CIVIL ACTION NO. 2008-012

ORDER AND MEMORANDUM

Dennis K. Yamase

Associate Justice

Hearing:  May 30, 2008

Decided:  June 27, 2008

APPEARANCES:

COURT’S OPINION

DENNIS YAMASE, Associate Justice:

    On May 30, 2008, the court held a hearing on the pending motions in this matter. The pending motions are: 1) the FSM’s April 4, 2008, Motion Pursuant to FSM Civ. R. 12(b), and 12(e) with Respect to Certain Aspects of the Counterclaim; 2) defendants’ ("Koshin’s") April 25, 2008, Cross Motion for Counter Security; 3) Koshin’s May 1, 2008, Motion for an Order Directing Plaintiff to Appoint Substitute Custodian to Safeguard the Vessel; 4) Koshin’s May 1, 2008, Motion for Summary Judgment Regarding applicable Laws and Regulations; and 5) the FSM’s May 14, 2008, Cross Motion for Summary Judgment.

    For the reasons that follow, motions 1) is granted; motion 2) is denied; motion 3) is granted in part and denied in part; motions 4) and 5) are denied.

I.  Background

    On February 12, 2008, the defendant vessel in this case, the Koshin 31, was arrested at sea. The verified complaint subsequently filed on February 26, 2008, alleges that the Koshin was in violation of the FSM’s "transponder on" statute, or 24 F.S.M.C. 611(4), which provides in pertinent part that "[n]o person shall intentionally, recklessly or unintentionally destroy, damage, render inoperative or otherwise interfere with a machine aboard a vessel which automatically feed or inputs information or date into a transponder." The complaint alleges that "[d]uring the boarding, Police Officer Justino Helgen observed the Defendant Captain manually switching on the automatic location communicator (ACL) or vessel monitoring system (VMS)." Compl. ¶ 13. The FSM seeks a penalty not to exceed one million dollars for the transponder on violation.

    Koshin filed its answer to the complaint on March 14, 2008. Part of its answer is a counterclaim for wrongful arrest. The counterclaim alleges that neither the vessel nor its crew committed any violations sufficient to justify the arrest and seizure of the vessel, and further alleges that if any violations were committed, they were subject to citation under the Administrative Penalties Regulations ("APRs") promulgated pursuant to the Marine Resources Act of 2002, which is codified at Title 24 of the FSM Code. The counterclaim includes a claim for punitive damages that is based on the alleged wrongful arrest.

    With this as background, the court considers the motions in turn.

II.  Discussion

    The FSM seeks the dismissal of both Koshin’s counterclaim for wrongful arrest and its counterclaim for punitive damages that rests on the wrongful arrest counterclaim. The FSM moves pursuant to FSM Civil Rule 12(b) on the basis that no relief could be granted on the existing set of facts, or in other words, for failure to state a claim pursuant Civil Rule 12(b)(6). Union Indus. Co. v. Santos, 7 FSM Intrm. 242, 244 (Pon. 1995). On such a motion, the well-pled facts are accepted as true, with all inferences to be made in favor of the party opposing the motion to dismiss. Id.

    Koshin’s claim for wrongful arrest attacks the validity of the arrest of the vessel Koshin 31. Koshin contends that it committed no violations sufficient to justify arrest and that "[a]s Plaintiff’s only

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lawful basis for the arrest was sufficient proof of violations warranting civil arrest, which proof never existed, such arrest was wrongful." Answer at 4. However, Koshin points to no factual deficiencies in the complaint, whose allegations are also deemed true for purposes of the motion to dismiss. Cf. Union Indus. Co., 7 FSM Intrm. at 244. A material allegation of the complaint is that Koshin’s captain switched on the automatic locating device or transponder when the vessel was boarded. Taking this allegation as true, the transponder was not on at the time of boarding, which constitutes a violation of 24 F.S.M.C. 611(4). Thus the complaint states a claim for a violation of 24 F.S.M.C. 611(4). Koshin’s contention to the contrary is insufficient to survive the FSM’s motion to dismiss the counterclaim for wrongful arrest.

    Also in support of its counterclaim for wrongful arrest, Koshin contends that the violations alleged in the complaint are subject to citation under the APRs. But whether or not to pursue a citation in lieu of arresting the vessel lies within the FSM’s discretion. Failure to pursue an administrative penalty did not render the arrest wrongful.

