THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as Edwin v. Kosrae ,
4 FSM Intrm. 292 (Kosrae S. Ct. Tr. 1990)

[4 FSM Intrm. 292]

HUDSON EDWIN,
Plaintiff,
vs.

KOSRAE STATE,
Defendant.

CIVIL ACTION NO. 33-87

OPINION

Before Harry H. Skilling
Chief Justice
Kosrae State Court
July 19, 1990
 
APPEARANCES:
For the Plaintiff:          Delson Ehmes
                                     Directing Attorney
                                     Micronesian Legal Services Corp.
                                     Tofol, Kosrae  96944
 
For the Defendant:     Richard Kaminski
                                     Office of the Attorney General
                                     Tofol, Kosrae  96944
 
*    *    *    *
 
HEADNOTES
Public Officers and Employees - Kosrae
     A public officer's right to a given salary is based primarily upon constitutional, statutory, and regulatory provisions.  Edwin v. Kosrae, 4 FSM Intrm. 292, 298 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     The Kosrae Code contemplates the problem of persons performing services in excess of their prescribed duties, and KC 5.427 provided a means for compensating such extra labor.  Edwin v. Kosrae, 4 FSM Intrm. 292, 299 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     When a Kosrae State employee makes a claim for additional compensation or benefits, on grounds that he has been temporarily assigned to a position by detail, "acting" assignment, or temporary promotion and is performing services in excess of prescribed duties, the burden is on the employee to show that a

[4 FSM Intrm. 293]

clear legal basis exists for the employee's right to those emoluments.  Edwin v. Kosrae, 4 FSM Intrm. 292, 299 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     There is no provision in the laws of Kosrae that provides that Kosrae State is entitled to reimbursement of salary paid over and above a state employee's pay level.  Edwin v. Kosrae, 4 FSM Intrm. 292, 300 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     Representations by officials with authority to set and change salaries can alter the general rule that salaries are set by law and not contract.  Edwin v. Kosrae, 4 FSM Intrm. 292, 300 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     In order for a Kosrae State employee's salary to be set by contract and not law, it must be shown that direct representations were made to the employee regarding the fixing of a salary not otherwise determined by law and made by an official with legal discretion to do so.  Edwin v. Kosrae, 4 FSM Intrm. 292, 300 (Kos. S. Ct. Tr. 1990).

Civil Procedure
     When issues which were not raised in the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings. Edwin v. Kosrae, 4 FSM Intrm. 292, 301 (Kos. S. Ct. Tr. 1990).

Constitutional Law - Due Process
     To be property protected under the Federated States of Micronesia and Kosrae State Constitutions, the employment right must be based on governmental assurance of continual employment or dismissal for only specified reasons as stated in statute, regulation, formal contract or actions of a supervisory person with authority to establish terms of employment. Edwin v. Kosrae, 4 FSM Intrm. 292, 302 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     In Kosrae, a permanent employee has the right to hold his position during good behavior, subject to suspension, demotion, reduction-in-force, or dismissal, except when an employment contract provides otherwise.  Edwin v. Kosrae, 4 FSM Intrm. 292, 302 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     The right of Kosrae State to demote an employee is limited to disciplinary reasons based on good cause.  Edwin v. Kosrae, 4 FSM Intrm. 292, 303 (Kos. S. Ct. Tr. 1990).

Public Officers and Employees - Kosrae
     Kosrae State has the right and the power to adjust its employment scheme according to the availability of funds and work.  Edwin v. Kosrae, 4 FSM Intrm. 292, 303 (Kos. S. Ct. Tr. 1990).

[4 FSM Intrm. 294]

Public Officers and Employees - Kosrae
     When shortage of work or funds requires the dismissal of a Kosrae State employee the Executive should consider an employee's individual merit, qualifications through education, training, and experience and the employee's seniority.  Edwin v. Kosrae, 4 FSM Intrm. 292, 303 (Kos. S. Ct. Tr. 1990).
 
*    *    *    *

COURT'S OPINION
HARRY H. SKILLING, Chief Justice:
     This matter came on for trial June 13, 1990.  Present were plaintiff and his counsel of record, Delson Ehmes of MLSC, and defendant's counsel of record, Richard Kaminski of the Office of Attorney General.  At the hearing, plaintiff called two witnesses, Mr. Fred Sigrah (Director of Personnel), and plaintiff. Plaintiff also introduced into evidence eight documents which comprised the personnel action forms for plaintiff for the period from 1980 to 1986.  Defendant called one witness, Weston Luckymis, and introduced no documentary evidence.
 
