid by the state, he can clearly request specific appropriations from the Legislature for that purpose.

The Court finds that one particular exception to this rule is warranted. In some cases, judgments are rendered against the state by this Court, or by the Supreme Court of the Federated States of Micronesia, for personal physical injuries suffered by persons due to the negligent or wilful conduct of officers and employees of the state. In these cases, prompt payment of judgments may be the only way that victims of such conduct who have continuing health problems can receive adequate medical care. Therefore, the Court believes it reasonable to expect that payments necessary for continuing medical care should be made regardless of the date of entry of the judgment. In the case of a judgment creditor needing continuing medical care resulting from the negligent or wilful conduct of Chuuk State employees, the judgment creditor may apply by petition to this Court for specific relief from the provisions of this order. Upon the granting of such relief by the Court, and assuming funds have been appropriated for payment of judgment debts of the state which remain undisbursed and available for payment, any such judgment creditor shall receive payment on his or her judgment regardless of the date of entry of the judgment.

IV. Orders in Aid of Judgment

Now therefore, and good cause appearing, the Court makes the following orders in aid of the judgment of the judgment creditor herein, which orders shall remain in full force and effect until further order of this Court or action by the Chuuk State Legislature which contravenes or negates the provisions of these orders:

1. The Governor of Chuuk State, and the Director of Treasury of Chuuk State, and any other person or entity otherwise authorized by law to pay debts of Chuuk State, are hereby permanently enjoined from paying any "settlements" or "claims" against Chuuk State which have not been reduced to judgment out of any monies appropriated by the Chuuk State Legislature for payment of judgments against Chuuk State.

[11 FSM Intrm. 055]

2. The Director of Treasury is ordered to provide this Court, within thirty (30) days from the date of this Order, a complete list of all judgments against Chuuk State presently outstanding and unpaid, including with each judgment the date of entry of the judgment, the amount currently owed on the judgment including accrued interest on the judgment, payments made to date on the judgment, and whether the judgment is for personal physical injuries resulting from the negligence or wilful conduct of officers or employees of Chuuk State. For good cause shown, at any time prior to the expiration of said thirty (30) day period, such time may be extended, in the discretion of the Court, for an additional thirty (30) days only. Failure to provide this information within the time permitted shall be considered an act in contempt of the authority of this Court, and in contempt of the orders and processes of this Court, and shall be dealt with accordingly.

3. Beginning on October 1, 2002, and continuing thereafter until further order of this Court, or until legislation is adopted which supersedes or negates the effect of this Order, the Governor of Chuuk State, and the Director of Treasury, and any person or entity otherwise authorized by law to pay debts of Chuuk State, are hereby directed and mandated to pay, out of monies appropriated by the Legislature for payment of judgments against Chuuk State, judgments against Chuuk State in the order in which they were rendered by either the Chuuk State Supreme Court or the Supreme Court of the Federated States of Micronesia, with the oldest outstanding judgment paid in full before any payment may be made on the next oldest judgment, until such time as all judgments against Chuuk State are paid in full.

4. The Governor of Chuuk State, and the Director of Treasury, and any person or entity otherwise authorized by law to pay debts of Chuuk State, shall inform any judgment creditor seeking payment of his or her judgment of the existence of these orders, and of their provisions. In the case of any judgment creditor seeking payment of a judgment entered for personal physical injuries, the Governor, Director of Treasury, and any other person or entity authorized by law to pay debts of Chuuk State, shall instruct the judgment creditor to apply to this Court for a waiver of the requirements of this order in accordance with the terms of this memorandum and orders in aid of judgment.

5. Failure to comply in any way with the provisions of these Orders shall be considered an act in contempt of the authority of this Court, and in contempt of the orders and processes of this Court, and shall be dealt with accordingly.

6. The Attorney General of Chuuk State is hereby ordered to certify to this Court, by affidavit under penalty of perjury, within fourteen (14) days from the date of entry of this Memorandum and Orders in Aid of Judgment, that the Governor of Chuuk State and the Director of Treasury of Chuuk State have both been provided with a copy of this Memorandum and Order, have had the orders contained herein explained fully to them, and that the Governor and Director of the Treasury understand fully the duties and obligations imposed upon them by the terms of these orders.

The Clerk of the Court is directed to have this Memorandum and Orders served on counsel for the Plaintiff by the most convenient means, and personally served on the Attorney General of Chuuk State and the Legislative Counsel for the Chuuk State Legislature.

It is so ordered.

¹ The fact that payments had been made seems, to the Court, to dispose of the argument raised by Defendant Chuuk State that no judgment existed due to the fact that it had not been entered. If there were no judgment, why did Defendant make payments?

² ($3,600.00 x 8 years) + ($9.86 x 242 days) = $31,186.12.

³ Article VII, § 2 provides: "No public funds may be paid out of the treasury of the State of Chuuk except as prescribed by statute."

⁴ "Section 4. General Powers of State and Municipal Courts. Each court shall have power to issue all writs of equitable and legal relief, except the power of attachment, execution and garnishment of public property. . ." [emphasis added].