[13 FSM Intrm. 464]

Property ) Leases

Civil Procedure ) Summary Judgment

Civil Procedure ) Summary Judgment; Torts ) Trespass

Attorney and Client ) Fees; Civil Procedure ) Motions

Civil Procedure ) Motions

Civil Procedure ) Admissions

Civil Procedure ) Admissions; Evidence ) Hearsay

Civil Procedure ) Discovery; Civil Procedure ) Sanctions

Civil Procedure ) Injunctions

Civil Procedure ) Pleadings

Civil Procedure ) Pleadings

      A movant’s motion to amend its answer will be granted when the movant’s new cross-claims and counterclaim are either related to its previous cross-claim and based on the same nucleus of operative fact, or are based on an event that has occurred since the case started and is closely related to the litigation so none of the grounds for denial are apparent, and when the one declared ground ) futility of amendment ) has been rejected. Mailo v. Chuuk, 13 FSM Intrm. 462, 472 (Chk. 2005).

* * * *

DENNIS YAMASE, Associate Justice:

     This came before the court for hearing on four pending motions on September 19, 2005. The court heard argument on the following:

      (1)  Motion for Summary Judgment filed by defendants Gradvin Aisek and Gardenia Walter d/b/a

the Blue Lagoon Resort ("Blue Lagoon") on August 30, 2004, plaintiff Mark Mailo’s Opposition to Motion for Summary Judgment, filed June 30, 2005, Mailo’s Supplemental Opposition to Motion for Summary Judgment, filed July 1, 2005, and Mailo’s Supplemental Opposition to Motion to Amend Answer and Summary Judgment Motion, filed October 3, 2005;

      (2)  Mailo’s Motion to Compel Discovery, Responses and Deem Requests for Admissions Admitted, filed June 27, 2005, and Blue Lagoon’s Opposition to Plaintiff’s Motion to Compel Discovery, Responses and Deem Requests for Admissions Admitted, filed July 6, 2005; and

      (3)  Blue Lagoon’s Motion to Amend Preliminary Injunction, filed June 21, 2005, and Mailo’s opposition to Motion to Amend Preliminary Injunction, filed June 27, 2005.

      No argument was heard on (4) Blue Lagoon’s Motion to Amend Answer, filed on September 15, 2005 and served on the State of Chuuk on September 16, 2005, because the ten days to respond, FSM Civ. R. 6(d), had not yet run and the defendant State of Chuuk indicated that it would like an opportunity to respond to the motion. Chuuk, however, did not file an opposition. Mailo’s Opposition to Motion to Amend Answer was filed on September 19, 2005. On September 29, 2005, Blue Lagoon filed a Reply: Notice of Non-Opposition to Motion.

A.  Trespass Cause of Action

       To maintain a trespass action, a plaintiff must prove that at the time of the alleged trespass he had either actual possession or the right to immediate possession. Sana v. Chuuk, 7 FSM Intrm. 252, 254 (Chk. S. Ct. Tr. 1995). The court’s role in a civil trespass case is to determine which party has the greater possessory right to the property. Nelson v. Kosrae, 8 FSM Intrm. 397, 403 (App. 1998). Trespass actions determine who has a better right to possession of the land, Kiniol v. Kansou, 12 FSM Intrm. 335, 336 (Chk. 2004), and an action for trespass has been broadly defined in the FSM as a wrongful interference with another’s possessory interest in property, Nelper v. Akinaga, Pangelinan & Saita Co., 8 FSM Intrm. 528, 533 (Pon. 1998).

B.  Summary Judgment Standard

      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, and the burden of showing a lack of triable issues of fact belongs to the movant. Weno v. Stinnett, 9 FSM Intrm. 200, 206 (App. 1999); Adams v. Etscheit, 6 FSM Intrm. 580, 582 (App. 1994).

