Cite as Lee v. Lee,13 FSM Intrm. 68 (Chk. 2004)

[13 FSM Intrm. 68]

CIVIL ACTION NO. 2003-1023

Decided: December 10, 2004

APPEARANCES:

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HEADNOTES

Civil Procedure – Default and Default Judgments

When a party against whom judgment by default is sought has appeared in the action, that party must be served with written notice of the application for judgment at least three days prior to the hearing on such application. Lee v. Lee, 13 FSM Intrm. 68, 70 (Chk. 2004).

Civil Procedure – Motions

Failure to oppose a motion is generally deemed a consent to the motion, but even if there is no opposition, the court still needs good grounds before it can grant the motion. For a motion to be granted, even if unopposed, it must be well grounded in law and fact. Lee v. Lee, 13 FSM Intrm. 68, 70 (Chk. 2004).

Civil Procedure – Summary Judgment

A court must deny a motion for summary judgment unless it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The court must view the facts presented and inferences made in the light most favorable to the nonmoving party. The burden of showing a lack of triable issues of fact belongs to the moving party. Lee v. Lee, 13 FSM Intrm. 68, 70 (Chk. 2004).

Civil Procedure – Summary Judgment

When the moving party has made out a prima facie case that there are no triable issues of fact and that he is entitled to summary judgment as a matter of law, the nonmoving party then has the burden to show by competent evidence that there is a triable material issue of fact. A nonmovant's failure to respond to a summary judgment motion, is a failure to meet his burden to overcome the plaintiff's prima facie case. In order to succeed on a summary judgment motion, the plaintiff must also overcome all affirmative defenses that the defendant has raised. Lee v. Lee, 13 FSM Intrm. 68, 71 (Chk. 2004).

Interest and Usury; Judgments

The general rule is that, in the absence of express authorization, interest is to be computed on a simple basis rather than compounded. Lee v. Lee, 13 FSM Intrm. 68, 71 (Chk. 2004).

Interest and Usury; Judgments

Nine percent a year is the legal or statutory interest rate on judgments. Such interest is only simple interest and is not compounded. Lee v. Lee, 13 FSM Intrm. 68, 71 (Chk. 2004).

Contracts – Damages; Interest and Usury; Settlement

When there is no authorization for compound interest in the settlement agreement and when it is apparent that the parties, in settling their prior lawsuit, intended to apply the legal or judgment rate of interest to any unpaid settlement balances, the plaintiff's damages must therefore be calculated on a simple interest basis. Lee v. Lee, 13 FSM Intrm. 68, 71 (Chk. 2004).

COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

This comes before the court on the Plaintiff's Request for Default Judgment Against Defendant Won Don Han and on the Plaintiff's Motion for Summary Judgment Against Defendant Yong Yee Lee

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(with supporting affidavit and exhibits), both served on October 6, 2004, and filed on October 11, 2004.

This case arises from the settlement agreement executed in Civil Action No. 2000-1012 on September 27, 2000. In that settlement agreement, Dong Hun Lee agreed to relinquish his 21% ownership stake in Ocean Flag, Ltd. and in return the defendants in that case (which included both Yong Yee Lee and Won Don Han and others) agreed to pay $500,000 – $250,000 immediately, and the $250,000 balance in monthly $20,000 installments, starting January 2001, with the installment payments to be the joint and several obligation of all the defendants in that case and subject to nine per cent interest. The initial $250,000 payment was made.

Alleging that the monthly installment payments had not been made, the plaintiff filed this suit seeking the sums due.

I. DEFAULT JUDGMENT MOTION

Defendant Won Don Han was served with the complaint and summons on August 25, 2003, and with a copy of the amended complaint on August 9, 2004. Won Don Han filed, but did not serve, an "answer" on January 5, 2004. However, that "answer" does not appear to respond to the original complaint, but to a motion filed by co-defendant Wesley Simina. He did not respond to the amended complaint. Nonetheless, Won Don Han, since he filed one paper, has appeared in the action.

Upon the plaintiff's request, the clerk has entered Won Don Han's default. FSM Civ. R. 55(a). The plaintiff's motion asks the court to enter a default judgment against Won Don Han. When a party against whom judgment by default is sought has appeared in the action, that party must be served with written notice of the application for judgment at least three days prior to the hearing on such application. FSM Civ. R. 55(b). The plaintiff has complied with this requirement. Won Don Han has failed to answer or otherwise defend this action although he has had notice and the opportunity to be heard. Judgment against him shall therefore be entered for $250,000 plus nine percent interest per annum starting from September 27, 2000.

