FSM SUPREME COURT TRIAL DIVISION

Cite as Neth v. Peterson, 21 FSM R. 269 (Pon. 2017)

CIVIL ACTION NO. 2015-007

Decided: June 2, 2017

APPEARANCES:

HEADNOTES

Civil Procedure – Pleadings – Amendment; Civil Procedure – Pleadings – Counterclaims and Cross-Claims

Under Civil Procedure Rule 13(f), when a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment. Neth v. Peterson, 21 FSM R. 269, 270 (Pon. 2017).

Civil Procedure – Pleadings – Amendment; Civil Procedure – Pleadings – Counterclaims and Cross-Claims

The argument for allowing amendment is especially compelling when the omitted counterclaim

[21 FSM R. 270]

is compulsory. Neth v. Peterson, 21 FSM R. 269, 270 (Pon. 2017).

Civil Procedure – Pleadings – Amendment; Civil Procedure – Pleadings – Counterclaims and Cross-Claims

Although the court must first look to FSM sources of law, when it has not previously interpreted Rule 13(f) or considered the aspects of Rule 15(a) and 15(c) as they relate to Rule 13(f), and when those aspects are identical to a U.S. rule, the court may look to U.S. sources for guidance in interpreting those aspects. Neth v. Peterson, 21 FSM R. 269, 271 n.1 (Pon. 2017).

Civil Procedure – Pleadings – Amendment

The mere passage of time between an original filing and an attempted amendment is not a sufficient reason for denial of the motion. FSM Civil Procedure Rule 15(a) provides that a party may amend the party's pleadings by leave of court, and that this leave shall be freely given when justice so requires. Neth v. Peterson, 21 FSM R. 269, 271 (Pon. 2017).

Civil Procedure – Pleadings – Amendment; Civil Procedure – Pleadings – Counterclaims and Cross-Claims

Rules 13(f) and 15(a) are interpreted liberally, in line with the Rules' overall goal of resolving disputes, insofar as possible, on the merits and in a single judicial proceeding. Amendments under Rule 13(f) relate back to the original pleading under Rule 15(c) so long as the adverse party had adequate notice of the transactions forming a basis for the amended counterclaim. Neth v. Peterson, 21 FSM R. 269, 271 (Pon. 2017).

COURT'S OPINION

LARRY WENTWORTH, Associate Justice:

This comes before the court on the defendants' Motion for Leave to Amend Answer [FSM Civ. R. 15(a)], filed April 21, 2017, and the plaintiffs' Opposition to Motion to Add Compulsory Counterclaim, filed May 1, 2017. The motion is granted. The court's reasons follow.

The defendants move for leave to amend their answer to add, what they characterize as a compulsory counterclaim, alleging that both of the plaintiffs colluded or conspired to either request, authorize, approve, pay, or receive excessive and unauthorized overtime compensation in fiscal years 2011 and 2012. They assert that since these counterclaims arise from the same transaction or occurrence as the subject matter of the plaintiffs' complaint, these are compulsory counterclaims and that, since the parties have not conducted discovery, an amendment at this stage will not prejudice the plaintiffs.

The plaintiffs contend that the amendment should not be allowed because, when the defendants omitted these counterclaims from their original answer, it constituted a waiver of those counterclaims. The plaintiffs further contend that that waiver must stand since the defendants did not show that they had omitted the counterclaims due to oversight, inadvertence, or excusable neglect or that justice so requires that the counterclaims be pled. Under Civil Procedure Rule 13(f), "[w]hen a pleader fails to set up a counterclaim through oversight, inadvertence, or excusable neglect, or when justice requires, the pleader may by leave of court set up the counterclaim by amendment."

The plaintiffs acknowledge that the defendants' omitted counterclaims are compulsory counterclaims. "The argument for allowing amendment is especially compelling when, as here, the omitted counterclaim is compulsory." Spartan Grain & Mill Co. v. Ayers, 517 F.2d 214, 220 (5th Cir.

[21 FSM R. 271]

1975). ¹ "The mere passage of time between an original filing and an attempted amendment is not a sufficient reason for denial of the motion." Id. Additionally, FSM Civil Procedure Rule 15(a) provides that a party may amend the party's pleadings "by leave of court" and that this "leave shall be freely given when justice so requires."

Courts have interpreted Rules 13(f) and 15(a) liberally, "in line with the . . . Rules' overall goal of resolving disputes, insofar as possible, on the merits and in a single judicial proceeding." Spartan Grain & Mill Co., 517 F.2d at 220. "[A]mendments under Rule 13(f) relate back to the original pleading under Rule 15(c) so long as the adverse party had adequate notice of the transactions forming a basis for the amended [counter]claim." Diematic Mfg. Corp. v. Packaging Indus, Inc., 412 F. Supp. 1367 1374 (S.D.N.Y. 1976); see also Chuuk Health Care Plan v. Department of Educ., 19 FSM R. 435, 438-39 (Chk. 2014) (Rule 15(c) is based on the notion once litigation is instituted, parties are not entitled to statute of limitations protection against later assertion by amendment of claims or defenses arising from the same conduct, transaction, or occurrence as original pleading). It seems apparent from the plaintiffs' opposition that they did have such adequate notice.

Accordingly, since justice so requires, the motion to amend is granted. IT IS THEREFORE ORDERED that the defendants file and serve their counterclaims against the plaintiffs no later than June 16, 2017.

The defendants' opposition also seems to indicate that sufficient panel members may be available to constitute a Personnel Review Board that could hear the plaintiffs' administrative challenge to their termination.

IT IS FURTHER ORDERED that the parties shall, no later than June 14, 2017, file and serve, jointly if possible, otherwise separately, a report on whether the plaintiffs' administrative challenge can go forward before a Pohnpei Personnel Review Board, and if so, how soon that might happen.

Footnotes:

¹ Although the court must first look to FSM sources of law, when the court has not previously considered certain aspects of an FSM civil procedure rule that are identical to a U.S. rule, it may look to U.S. sources for guidance in interpreting those aspects. Amayo v. MJ Co., 14 FSM R. 355, 362 n.2 (Pon. 2006). FSM courts have not previously interpreted Rule 13(f) or the aspects of Rule 15(a) and 15(c) as they relate to Rule 13(f).