C.  Undisputed Material Facts

      The following material facts are undisputed. In 1969, the Trust Territory government entered into a fifty-year lease with the landowners of sixteen parcels in Neauo, Weno. This lease did not

include Lot No. 60168. The Trust Territory then subleased these sixteen parcels plus three other parcels that it believed it owned (including Lot No. 60168), for fifty years to Continental Airlines ("Continental"), which built and operated the Truk Continental Hotel resort there. In 1979, Santer Eram and Nenita Santer sued Truk State, the Trust Territory government’s successor-in-interest, over the ownership of Lot No. 60168. On May 9, 1985, the parties stipulated to a judgment, approved by the Trust Territory High Court, wherein the State relinquished all its claims to ownership of Lot No. 60168, and, in return, the plaintiffs leased Lot No. 60168 to the State until 2019. The stipulation included the lease terms. The parties did not execute a lease separate from the stipulated judgment.

      Lot No. 60168 was later subdivided. Defendant Gradvin Aisek bought two parcels and plaintiff Mark Mailo bought three or four parcels from that lot. Mailo knew the parcels were subject to a lease to the State when he bought them. In 1998, Continental Airlines assigned its lease to the Blue Lagoon Dive Shop, and the Truk Continental Hotel became the Blue Lagoon Resort. Blue Lagoon has since timely made the lease payments called for in the 1969 lease from the Trust Territory and the State has accepted them.

C.  Mailo’s Opposition

      Mailo contends that Blue Lagoon has no lease for Lot No. 60168. Mailo contends that the Trust Territory mistakenly thought it owned Lot No. 60168 when it leased that lot to Continental in 1969 so that the portion of the 1969 lease leasing Lot No. 60168 to Continental is null and void. He also contends that since no new lease was made to Continental after the 1985 stipulated judgment, Continental, and therefore Blue Lagoon, never had a valid lease for Lot No. 60168 from either the Trust Territory or the State. Mailo also stresses that after the 1985 stipulated judgment, the State and Santer Eram and Nenita Santer never entered into a separate lease agreement for Lot No. 60168, although it is unclear exactly what inference he wants the court to draw from that.

E.  Analysis

      Mailo’s contentions fail at each turn. The court’s reasons follow.

1.  The Stipulated Judgment

      First, the 1985 stipulated judgment is not a judicial determination or holding that the Trust Territory did not own Lot No. 60168 in 1969, although Mailo characterizes it as such. That characterization fundamentally misunderstands the nature of stipulated judgments.

      Stipulated judgments, while they are judicial acts, also have the attributes of voluntarily-undertaken contracts. Farata v. Punzalan, 11 FSM Intrm. 175, 178 (Chk. 2002) (parties make a freely calculated, deliberate choice to submit to an agreed judgment rather than seek a more favorable litigated outcome or risk a less favorable one). A stipulated judgment (also called a consent decree) "although enforceable like any other judicial decree, is not a judicial determination of any litigated right.  It may

be defined as a contract of the parties acknowledged in open court and ordered to be recorded by a court of competent jurisdiction." Gagne v. Norton, 453 A.2d 1162, 1165 (Conn. 1983) (citation omitted). "A stipulated judgment is not a judicial determination, but is a contract between the parties entering into said stipulation." In re New Mexico Properties, Inc., 18 B.R. 936, 941 (Bankr. D.N.M. 1982). A consent decree or stipulated judgment "does not constitute a resolution of parties’ rights but is a mere recordation of their private agreement. Once a consent decree has been entered it is generally considered to be binding on the parties and it cannot be amended or varied without the consent of each party." Wallenius v. Sison, 611 N.E.2d 495, 502 (Ill. App. Ct. 1993) (citations omitted).

      The 1985 stipulated judgment was therefore not a judicial determination that the Trust Territory did not own Lot No. 61068 in 1969. It was not a resolution of the parties’ rights. It was merely a contract between the State and Santer Eram and Nenita Santer under which the State relinquished all its rights (whatever they were, whether full ownership or not) to Santer Eram and Nenita Santer and in return they leased Lot No. 60168 to the State until 2019 under the terms set forth, and then the contract was entered as a court judgment in order to end the pending lawsuit. When it is necessary to construe a stipulated judgment or consent decree, courts resort to ordinary principles of contract interpretation. See, e.g., United States v. ITT Continental Baking Corp., 420 U.S. 223, 236-37, 95 S. Ct. 926, 934-35, 43 L. Ed. 2d 148, 161-62 (1975); Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885, 892 (9th Cir. 1982). The 1985 stipulated judgment was, in part, a lease (a type of contract) between Santer Eram and Nenita Santer as lessors and Truk State as lessee for Lot No. 60168. Its terms control. No additional document was needed for the State to have a valid lease for Lot No. 60168.

