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HEADNOTES

COURT'S OPINION

DENNIS K. YAMASE, Associate Justice:

    Plaintiff and Counterclaim Defendant, Federated States of Micronesia (FSM) has pending a Motion to Dismiss Counterclaims. The Court has already dismissed all claims with respect to Counterclaim Defendant Robert Westerfield for failing to serve Westerfield, and now considers the remaining issues with respect to all counterclaims.

I. NONJUSTICIABLE POLITICAL QUESTIONS

    The FSM asks this Court to dismiss the third through eleventh counterclaims as nonjusticiable political questions. The underpinnings of this argument are that the disputed contract was for services paid for funds received from Compact grants, and since the Compact is a treaty between the FSM and the United States, and since the improvement of infrastructure through grants to the FSM is specifically contemplated by the Compact, and since the implementation of the infrastructure improvements must comply with requirements spelled out in the Compact and the FRP, the Court is without jurisdiction to hear the matters raised by GMP. This argument is without merit. Carried to its logical end, this argument would also bar the FSM from asserting its claims against GMP precisely because GMP=s contract was entered into to facilitate improving infrastructure in compliance with the Compact requirements attached to the FSM receiving the funds to pay for infrastructure improvements.

II. FAILURE TO JOIN THE UNITED STATES AS A PARTY

    The FSM asks the Court to dismiss, under Rule 19(b), GMP's third through eleventh counterclaims alleging the United States is an "indispensable party" that cannot be joined. That Rule provides, in part:

    As a preliminary matter, the Court must consider whether the United States is an indispensable party. First, a party may be indispensable if "in the person's absence complete relief cannot be accorded among those already parties." FSM Civ. R. 19(a)(1). The FSM has not shown that complete relief cannot be accorded between the FSM and GMP, the parties to the action. Indeed, each party seeks relief solely against the other, and there is no allegation that the United States is responsible to the FSM for GMP's alleged breach of contract, or to GMP for the FSM's alleged violations of due process, breach of contract, or other claims. Thus, the alternative reason for joinder contained in (a)(2), that "the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may (i) as a practical matter impair or impede the person's ability to protect that interest or (ii) leave any of the persons already parties subject to a

substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the person's claimed interest" is not satisfied. Even assuming the United States has some interest in the subject of this action, the United States is the source of the funding, and there is no suggestion by either party that the United States cannot protect its own interests. Second, there is no claim that either of the parties has a substantial risk of incurring double, multiple or inconsistent obligations. For these reasons, Plaintiff is not entitled to have the counterclaims dismissed on the basis of Rule 19.¹

III. COUNTERCLAIM THIRD CAUSE OF ACTION: VIOLATION OF CIVIL RIGHTS

    The FSM asks this Court to dismiss the Third cause of action for failing to state a claim upon which relief may be granted. GMP alleges that actions of some FSM government officials and employees deprived GMP of its property rights under a contract. 11 F.S.M.C. 701 provides:

    The counterclaim alleges the FSM and Westerfield² acted "under color of law, "³ however, section 701 does not require that the action be under color of law.⁴ To establish liability under 11 F.S.M.C. 701, GMP must allege and prove that it: (1) had a protected right; (2) FSM officials or employees acted to deprive GMP of the right; and (3) the FSM officials or employees acted pursuant to governmental policy or custom, or were responsible for final policy making. Pohnpei v. M/V Miyo Maru No. 11, 8

FSM Intrm. 281, 296 (Pon. 1998). Because the counterclaim neither alleges that the actions were pursuant to governmental policy or custom, nor that the actions were taken by officials responsible for final policy making, it fails to state a claim upon which relief may be granted. Further, a government's breach of a contract, without more, does not violate due process rights. Island Dev. Co. v. Yap, 9 FSM Intrm. 18, 20 (Yap 1999). The Third cause of action is dismissed.

IV. COUNTERCLAIM THIRD THROUGH ELEVENTH CAUSES OF ACTION: NONJUSTICIABLE POLITICAL QUESTION

    The FSM devotes some twenty-two pages of its brief to an explanation of justiciability, separation of powers, the Political Question Doctrine, and the relationship of these legal principles to the pleadings in this case. The FSM misapprehends the application of these principles to this case. Indeed, these principles do not apply to the case at bar. The case at bar is at its core one in which each party alleges the other breached a contract, and GMP also counterclaimed for violation of civil rights, abuse of process, civil conspiracy, intentional interference with contractual relations, libel, and slander.

    Although the FSM casts the question as whether this Court has the authority to "breath life back into a contract funded by U.S. Government Compact funds when the U.S. Government refuses to fund the contract after May 19, 2007," Memo. at 59, the true questions to be considered by this Court include, but are not limited to: (1) was the contract breached; (2) if so, who breached the contract; (3) was the contract properly terminated; (4) are any sums due either party under the contract; (5) does either party have any outstanding obligations to perform under the contract; (6) did Plaintiff defame GMP; (7) did the FSM violate GMP's civil rights; and (8) did the FSM interfere with GMP's contractual relations?

    None of these questions directly touch upon treaty relations between the FSM and the United States. Although Plaintiff is correct that this Court cannot correct, amend or withdraw the recommendations in the US DOl OIG Memorandum and reinstate funding for GMP's contract,5 ruling on the issues outlined in the previous paragraph do not require us to do so. The Court may, however, determine whether Plaintiff wrongfully procured the US DOl OIG Memorandum by providing false information to U.S. officials, whether, if proven, those actions were actionable, and if so, what damages GMP suffered. Similarly, this Court can decide the issue of whether either party breached the contract, and if so, who owes what sums to the other. The mere existence of a funding mechanism agreed to by two sovereign nations cannot strip this Court of jurisdiction to issue a decision on the merits of this case; nor does the Court believe the Compact is intended to so hobble the Court.

