FSM SUPREME COURT TRIAL DIVISION

Cite as Smith v. Nimea, 16 FSM Intrm. 186 (Pon. 2008)

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GORDON SMITH,

Plaintiff,

vs.

FABIAN NIMEA, individually and d/b/a FSN

FINANCIAL GROUP, INC., d/b/a FFGI

CONSULTING GROUP,

Defendants.

CIVIL ACTION NO. 2005-004

Decided: November 17, 2008

APPEARANCES:

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HEADNOTES

    The purpose of prior consultation to obtain the non-movant’s agreement or acquiescence to the relief being sought is to decrease litigation costs when compromises are reached, and in turn reduce the court’s workload, thereby increasing its ability to attend to other matters and minimize delays. The court, however, is not required to deny a motion because it lacks certification that the opposing party’s agreement or acquiescence was previously sought, and such a decision is within the court’s discretion. Smith v. Nimea, 16 FSM Intrm. 186, 188 (Pon. 2008).

    The rule governing amendments of pleadings is designed to provide maximum opportunity for each claim to be decided on the merits rather than on procedural technicalities. Smith v. Nimea, 16 FSM Intrm. 186, 188 (Pon. 2008).

    A party may amend the party’s pleading only by leave of court, or by the adverse party’s written

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consent, and leave shall be freely given when justice so requires. In the absence of any apparent or declared reason, such as undue delay, bad faith or dilatory motive on the movant’s part, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party by virtue of the amendment’s allowance, or futility of amendment, leave to amend should, as the rules require, be freely given. Smith v. Nimea, 16 FSM Intrm. 186, 189 (Pon. 2008).

    When the affirmative defenses that the defendants seek to add could not have been raised at the time the original answer was filed as the administrative hearing at issue had not yet taken place; there is no undue delay, bad faith or dilatory motive on the defendants’ part, as well as no undue prejudice to the plaintiff; and when it is the defendants’ first request for amendment and it is reasonably calculated to ensure that all appropriate claims are adjudicated on the merits, the amended answer will be permitted. Smith v. Nimea, 16 FSM Intrm. 186, 189 (Pon. 2008).

Although a right to reply to an opposition is not explicitly afforded by the FSM Rules of Civil Procedure, a motion to permit a reply will be granted when the movant certifies that opposing counsel has agreed to it. Smith v. Nimea, 16 FSM Intrm. 186, 189 (Pon. 2008).

    Summary judgment will be granted if the pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact and the moving party is entitled to judgment as a matter of law. Supporting and opposing affidavits must be made on personal knowledge, must set forth facts that would be admissible in evidence, and must show affirmatively that the affiant is competent to testify to the matters stated therein. When a summary judgment motion is made and supported as provided, the non-moving party may not rest upon mere allegations or denials of the adverse party’s pleading, but the non-moving party’s response, by affidavits or as otherwise provided, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, will be entered against the adverse party. Smith v. Nimea, 16 FSM Intrm. 186, 189-90 (Pon. 2008).

    The doctrine of exhaustion of remedies requires that a potential plaintiff follow whatever procedures are in place to seek reconsideration of an agency’s allegedly erroneous decision before bringing the dispute to the attention of the judiciary. It is incumbent on parties to exhaust administrative procedures concerning their disputes as designated by applicable state law before coming to court, unless and until the state law is judged invalid. Smith v. Nimea, 16 FSM Intrm. 186, 190 (Pon. 2008).

    Closely related to the requirement of exhausting all administrative remedies before seeking judicial redress is the doctrine of res judicata, which bars the relitigation by parties or their privies of all matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits that has been affirmed on appeal or for which time for appeal has expired. Once a plaintiff availed himself of the administrative remedies available for claims under Pohnpei state law, he was obligated to exhaust those remedies as provided by Pohnpei state law before filing suit in the FSM Supreme Court. When the plaintiff failed to exhaust these remedies by failing to appeal the Pohnpei administrative decision, his claims for unpaid wages, overtime, wrongful termination and criminal penalties are barred as a matter of law. Smith v. Nimea, 16 FSM Intrm. 186, 190 (Pon. 2008).

    When there is a factual dispute as to how much work the plaintiff contributed to the two projects on which he worked in relation to the work provided by other employees; when there is a factual dispute as to what deductions were properly taken from the projects’ proceeds prior to commission being awarded; and when these factual disputes are material to the plaintiff’s claim for unpaid commission, both parties’ summary judgment motions on this claim will be denied. Smith v. Nimea, 16 FSM Intrm. 186, 191 (Pon. 2008).

    Truth is a defense to libel. Smith v. Nimea, 16 FSM Intrm. 186, 191 (Pon. 2008).

    When the truth of the allegedly libelous letter is in dispute; when a factual dispute exists as to whether the allegedly libelous letter played a role in the denial of the plaintiff’s application for a foreign investment permit, the business opportunity alleged to have been interfered with by the defendant; and when these factual disputes are material to the claim, both parties’ summary judgment motions on the claim of libel and interference with business opportunity will be denied. Smith v. Nimea, 16 FSM Intrm. 186, 191 (Pon. 2008).

