FSM SUPREME COURT TRIAL DIVISION
Cite as< AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188 (Pon. 2006)
AHPW, INC.,
Plaintiff,
vs.
GOVERNMENT OF THE STATE OF POHNPEI,
Defendant.
CIVIL ACTION NO. 1999-053
MEMORANDUM AND ORDER
Martin Yinug
Associate Justice
Decided: April 14, 2006
* * * *
The anticompetitive practices statute authorizes treble damages. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 190 (Pon. 2006).
In construction of statutes the word "may" as opposed to "shall" is indicative of discretion or a choice between two or more alternatives, but the context in which the word appears must be the controlling factor. The fact that the word "may" was used is not conclusive, since it is well settled that permissive words may be interpreted as mandatory where such construction is necessary to effectuate the legislative intent. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 190 (Pon. 2006).
Treble damages were proper when the discretion denoted by the word "may" in the statute lies with the injured party and not the court – the injured party "may" sue and recover treble damages – and when Congress's intent was to give the injured party treble damages if it sues and proves its case. The statute's context compels this conclusion. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 190-91 (Pon. 2006).
An FSM Code provision is to be construed according to the fair construction of its terms, with a view to effect its object and to promote justice. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 n.1 (Pon. 2006).
When, from the consideration of the whole statute, and its nature and object, it appears that the legislature's intent was to impose a positive duty rather than a discretionary power, the word "may" will be held to be mandatory. A mandatory construction will usually be given to the word "may" when
public interests are concerned, and the public or third persons have a claim de jure that the power conferred should be exercised, or whenever something is directed to be done for the sake of justice or for the public good; but never for the purpose of creating a right. In a proper case the word "may" will be construed as "must" or "shall." AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 (Pon. 2006).
When the plaintiff has a claim de jure that the power conferred (on the court to treble damages) should be exercised because it had proved its right to damages under 32 F.S.M.C. 301 et seq. and when, considering the whole anticompetitive practices statute and its nature and object, Congress’s intent was to impose a positive duty to treble damages, not a discretionary power to do so, the court will therefore award treble damages. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 (Pon. 2006).
When the defendant's anticompetitive acts did not just harm the plaintiff's business, but those acts put it out of business, even if treble damages were discretionary, there would be no more appropriate a case to exercise the discretion to treble damages than one where the anticompetitive acts put the plaintiff out of business. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 (Pon. 2006).
Detrimental reliance is subsumed within estoppel. A party seeking to invoke the equitable estoppel doctrine must prove that 1) a defendant made representations or statements; 2) the plaintiff reasonably relied upon the representations; and 3) the plaintiff will be harmed if estoppel is not allowed. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191 (Pon. 2006).
To claim promissory estoppel a party must prove that 1) a promise was made; 2) the promisor should reasonably have expected the promise to induce actions of a definite and substantial character; 3) the promise did in fact induce such action; and 4) the circumstances require the enforcement of the promise to avoid injustice. Elements 3 and 4 are sometimes referred to collectively as "detrimental reliance." Misrepresentation, too, contains the elements of reasonable reliance and damages. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 191-92 (Pon. 2006).
Equitable estoppel is (and should be) applied to governments in the FSM when this is necessary to prevent manifest injustice and when the interests of the public will not be significantly prejudiced. But a party asserting equitable estoppel against the government must prove more than is required when it is asserted against a private entity. The government may not be estopped on the same terms as any other litigant. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 192 (Pon. 2006).
Another element must be established when a party asserts estoppel against the government – affirmative misconduct on the government's part. "Affirmative misconduct" has never been clearly defined by any court. This much, however, is clear. The misconduct complained of must be "affirmative," which indicates more than mere negligence is required. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 192 (Pon. 2006).
"Detrimental reliance" requires, at the very least, that a party has changed its position for the worse as a consequence of the government's purported misconduct. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 192 (Pon. 2006).
When the defendant affirmatively signed a Letter of Commitment that it would issue the plaintiff a permit to purchase the first 60 metric tons of shell from the Pohnpei reefs during each annual trochus harvest and made other promises or representations that there would be a trochus harvest and the plaintiff reasonably relied upon these representations that there would be a trochus harvest and, until it finally stopped business in 1998, kept employees on so that it would be ready to go back into the trochus button business, the defendant is liable. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 192 (Pon. 2006).
Detrimental reliance damages are the actual expenses incurred in reliance on the representation and do not include depreciation. AHPW, Inc. v. Pohnpei, 14 FSM Intrm. 188, 192 (Pon. 2006).