    Section 204(1)(f) of the Marine Resources Act of 2002, codified at Chapter 24 of the Code of the Federated States of Micronesia, provides that the National Oceanic Resources Management Authority (" NORMA") "shall have the authority to: (f) adoption regulations for the issuance of citations and assessment of administrative penalties consistent with chapter 7 of this subtitle." 24 F.S.M.C. 703(1) goes on to state that for "any violation of this subtitle or its regulations which would fall within the penalty provisions of section 920 of this subtitle, the Authority may, by regulation . . . provide for an administrative penalty." (Emphasis added). Section 920 in turn specifies that "[a]ny person who commits an act in violation of any provisions of this subtitle, for which no civil penalty is otherwise specified in this chapter, shall be subject to a civil penalty of not less that $40,000 and not more than $100,000." Thus, NORMA has the statutory authority to promulgate administrative regulations that impose an administrative penalty for any violation of Title 24 for which Title 24 does not impose a specific civil penalty, and which consequently falls within the catch-all provision of Section 920.

    Consistent with the foregoing, NORMA adopted its APRs, which were approved by NORMA’s Board and became effective on September 16, 2006. Those regulations provide for a discretionary system of citations and administrative penalties. Part 2.1 states that the administrative penalties "may be assessed for any violation of Title 24, or regulations promulgated under Title 24, or violations of an access agreement, for which no penalty is specified in Title 24." (Emphasis added). The clause "for which no penalty is specified in Title 24" modifies the phrases "any violation of Title 24," "regulations promulgated under Title 24," and "violations of an access agreement." Part 2.4 states that "[t]he establishment of administrative penalties does not create any obligation on the part of the Authority or the Secretary to issue a citation instead of pursuing other legal remedies or to issue a citation prior to pursuing other legal remedies." Citations are issued by authorized officers, and this includes Maritime Surveillance Officers, who may issue a citation under circumstances where the officer has a reasonable ground to believe that a violation has been committed. Pts. 3.1 through 3.3. Anyone to whom a citation is issued may challenge the citation within 10 days of the receipt of the citation, and NORMA’s executive director must issue a final decision on the challenge within 15 days thereafter. Pt. 4.3(a) and (c). Any citation not so challenged is deemed final. Pt. 4.3(d). In the event that the citation remains unpaid for thirty days after becoming final, the Secretary of the Department of Justice may either take steps to enforce the citation or initiate legal proceedings for the recovery of penalties under 24 F.S.M.C. 920. Pt. 5.2.

    With regard to civil penalties, Section 901 of Title 24 provides that "[a]ny person who is found by the Supreme Court of the Federated States of Micronesia in a civil proceeding to have committed an act prohibited by this subtitle shall be liable to the Federated States of Micronesia for a civil penalty." Thus with respect to the interplay between the APRs and Title 24 of the FSM Code, administrative

penalties are those resulting from a citation issued by a Marine Surveillance Officer, while civil penalties are those imposed by the FSM Supreme Court in a civil lawsuit after a finding of liability for a violation of Title 24. Thus the court has neither the authority nor the discretion to impose an administrative penalty for the violation in question here.

    As previously noted, in its counterclaim Koshin asserts that the violations alleged in the complaint are subject to citation under the APRs. While this is correct, the citation process is not mandatory. The citation process to assess an administrative penalty and a civil lawsuit for civil penalties proceed on two separate tracks. The FSM may pursue the administrative penalties through the administrative process, while it may pursue the civil penalties provided for under Title 24 by filing a civil action against the defendants. The fact that the FSM has not cited Koshin under the Administrative Penalty Regulations but instead has pursued civil penalties under Title 24 is not a sufficient ground as a matter of law upon which to allege a cause of action for wrongful arrest against the FSM.

    Accordingly, the FSM’s motion to dismiss Koshin’s counterclaim for wrongful arrest is granted. Since Koshin’s claim for punitive damages is based on the claim for wrongful arrest, the motion to dismiss the punitive damages claim is likewise granted. Punitive damages are derivative, and must rest on another underlying cause of action. Semwen v. Seaward Holdings, Micronesia, 7 FSM Intrm. 111, 113 (Chk. 1995).

      Citing Admiralty Rule E(6)(a), Koshin moves to require the FSM to provide security on its counterclaim. That rule provides that "[w]henever . . . process in rem is issued[,] the execution of such process shall be stayed, or the property released, on the giving of security." Subparagraph (d) then goes on to state that

Koshin’s request to have the FSM give security on its counterclaim is rendered moot by the counterclaim’s dismissal. Accordingly, the motion is denied.

    However, even if Koshin’s counterclaim were a live issue, the language of Admiralty Rule E(6)(a) provides for the release of property "on the giving of security." Thus when Rule E(6)(d) goes on to refer to the situation where the defendant has "given security to respond in damages," it is referring to the bond or other security posted to obtain the release of the property in the first instance, not the property itself. The fact that the FSM is holding the seized vessel does not mean a fortiori that Koshin has given security in the original action within the meaning of subparagraph (6)(d) of Admiralty Rule E.