II. SUMMARY JUDGMENT MOTION

The plaintiff also moves for summary judgment against defendant Yong Yee Lee. The motion, with supporting affidavit and exhibits, was served upon defendant Yong Yee Lee on October 6, 2004. No response has been filed. Failure to oppose a motion is generally deemed a consent to the motion, FSM Civ. R. 6(d), but even if there is no opposition, the court still needs good grounds before it can grant the motion. Senda v. Mid-Pacific Constr. Co., 6 FSM Intrm. 440, 442 (App. 1994). For a motion to be granted, even if unopposed, it must be well grounded in law and fact. In re Parcel No. 046-A-01, 6 FSM Intrm. 149, 153 (Pon. 1993).

A court must deny a motion for summary judgment unless it finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The court must view the facts presented and inferences made in the light most favorable to the nonmoving party. The burden of showing a lack of triable issues of fact belongs to the moving party. Nanpei v. Kihara, 7 FSM Intrm. 319, 323 (App. 1995); Adams v. Etscheit, 6 FSM Intrm. 580, 582 (App. 1994). In order to succeed on a summary judgment motion, the plaintiff must also overcome all affirmative defenses that the defendant has raised. FSM Dev. Bank v. Ifraim, 10 FSM Intrm. 342, 345 (Chk. 2001); Bank of the FSM v. Hebel, 10 FSM Intrm. 279, 284 (Pon. 2001); Mid-Pacific Constr. Co. v. Semes, 7 FSM Intrm. 522, 526-27 (Pon. 1996).

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Based upon the pleadings; the motion's supporting affidavit; the plaintiff's requests for admissions, which were served on Yong Yee Lee on January 12, 2004 and to which no response was made so that they are therefore deemed admitted, FSM Civ. R. 36(a); and the text of the settlement agreement, the plaintiff has made out a prima facie case that there are no triable issues of fact and that he is entitled to summary judgment as a matter of law according to the terms of a valid settlement agreement.

Yong Yee Lee filed an answer to the original complaint. He did not respond to the amended complaint. The plaintiff has also overcome the affirmative defenses raised in Yong Yee Lee’s answer to the original complaint to the extent that that pleading is still operative.

When the moving party has made out a prima facie case that there are no triable issues of fact and that he is entitled to summary judgment as a matter of law, the nonmoving party then has the burden to show by competent evidence that there is a triable material issue of fact. Nanpei, 7 FSM Intrm. at 325. By his failure to respond to the summary judgment motion, Yong Yee Lee has failed to meet his burden to overcome the plaintiff's prima facie case. Judgment against him shall therefore be entered for $250,000 plus nine percent interest per annum starting from September 27, 2000.

III. INTEREST CALCULATION

The plaintiff asked for a judgment totaling $353,502, which includes the $250,000 principal plus nine percent interest from September 27, 2000 to September 28, 2004 ($103,502). He has, however, miscalculated the interest.

In his computation, the interest is compounded every December 31st. The interest provision in the settlement agreement makes no mention of compounding. It merely states that the interest is to be "9% per annum." The general rule is that, in the absence of express authorization, interest is to be computed on a simple basis rather than compounded. Stovall v. Illinois Cent. Gulf R.R., 722 F.2d 190, 192 (5th Cir. 1984); see also 45 AM. JUR. 2D Interest and Usury § 57 (1999). There is no authorization for compound interest in the settlement agreement.

The conclusion that compound interest was not expressly authorized is further reinforced by the choice of nine per cent interest. "[N]ine percent a year" is the legal or statutory interest rate on judgments. 6 F.S.M.C. 1401. Such interest is only simple interest and is not compounded. Senda v. Creditors of Mid-Pacific Constr. Co., 7 FSM Intrm. 664, 670 (App. 1996). It is apparent that the parties, in settling their prior lawsuit, intended to apply the legal or judgment rate of interest to any unpaid settlement balances.

The plaintiff's damages must therefore be recalculated on a simple interest basis and brought up to date. The difference between the two calculations is substantial – over $14,900. Nine percent interest on $250,000 from September 27, 2000 to December 10, 2004 is $94,561.64. (By the plaintiff's method, it would have been $109,547.82 by December 10, 2004).

IV. CONCLUSION

There being no just cause for delay, the clerk is accordingly directed to forthwith enter judgment against defendants Yong Yee Lee and Won Don Han, jointly and severally, for the sum of $344,561.64. FSM Civ. R. 54(b).