* * * *
MARTIN YINUG, Associate Justice:
Once this court issued its July 8, 2004 decision, AHPW, Inc. v. FSM, 12 FSM Intrm. 544 (Pon. 2004), defendant State of Pohnpei appealed and plaintiff AHPW, Inc. cross-appealed. The appellate court affirmed this court's dismissal of the Federated States of Micronesia as the other party defendant and affirmed the nucleus of this court's judgment against Pohnpei, but reversed liability under 32 F.S.M.C. 301 et seq. for AHPW’s trochus shell business and vacated the trebling of damages for AHPW's pepper business. Pohnpei v. AHPW, Inc., 14 FSM Intrm. 1 (App. 2006). The appellate court gave this court two tasks on remand: 1) to express it reasons for trebling the award rather than merely citing the statute that permits it, and 2) to determine if AHPW had proved at trial that Pohnpei was liable to it under another theory for AHPW's trochus shell business. Id. at 26. This order follows.
This court found Pohnpei liable, under 32 F.S.M.C. 301 et seq. to AHPW for its pepper business. This court found that AHPW proved damages of $225,448, which were then trebled. The appellate court affirmed Pohnpei's liability and the $225,448 damage finding, but vacated the trebling of damages and remanded the matter to this court for this court to express its reasons for trebling the award other than just citing the statute. Since statutory treble damages was a matter of first impression, it is only proper that this court should be required to express its views first.
The statute under which Pohnpei was found liable authorizes treble damages. "Any person who is injured in his business, personal property, or real property by reason of another's violation of sections 302 or 303 of this chapter may sue therefor . . . and may recover three times the damages sustained by him . . . ." 32 F.S.M.C. 306(2). "While it is true in construction of statutes . . . that the word ‘may’ as opposed to 'shall' is indicative of discretion or a choice between two or more alternatives, the context in which the word appears must be the controlling factor." Kama v. Chuuk, 10 FSM Intrm. 593, 599 (Chk. S. Ct. App. 2002). "The fact that the word 'may;' was used is not conclusive, since it is well settled that permissive words may be interpreted as mandatory where such construction is necessary to effectuate the legislative intent." California Trust Co. v. Bennett, 204 P.2d 324, 326 (Cal. 1949).
Treble damages were proper. The discretion denoted by the word "may" in the statute lies with the injured party and not the court – the injured party "may" sue and recover treble damages. The
injured party may, of course, choose not to sue, in which case it will not recover anything; or it may sue but not recover if it fails to prove its case. The statute does not read that the injured party may sue and the court may award treble damages. It reads: "[a]ny person who is injured . . . may sue . . . and may recover three times the damages sustained by him . . . ." 32 F.S.M.C. 306(2). Congress's intent1 was to give the injured party treble damages if it sues and proves its case. The statute's context compels this conclusion.
Where, from the consideration of the whole statute, and its nature and object, it appears that the intent of the legislature was to impose a positive duty rather than a discretionary power, the word "may" will be held to be mandatory. A mandatory construction will usually be given to the word "may" where public interests are concerned, and the public or third persons have a claim de jure that the power conferred should be exercised, or whenever something is directed to be done for the sake of justice or for the public good; but never for the purpose of creating a right. Accordingly, in a proper case the word "may" will be construed as "must" or "shall."
82 C.J.S. Statutes § 380, at 880-81 (1953) (footnotes omitted). Here AHPW has a claim de jure that the power conferred (on the court to treble damages) should be exercised because AHPW had proved its right to damages under 32 F.S.M.C. 301 et seq. Considering the whole anticompetitive practices statute and its nature and object, Congress's intent was to impose a positive duty to treble damages, not a discretionary power to do so. The court will therefore reinstate (as permitted by the appellate court) the treble damage award for AHPW's pepper business. The $225,448 award affirmed by the appellate court is therefore trebled to $676,344.
But even if the statute's context and the Congressional intent had not compelled the trebling of damages, this still would have been an appropriate case for treble damages. Pohnpei's anticompetitive acts did not just harm AHPW's business, those acts put AHPW out of business. Thus, even if treble damages were discretionary, there would be no more appropriate a case to exercise the discretion to treble damages than (this) one where the anticompetitive acts put the plaintiff out of business.
The appellate court also instructed this court to determine, from the trial already held, whether the State of Pohnpei was liable to AHPW for its trochus business on a detrimental reliance theory, and, if not, then whether Pohnpei was liable under AHPW's constitutional due process and equal protection claims.