    Plaintiff's reliance on Oetien v. Central Leather Co., 246 U.S. 297, 38 S. Ct. 237, 62 L. Ed. 726 (1918) is misplaced. In that case, General Villa, during the Mexican Civil War seized animal hides for payment of taxes due from their owner. The hides were later sold in Mexico, and delivered to the new owner in the United States. The original owner of the hides alleged the hides were taken in violation of the Hague Convention, and that Villa had no right to seize them. The Court refused to re-examine the Mexican determination of ownership because the Court would not "imperil the amicable relations between governments." That is, the United States Government now recognized the Mexican government that had seized the hides as the legitimate government of that country. The Court would not judge that government=s actions. The only way the original owner of the animal hides could prevail in Oetien was by having a U.S. court rule that Villa's seizure of the hides was illegal. The court could not do that.

    While this Court will not judge the actions of the U.S. Government, disposition of this case does not require the Court to judge those actions. The Court can and will judge the actions of the parties in this case, and is persuaded that there are satisfactory criteria to do so.

    The Court has already dismissed the third cause of action for other reasons. With respect to the political question issue, the motion is denied.

V. COUNTERCLAIM FOURTH CAUSE OF ACTION: BREACH OF COVENANT OF GOOD FAITH

    GMP alleges the FSM "acted in bad faith and failed to act fairly, impartially and without bias against GMP in the administration of the contract." Plaintiffs ask that this Court dismiss the cause of action, alleging Plaintiffs acted within the scope and authority of the terms and conditions of the Contract. Memo. at 73. The parties have a factual dispute with respect to this cause of action. The FSM has not shown, as a matter of law, that the cause of action should be dismissed, and has cited no authority for the proposition. With respect to the fourth cause of action, the motion is denied.

VI. COUNTERCLAIM FIFTH CAUSE OF ACTION: ABUSE OF PROCESS

    The tort of abuse of process requires some legal process. It requires the use of legal process emanating from an official body. Mailo v. Twun-Barimah, 2 FSM Intrm. 265, 269 (Pon.1985). The allegations in the complaint allege that the FSM used the audit process to wrongfully terminate the contract, and that the Memorandum issued by the U.S. Department of Interior "was part of an official legal process authorized and instituted under the Compact and the FPA." Such an allegation does not meet the requirements of legal process.

    GMP also alleges that the FSM "instituted a separate lawsuit [the case at bar] against GMP in violation of Rule 11, and in bad faith, for the ulterior purpose of retaliation for GMP's lawsuit against Westerfield in his official capacity in retaliation for the personal lawsuit against him by GMP."

    As a matter of law, the audit procedure and the Memorandum cannot be the process on which an allegation of abuse of process rests. With respect to the remaining charge that the FSM brought the instant law suit as an abuse of process, the Court fails to see how when each party vigorously pursues opposite sides of a legitimate dispute (who breached a contract), how either party can seriously argue that either the complaint or the counterclaim constitutes abuse of process. The fifth cause of action is dismissed.

VII. COUNTERCLAIM NINTH CAUSE OF ACTION: DEFAMATION

    With respect to the libel and slander claims, the FSM alleges the FSM did not publish the statements, all of the information in the DOl report is true, and that the U.S. government is an indispensable party. The Court has already considered the indispensable party argument, and will not repeat that analysis here, but simply state that the United States is not an indispensable party within the meaning of Rule 19, and in any event the FSM has not addressed the four factors required to be discussed under Rule 19 when determining whether to dismiss an action.

    Although it is true that the FSM did not author the DOl report, it is clear that FSM government employees corresponded with and spoke to DOI personnel concerning matters alleged in the counterclaim. If the statements complained of were defamatory, they would still qualify as slanderous if they were spoken, but not committed to writing by the FSM.

    The truth of the alleged defamatory statements is at issue. The parties may litigate the issue of

truth or falsity at trial. Dismissal at this juncture is not warranted.

VIII. TWELFTH CAUSE OF ACTION: INJUNCTIVE RELIEF

    Although presented as a cause of action, injunctive relief is a remedy available in proper cases. The FSM asks this Court to dismiss the twelfth cause of action: (a) because the claim is nonjusticiable;6 (b) the claim is untimely and has been waived by GMP's delay; (c) GMP is not entitled to injunctive relief; and (d) GMP has not posted security for issuance of a TRO or injunctive relief.

    The Court cannot find, as a matter of law that the request for injunctive relief is untimely. Such a ruling would require an evidentiary hearing. Similarly, a determination of whether GMP is entitled to injunctive relief would require an evidentiary hearing concerning the likelihood of success on the merits and other factors to be considered before granting an injunction. In re FSM Telecomm. Corp. Cellular Tower, 12 FSM Intrm. 243 (Chk. 2003). From the facts before it, the Court cannot say, as a matter of law, that GMP is not entitled to relief. Lastly, although the FSM urges the Court to deny the request for injunctive relief because GMP has not posted security, the Court, after considering all of the facts before it, determines what security is necessary. Such a determination in this case would require an evidentiary hearing. The motion is denied with respect to the request for injunctive relief.

IX. MOTION TO DISMISS, OR TO STRIKE FOR LACK OF STANDING

    The FSM has failed to provide any authority to support this motion. It is denied.