2.  The State’s "After-Acquired" Leasehold Title

      Mailo further contends that for Blue Lagoon to have a valid lease to Lot No. 60168, either Continental or Blue Lagoon would have had to execute a new lease for that lot after the 1985 stipulated judgment because the Trust Territory could not have validly leased it to Continental in 1969 when it did not own it or have a lease for it in 1969. In turn, Blue Lagoon relies on Mailo’s statements in his deposition that when he bought his Lot No. 60168 parcels, he knew that they were subject to a lease to the State until 2019.

      As explained above, the 1985 stipulated judgment cannot be used as a determination of whether the Trust Territory owned Lot No. 60168 in 1969. That question has never been judicially resolved, but it does not need to be resolved in order for Blue Lagoon to prevail. This is because even if the Trust Territory did not own Lot No. 60168 in 1969, its 1969 lease of that lot to Continental was later validated, under the after-acquired title doctrine, by Truk State’s (its successor-in-interest’s) 1985 lease (the stipulated judgment) of Lot No. 60168.

      Under the after-acquired title doctrine as it applies to leases:

49 Am. Jur. 2d Landlord and Tenant § 4, at 51 (rev. ed. 1995). "The after-acquired title doctrine may be applied in favor of one holding the lease under an assignment from the original lessee," id., because "[a]n assignee of a landlord or tenant by estoppel stands in as good a position as his assignor and may sue on the covenants of the lease," Susse Chalet Inns, Inc. v. Howard D. Johnson Co., 421 N.E.2d 474, 477 n.1 (Mass. App. Ct. 1981).

Carey’s Inc. v. Carey, 517 N.E.2d 850, 855 (Mass. App. Ct. 1988) (especially appropriate case to apply doctrine when the lessor had accepted rental payments both before and after she acquired title).

      In this case, if the court were to assume that the Trust Territory did not hold fee simple title to Lot No. 60168 in 1969 when it leased that lot to Continental, then when its successor-in-interest, Truk State, acquired a leasehold title to Lot. No. 60168 in 1985 by stipulating to a judgment with Santer Eram and Nenita Santer, this inured to Continental’s benefit. The State’s after-acquired legal (leasehold) title estops the State from denying that Blue Lagoon has a valid lease to Lot No. 60168. Mailo, who knowingly acquired his parcels subject to the State’s valid lease (the 1985 stipulated judgment) also cannot deny the validity of the lease that Continental assigned to Blue Lagoon. Blue Lagoon is entitled to quietly enjoy what it has leased.

      It is difficult to see how the rule [after-acquired title doctrine] could be any other way. The general rule is "that a person may only transfer such title to land as that person lawfully possesses." Muritok v. William, 8 FSM Intrm. 574, 576 (Chk. S. Ct. Tr. 1998). However, if a person should transfer more than he lawfully possesses and then later comes to lawfully possess what he purported to transfer, it is only fair and just that he and the law must honor his prior transfer. If a person should transfer an interest that he mistakenly believes he holds and then it is discovered that he does not hold it, the law should encourage him to cure this defective transfer and acquire the interest so that the innocent transferee continues to receive the benefit of his bargain and quietly enjoy what he has leased or bought. If the doctrine of after-acquired title (also called estoppel by deed and estoppel by lease for sales and leases respectively) were not the rule, an innocent transferee would be deprived of the benefit of his bargain, while permitting the after-acquiring transferor to unfairly benefit by disregarding the sale or lease although he has now acquired the right he earlier claimed that he had.