    When the trial court denies a summary judgment motion it should delineate between those material facts that are in dispute and those that are not, but when such an exercise would not materially expedite the adjudication process, the court may direct the parties to address the concerns themselves by a pre-trial order. Smith v. Nimea, 16 FSM Intrm. 186, 191 (Pon. 2008).

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COURT’S OPINION

MARTIN G. YINUG, Associate Justice:

I. Introduction

    This matter comes before the Court on Defendants’ motion to amend answer, both parties’ motions for summary judgment, and Plaintiff’s motion to enlarge the time to reply to Defendants’ opposition to motion for summary judgment. All issues raised have been adequately briefed by the parties and are now ripe for adjudication.

II. Motion to Amend Answer

    As noted by Plaintiff in his opposition to the motion to amend answer, Defendants failed to adhere to FSM Civ. R. 6(d) in that their motion does not certify prior attempts to seek Plaintiff’s agreement or acquiescence to the relief being sought. The purpose of this prior consultation is to decrease litigation costs when compromises are reached, and in turn reduce the court’s workload, thereby increasing its ability to attend to other matters and minimize delays. Damarlane v. Pohnpei Supreme Court Appellate Division, 9 FSM Intrm. 601, 603-4 (Pon. 2000). However, the Court is not required to deny a motion because it lacks certification that the opposing party’s agreement or acquiescence was previously sought, and such a decision is within the court’s discretion. Fan Kay Man v. Fananu Mun. Gov’t, 12 FSM Intrm. 492, 496 (Chk. 2004). Furthermore, the rule governing amendments of pleadings is designed to provide maximum opportunity for each claim to be decided on the merits rather than on procedural technicalities. FSM Civ. R. 15; FSM Dev. Bank v. Arthur, 13 FSM

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Intrm. 1, 7-8 (Pon. 2004). Finally, Plaintiff suffers no prejudice by having the motion adjudicated on its merits. Under these circumstances, the Court decides to hear Defendants’ motion to amend answer on its merits. Nevertheless, Defendants’ counsel is put on notice that compliance with FSM Civ. R. 6(d) is mandatory and repeated violations may draw reprimand from the Court.

    Defendants are seeking to add the affirmative defenses of statue of limitations, bar of failure to appeal an administrative decision, collateral estoppel and res judicata, arguing that an administrative decision entered on April 17, 2006 adjudicated issues in this employment action. Because Defendants originally answered the complaint in this matter on March 7, 2005, before the administrative hearing precipitating the April 17, 2006 decision was held, they argue that leave should be freely given to amend their answer.

    Rule 15(a) of the FSM Civil Rules of Procedure governs Defendants’ motion to amend answer and provides, in pertinent part, that "a party may amend the party’s pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." In the absence of any apparent or declared reason, such as undue delay, bad faith or dilatory motive on the movant’s part, repeated failure to cure deficiencies by amendment previously allowed, undue prejudice to the opposing party by virtue of the amendment’s allowance, or futility of amendment, leave to amend should, as the rules require, be freely given. Primo v. Pohnpei Transp. Auth., 9 FSM Intrm 407, 413 (App. 2000).

    The affirmative defenses that Defendants are seeking to add could not have been raised at the time the original answer was filed, as the administrative hearing at issue had not yet taken place. As such, there is no undue delay, bad faith or dilatory motive on the Defendants’ part, as well as no undue prejudice to the Plaintiff. Furthermore, this is Defendants’ first request for amendment and it is reasonably calculated to ensure that all appropriate claims are adjudicated on the merits. Accordingly, Defendants’ motion to amend answer is granted, and the clerk of court is instructed to enter the First Amended Answer submitted by Defendants along with their motion.

III. Motions for Summary Judgment

A. Plaintiff’s Motion for Enlargement

    Because such a right is not explicitly afforded by the FSM Rules of Civil Procedure, Plaintiff moved the Court on April 26, 2007 to allow him until May 11, 2007 to reply in writing to Defendants’ opposition to summary judgment filed on April 19, 2007. Because Plaintiff certifies that Defendants’ counsel agreed to the relief being requested, Plaintiff’s motion is granted, and his reply to defendants’ opposition to summary judgment filed on May 11, 2007 will be considered by the Court. FSM Civ. R. 7(b)(1).

B. Standard of Review

    A party seeking to recover upon a claim, at any time after the expiration of 20 days from the commencement of the action, may move with or without supporting affidavits for summary judgment on all claims. The judgment sought shall be granted if the pleadings, depositions, answers to interrogatories, and admission on file, together with the affidavits, if any, show that there is no genuine issues as to any material fact and the the moving party is entitled to judgment as a matter of law. Supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein. When a motion for summary judgment is made and supported as provided in this rule, the non-moving party may not rest upon mere allegations or denials of the adverse

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party’s pleading, but the non-moving party’s response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party. FSM Civ R. 56.