    Koshin requests that the court order the FSM to appoint "an experienced and insured substitute marine/vessel custodian to safeguard the vessel and its machinery, and to issue monthly report to the Court and all parties as to the condition of the vessel." Mot. for Appointment at 3. Koshin also

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questions whether the FSM has procured the proper insurance.

    Relative to these points, Admiralty Rule E(5)(a) provides that the "FSM National Police shall arrange for adequate safekeeping, which may include placing keepers on or near the vessel," emphasis added, while Rule E(5)(b) provides that the FSM Police "may procure insurance to protect itself from liability assumed in arresting and holding the vessel." (Emphasis added). Thus providing for the vessel’s adequate safekeeping is mandatory, while arranging for placing keepers on board and for insurance is discretionary.

    Koshin argued at the hearing on the motions that the FSM is merely guarding the vessel, and is not making necessary efforts to look after and maintain the equipment on board the vessel. While Koshin has not offered any specific evidence that the court may consider that this is the case, it is equally the case that adequate safekeeping is mandatory under Admiralty Rule E(5)(a). Accordingly, on or before July 7, 2008, the parties will each nominate an individual resident in Pohnpei that they deem qualified to inspect the vessel and offer an opinion on the status of the safekeeping efforts. The FSM will bear the expenses of engaging the nominated individual after the individual’s appointment is approved by the court. Pursuant to further order of court, the individual so designated will then file a report with the court that will describe the present condition of the ship, indicate any concerns that may exist or are likely to arise relative to the vessel’s safekeeping, and specify any specific measures that must be taken with respect to maintenance in order to provide adequate safekeeping as required under Admiralty Rule E(5)(a).

    Without citation to authority for doing so, Koshin’s motion for summary judgment purports to admit liability for the transponder on violation, but only for purposes of the summary judgment motion, and then goes on to request a ruling "that, as a matter of law, the APR’s may be applicable to the alleged violation of failing to turn on the transponder under the circumstances of this case." Mot. for Sum. J. at 5 (emphasis added). Thus Koshin is not asking to find pursuant to FSM Civil Rule 56 that "there is no genuine issue of any material fact and that the moving party is entitled to judgment as a matter of law." Instead, it seeks an advisory opinion about what the court may do in the event that Koshin is found liable for the alleged violation. It is a basic principle of justiciability that a court will not render an advisory opinion. Estate of Mori v. Chuuk, 12 FSM Intrm. 24, 26 (Chk. 2003). As a practical matter, the court effectively granted the relief requested in Koshin’s summary judgment motion in its disposition of the FSM’s motion to dismiss Koshin’s counterclaim. However, this was necessary to a disposition of the FSM’s motion to dismiss. Koshin’s motion for summary judgment is denied.

    The FSM’s cross motion for summary judgment sets out two issues. Under its first issue it urges that the transponder on violation specified in the APRs should be stricken because that violation is also covered under the Title 24. This request suffers from the same infirmity as Koshin’s motion for summary judgment does. Koshin has not been cited under the APRs, and no penalty has been assessed. A ruling adjudicating the legality of any penalty under these circumstances would serve advisory purposes only. Mori, 12 FSM Intrm. at 26. That said, the transponder on violation in the APRs is listed as a violation of a condition of an access agreement under the Violation Penalty section of the APRs. Section 404 specifies the minimum terms for access agreements, and subparagraph 3(j), as one of these minimum terms, requires that the transponder be on at all times. However, Section 404 does not provide for civil penalties for violation of an access agreement. Nor does it appear that any other section of Title 24 provides for such a penalty. If this be the case, then a violation of an access agreement is something for which no specific penalty is provided under Title 24, and falls within the catch-all provision of Section 920. As previously discussed, violations that fall within that section may

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be subject to administrative penalties. But these concerns notwithstanding, the FSM’s motion for summary judgment is denied with respect to the first issue.

     The second issue that the FSM raises in its cross motion for summary judgment is that the issuance of a citation is a discretionary power of the FSM under the APRs. This portion of the FSM’s motion is urged in response to Koshin’s motion, and to this extent requests no affirmative relief. Summary judgment as to the second issue is thus denied as well.

     For these reasons, the FSM’s motion for summary judgment is denied.

    As a final concern, the factual allegations in this case are straightforward. The court can see no reason why this case should not be set for trial on an expedited basis. Accordingly, trial is set for August 5, 2008, at 9:30 a.m.

    Also, the parties are reminded that they will nominate individuals to report on safekeeping efforts on or before July 7, 2008.

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