      Mailo also asserts that there is no indication in the record that the State’s purpose in making the lease in 1985 (by stipulating to a judgment) was to benefit Continental by honoring the Trust Territory lease of Lot No. 60168. This assertion is baseless and irrelevant. It is baseless because the termination date in the stipulated judgment lease is the same as that for Continental’s lease of the property from the Trust Territory, so that the only reasonable inference that can be drawn is that Truk

State intended to honor the Continental lease. It is irrelevant because, even if Truk State had some other purpose in mind when it stipulated to the judgment, it was nevertheless legally obligated to honor the Trust Territory lease to Continental. Also irrelevant to this motion are Mailo’s other arguments made during the hearing, such as that Mailo’s land is not in the center of the Blue Lagoon Resort, but near the edge or that Gradvin Aisek is using the parcels he bought for the Blue Lagoon Dive Shop.

      Accordingly, there being no material facts in dispute, Blue Lagoon is entitled to summary judgment as a matter of law against Mailo on Mailo’s only cause of action against it - trespass. For the reasons stated, Blue Lagoon has shown a superior right to present possession of Lot No. 60168. Mailo has not shown any right to immediate possession of any of the parcels he owns in Lot No. 60168 or any right to actual possession until 2019. Mailo cannot maintain a trespass action against Blue Lagoon. Blue Lagoon has the superior possessory right.

      Concerning Blue Lagoon’s request for attorney’s fees and costs, Blue Lagoon’s motion contained no points and authorities to support its request for attorney’s fees and it was not argued at the hearing. The request is thus deemed waived, FSM Civ. R. 6(d), and abandoned. Costs are awarded as a matter of course to the prevailing party as a part of the final judgment. FSM Civ. R. 54(d).

      Mailo asks that the State be compelled to respond to his Requests for Production of Documents, served by mail on December 30, 2004; Interrogatories, First Set, and Interrogatories, Second Set, served by mail on January 17, 2005; and to deem admitted his Amended Requests for Admission, First Set, and Requests for Admission, Second Set, served by mail on January 17, 2005. He also seeks attorney’s fees and costs for bringing the motion. The State has not responded to any of these discovery requests.

      Nor has it opposed the motion. Failure to oppose a motion is generally deemed a consent to the motion. Bank of the FSM v. Aisek, 13 FSM Intrm. 162, 165 (Chk. 2005); 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). Blue Lagoon opposes the motion to the extent that if the requests for admission addressed to the State are deemed admitted, Blue Lagoon seeks an order limiting the use of those admissions to claims against the State only and that they not be deemed admitted for the purpose of using them against Blue Lagoon. Blue Lagoon notes that it has responded to all requests for admission addressed to it.

      The State had 36 days after the date of service by mail to respond to the discovery requests. FSM Civ. R. 6(e); 33(a); 34(b); 36(a). The State did not respond to any of them or seek an enlargement of time to respond.

      The State shall therefore respond to Mailo’s discovery requests no later than October 31, 2005. If the State fails to respond to Mailo’s requests for admission by that date, each request for admission

will be deemed admitted by the State unless it calls for admission of a pure matter of law or asks for a legal conclusion. See, e.g., United States v. Block 44, 177 F.R.D. 695, 695-96 (M.D. Fla. 1997) (request for admission of a legal conclusion as to burden of proof was improper); Lakehead Pipe Line Co. v. American Home Assurance Co., 177 F.R.D. 454, 458 (D. Minn. 1997) (plaintiffs justified in refusing to respond to requests that asked them to ratify the legal conclusions that the defendants attached to the operative facts in the case); Golden Valley Microwave Foods, Inc. v. Weaver Popcorn Co., 130 F.R.D. 92, 96 (N.D. Ind. 1990) (requesting admission that a patent is valid calls for a legal conclusion and is improper request for admission); English v. Cowell, 117 F.R.D. 132, 135 (C.D. Ill. 1986) (requests asking for legal conclusions are not proper).

      Any requests so deemed admitted may be used only against the State. This is because admissions obtained under Rule 36 may be offered in evidence, but are subject to all pertinent objections to admissibility that may be interposed. It is only when the admission is offered against the party that made it that it comes within the exception to the definition of hearsay, FSM Evid. R. 801(d)(2), as an admission of a party opponent. See Walsh v. McCain Foods Ltd., 81 F.3d 722, 726-27 (7th Cir. 1996) (admission by one former orange juice company owner resulting from his failure to respond to request for admission could not be used at trial against other former owners); see generally 8A Charles Alan Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 2264, at 571-72 (2d ed. 1994).