Detrimental reliance is subsumed within estoppel. A party seeking to invoke the equitable estoppel doctrine must prove that 1) a defendant made representations or statements; 2) the plaintiff reasonably relied upon the representations; and 3) the plaintiff will be harmed if estoppel is not allowed. Production Credit Ass'n v. Farm Credit Bank, 781 F. Supp. 595, 604, 607 (D. Minn. 1991); In re Crain, 158 B.R. 608, 612 (W.D. Pa. 1993).
[T]o claim promissory estoppel a party must prove that (1) a promise was made; (2) the promisor should reasonably have expected the promise to induce actions of a definite and
substantial character; (3) the promise did in fact induce such action; and (4) the circumstances require the enforcement of the promise to avoid injustice. Elements 3 and 4 are sometimes referred to collectively as "detrimental reliance." Misrepresentation, too, contains the elements of reasonable reliance and damages.
Production Credit Ass'n, 781 F. Supp. at 607 (citations omitted). The court has previously held that equitable estoppel is (and should be) applied to governments in the FSM when this is necessary to prevent manifest injustice and when the interests of the public will not be significantly prejudiced. KCCA v. Tuuth, 5 FSM Intrm. 118, 120 (Pon. 1991). But "[a] party asserting equitable estoppel against the government must prove more than is required when it is asserted against a private entity. 'The Government may not be estopped on the same terms as any other litigant.'" In re Crain, 158 B.R. at 612 (quoting Heckler v. Community Health Servs., 467 U.S. 51, 60, 104 S. Ct. 2218, 2224, 81 L. Ed. 2d 42, 52 (1984)). Another element must be established when a party asserts estoppel against the government – affirmative misconduct on the government's part. Id. " 'Affirmative misconduct' has never been clearly defined by any court. This much, however, is clear. The misconduct complained of must be 'affirmative', which indicates more than mere negligence is required." Id. at 614.
"Detrimental reliance requires, at the very least, that a party has changed its position 'for the worse' as a consequence of the Government's purported misconduct." Id. at 613. In late April, 1997, the Director of the Pohnpei Department of Resources Management and Development affirmatively signed a Letter of Commitment that it would issue AHPW, Inc. "a permit to purchase the first 60 metric tons of shell from the Pohnpei reefs during each annual trochus harvest."2 Pohnpei made other promises or representations that there would be a trochus harvest. AHPW reasonably relied upon these representations that there would be a trochus harvest and, until AHPW finally stopped business in 1998, kept employees on so that it would be ready to go back into the trochus button business. Tr. at 165-68, 175-76, 202, 218-19, 226 (Robert Arthur test.).
The AHPW Statement of Earnings for the year ended December 31, 1997, listed the net loss from the shell part of the business as $48,944. Since AHPW went out of business in June, 1998, this is the best evidence of the expenses that AHPW's shell business incurred for the approximately little over one year that the AHPW shell business stayed open in reliance on Pohnpei's affirmative April, 1997 representation that there would be a trochus harvest and that AHPW would get the first 60 metric tons. Damages are the actual expenses incurred in reliance on the representation. Therefore the court will exclude the $11,522 that the AHPW Statement of Earnings lists as depreciation, leaving $37,422 as detrimental reliance damages, which the court hereby awards.
Since this liability was not found under 32 F.S.M.C. 301 et seq., these damages will not, and cannot, be trebled. Additionally, since lability was found under a detrimental reliance theory, the court, as instructed by the appellate court, will not consider AHPW's constitutional claims.
Accordingly, the damages previously determined under 32 F.S.M.C. 301 et seq. for AHPW's pepper business are, pursuant to statute, trebled to $676,344, and damages of $37,422 are awarded under a detrimental reliance theory for AHPW's trochus shell business. The clerk shall enter a judgment in conformity with this order.
_______________________________Footnotes:
1 The legislative history of Congress of Micronesia Public Law No. 3C-57, the original predecessor statute to 32 F.S.M.C. 301 et seq., is silent on the treble damages provision. An FSM Code provision is to be construed according to the fair construction of its terms, with a view to effect its object and to promote justice. 1 F.S.M.C. 211.
2 There are two versions of this letter. Both contain the quoted language. The first version, Pohnpei Ex. A, also contained language that the harvest was to be to the extent environmentally feasible. The later version, AHPW Ex. 133, omitted such language.