C. Plaintiff’s Claims for Unpaid Wages, Overtime, Wrongful Termination, Criminal Penalties

    In November 2004, Plaintiff first made administrative claims for unpaid wages, overtime and wrongful termination to the Pohnpei State Division of Personnel, Labor and Manpower Development. On April 6, 2006, hearing on these claims was held before the Director of the Pohnpei State Department of Treasury and Administration. On April 17, 2006, the Director issued his decision, denying Plaintiff’s claims for unpaid wages, overtime and wrongful termination. As noted in the April 17, 2006, decision, Plaintiff had 15 days from the date of the decision to appeal it to the Pohnpei Supreme Court, pursuant to Pohnpei S.L. No. 2L-204-91, § 18. Plaintiff did not appeal the Director’s April 17, 2006 decision as provided in Pohnpei S.L. No. 2L-204-91, § 18. These facts are undisputed.

    The doctrine of exhaustion of remedies requires that a potential plaintiff follow whatever procedures are in place to seek reconsideration of an agency’s allegedly erroneous decision before bringing the dispute to the attention of the judiciary. Asumen Venture, Inc. v. Board of Trustees, 12 FSM Intrm. 84, 89 (Pon. 2003). It is incumbent on parties to exhaust administrative procedures concerning their disputes as designated by applicable state law before coming to court unless and until the state law is judged invalid. Abraham v. Lusangulira, 6 FSM Intrm. 423, 426 (Pon. 1994).

    Closely related to the requirement of exhausting all administrative remedies before seeking judicial redress is the doctrine of res judicata, which bars the relitigation by parties or their privies of all matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits, which has been affirmed on appeal or for which time for appeal has expired. Iriarte v. Etscheit, 8 FSM Intrm. 231, 236-37 (App. 1998).

    Plaintiff makes no attempt to excuse his failure to appeal the April 17, 2006 decision to the Pohnpei Supreme Court as provided by state law, focusing instead on the merits of his argument to reverse the decision. The April 17, 2006 decision fully adjudicated Plaintiff’s current claims for unpaid wages, overtime and wrongful termination. Furthermore, Plaintiff’s claims for criminal penalties are disposed of by the April 17, 2006 decision because they stem from the primary claim for nonpayment of wages. The April 17, 2006 decision became final when it was not appealed by the Plaintiff. Once the Plaintiff availed himself to the administrative remedies available for these claims under Pohnpei state law, he was obligated to exhaust those remedies as provided by Pohnpei state law prior to filing suit in this Court. Plaintiff failed to exhaust these remedies by failing to appeal the April 17, 2006 decision to the Pohnpei Supreme Court. Under these circumstances, Plaintiff’s claims for unpaid wages, overtime, wrongful termination and criminal penalties in this matter are barred as a matter of law. Defendant’s motion for summary judgment with regard to Plaintiff’s claims for unpaid wages, overtime, wrongful termination and criminal penalties for nonpayment of wages is granted. Plaintiff’s motion for summary judgment with regard to these claims is denied.

D. Plaintiff’s Claim’s for Unpaid Commission

    The employment agreement underlying this action provides that Plaintiff is to receive commission on the projects for which he provided services. The percentage of commission depends upon the amount of work that Plaintiff provided on each project in relation to work provided by other employees. Furthermore, deductions for overhead costs are taken from a project’s proceeds prior to commission being awarded.

    There is a factual dispute as to how much work the Plaintiff contributed to the two projects on which he worked in relation to the work provided by other employees. There is a factual dispute as to what deductions were properly taken from the projects’ proceeds prior to commission being awarded. These factual disputes are material to this claim. Both parties’ motions for summary judgment on Plaintiff’s claim for unpaid commission are denied.

E. Plaintiff’s Claim for Business Libel/Interference with Business Opportunity

    Plaintiff alleges that Defendant Nimea committed libel and interfered with his business opportunity by writing a letter to the Pohnpei Foreign Investment Permit Board, which subsequently denied Plaintiff’s application for a foreign investment permit.

    Truth is a defense to libel. 50 Am. Jur. 2d Libel and Slander § 179 (1970). The truth of Defendant Nimea’s allegedly libelous letter is in dispute. Furthermore, a factual dispute exists as to whether the allegedly libelous letter played a role in the denial of Plaintiff’s application for a foreign investment permit, the business opportunity alleged to have been interfered with by Defendant Nimea. These factual disputes are material to this claim. Both parties motions for summary judgment on Plaintiff’s claim of libel and interference with business opportunity are denied.

F. Dismissal of Defendant Nimea

    Defendant Nimea, in his individual capacity, seeks dismissal from this suit. However, Defendant provides no legal basis for the Court to take this action. Defendant Nimea’s request to be dismissed is denied.

IV. Rule 56(d)

    Rule 56(d) of the FSM Rules of Civil Procedure provides that when the trial court denies a motion for summary judgment it should delineate between those material facts that are in dispute and those that are not. In the present matter, however, such an exercise would not materially expedite the adjudication process. Rather, the parties will be directed to address the concerns raised by Rule 56(d) themselves in a forthcoming pre-trial order.

V. Conclusion

    Defendants’ motion to amend answer is granted. Plaintiff’s motion for enlargement is granted. Plaintiff’s motion for summary judgment is denied. Defendants’ motion for summary judgment is granted in part, denied in part.

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