      A party that prevails on a motion to compel discovery is usually entitled to reasonable attorney’s fees and costs as a sanction for the necessity to bring such a motion. FSM Civ. R. 37(a)(4). Mailo shall therefore file and serve on the State, no later than October 31, 2005, his requests for fees and costs. The State shall have ten days to respond.

      Blue Lagoon asks the court to amend the July 2, 2004 Preliminary Injunction to enjoin the State from releasing or conveying to Mark Mailo or any other person the property involved in this litigation and to enjoin the State from trying to terminate either the lease or sublease that covers the property while this litigation is pending. Blue Lagoon contends that Mailo and the State are trying to arrange a "release" of the property that would purportedly allow Mailo to enter and possess the property and that this is in violation of the lease assigned to Blue Lagoon by Continental.

      The State has not filed an opposition. Failure to oppose a motion is generally deemed a consent to the motion. Naoro v. Walter, 11 FSM Intrm. 619, 621 (Chk. 2003); 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). At oral argument the State said that it had no interest in the land so it decided to release it.

      Mailo’s opposition is based on his contention that since he has certificates of title to four parcels of Lot No. 60168 and since, in his view, Blue Lagoon does not have a valid lease to Lot No. 60168, Blue Lagoon has no likelihood of success on the merits. Mailo also asserts that to enjoin the State and Mailo from releasing the property would be contrary to the court’s general policy of encouraging settlement and compromise.

      The State and Mailo executed a Deed of Release on June 29, 2005. Blue Lagoon, at oral argument, asked that the court enjoin the State from taking any further action concerning or effecting the "release."

     Mailo’s contention that Blue Lagoon has no likelihood of success on the merits plainly fails. Blue

Lagoon has succeeded on the merits. The court has, in this order, granted Blue Lagoon’s summary judgment motion and determined that Blue Lagoon has a valid lease for Lot No. 60168, which the State is legally obligated to honor. It would therefore appear that the State is not in the position to give Mailo the type of release (freedom to enter and develop the land) that he desires without first getting permission from Blue Lagoon, the lessee. Blue Lagoon’s motion to amend the preliminary injunction is therefore granted.

     The State of Chuuk, its agents, successors, employees, attorneys, assigns, and all persons acting in concert or in cooperation with it or at its direction, and Mark Mailo, his agents, successors, employees, attorneys, assigns, and all persons acting in concert or in cooperation with him or at his direction, are enjoined and restrained pursuant to Rule 65 of the FSM Supreme Court Rules of Civil Procedure from taking any further action to put into effect any release of land owned by Mark Mailo in Lot No. 60168 to Mark Mailo or any other person until further order of this court.

      Blue Lagoon seeks to amend its answer, which contains a cross-claim against the State of Chuuk, to include three additional cross-claims (breach of contract, specific performance, and declaratory relief) against Chuuk and a counterclaim (declaratory relief) against Mailo.

      Accordingly, the court concludes that Blue Lagoon has the superior right to possession of the

Mark Mailo property in Lot No. 60168 until 2019 and therefore defendant Blue Lagoon is entitled to summary judgment as a matter of law on Mailo’s trespass claim. Its summary judgment motion is therefore granted. The parties shall submit, by October 31, 2005, such briefs or memorandums, as they deem advisable, on whether there is any just cause for delaying entry of judgment in Blue Lagoon’s favor on Mailo’s trespass claim(s) against it and whether, and under what terms, the preliminary injunction should be made permanent.

      Mailo’s motion to compel is granted and the State must respond to his discovery requests no later than October 31, 2005. Mailo shall file and serve his requests for the expense of bringing the motion to compel by October 31, 2005.

      Blue Lagoon’s motion to amend the preliminary injunction is granted as is its motion to amend its answer. An amendment to the July 2, 2004 preliminary injunction issues herewith. Blue Lagoon shall file and serve its amended answer no later than October 31, 2005.