      Both Plaintiff and defendant submitted trial briefs and defendant submitted a supplemental brief.  Defendant at one point also moved the Court to allow defendant to amend its answer to the complaint to include the affirmative defenses of (1) failure to exhaust administrative remedies; and (2) action is barred by the applicable regulatory period.  Defendant made this motion on the basis that plaintiff had waived the right by implied consent on the issue of whether a hearing had been held before the Executive Service Appeals Board. This Court denied the motion, but will discuss the matter below.

FACTUAL BACKGROUND
     This case is a salary dispute between the State of Kosrae and one of its long-term employees, Mr. Hudson Edwin.  During the transition period between the former Trust Territory Government and the emergence of Kosrae as an independent state of the Federated States of Micronesia, many changes took place, including the need for a Director of Public Works.

     In 1980, the Trust Territory Government promoted Mr. Edwin to the position of Acting Director of Public Works, pending his approval by the legislature or the appointment of another person.  Mr. Edwin was never appointed, and performed the duties of Acting Director until 1984, when another person, Mr. Pualoa was appointed Director of Public Works.

     For approximately two years after Mr. Pualoa arrived plaintiff retained the position and salary of Acting Director.  The evidence at trial showed that plaintiff floated about the department during this time, operating equipment and doing other odd jobs.  The dispute arises from the State's alleged failure

[4 FSM Intrm. 295]

to follow established procedures in returning Mr. Edwin to the Executive Service after his release from the position of Acting Director of Public Works.

     The parties submitted and stipulated in open court to the set of stipulated facts prepared by the parties.  These stipulated facts form much of the factual basis of this lawsuit, and will be repeated here in relevant part:

STIPULATED FACTS
17.   Hudson Edwin's Trust Territory service date was December 3, 1957.

18.   He was promoted from Leader Foreman to Assistant Public Works Officer on April 14, 1970.  He received with-in grade step increases in April  of 1971, 1972, 1973, 1974, 1975, 1976 and 1978.

1.   Hudson Edwin, immediately prior to July 13, 1980, held the position of Public Works Officer I1 (Developmental), at pay level 21/5, with a bi-weekly salary of $325.64.

3.   On 8/1/81, the personnel office increased Hudson Edwin's pay level and salary as Acting Director (Developmental) to 25/4, at $397.68 bi-weekly.  This increase was made retroactive to 7/13/80.
  
19.  On August 13,1981, the personnel office extended Hudson Edwin's temporary promotion to Acting Director (Developmental) at pay level 25/4, $397.68 bi-weekly.  This extension was made retroactive to 7/14/81.  Hudson Edwin received a copy of the personnel action form authorizing this extension.

10.   At the time of his temporary promotion (NTE 1 year) to Acting Director of Public Works (Developmental), Hudson Edwin agreed to return to the former salary (grade and step) he would have been receiving had he remained in this former position of Public Works Officer I.
 
4.   On 3/25/86, the personnel office increased Hudson Edwin's pay level and salary as Acting Director (Developmental) to 25/5, at $425.52 bi-weekly.  This increase was made retroactive to 4/4/82.

12.  Hudson Edwin's promotion to Acting Director ceased on August 31, 1984, when Jim Pualoa became Director of Public Works.

5.  Also on 3/25/86, the personnel office reallocated Hudson Edwin's position from Acting Director of Public Works (Developmental) to Public Works Officer I, pay level 19/7, at $325.64.  This reallocation was made retroactive to 8/31/84.
 
[4 FSM Intrm. 296]

20.   The personnel office did not return Hudson Edwin to his former position and salary, when the extension authorized on 8/13/81 was done.  Hudson Edwin did not request to be returned to his former position and salary, when the extension was done.

8.  On 5/13/87, Hudson Edwin resigned from his position in the Kosrae State Government as Roads and Grounds Foreman II, at pay level 14/10, $283.52 bi-weekly.

13.  Hudson Edwin's duties at Public Works from August 31, 1984 until his resignation on May 13, 1987 consisted of work in the field as a foreman and equipment operator, as assigned by the Director of Public Works.

14.   Hudson Edwin was not required to repay any salary difference for the period from September 1, 1984 to March 29, 1986.
 
ISSUES
     In the amended complaint plaintiff alleges four causes of action:

     (1)  Breach of Contract

     (2)  Violation of Due Process

     (3)  Violation of Title 5 of Kosrae Code

     (4)  Violation of Title 61 of the Trust Territory Code

     Plaintiff claimed unspecified damages in the complaint, and did not put on any evidence of damages other than the difference between the salary plaintiff actually received, and the salary of an Acting Director.

     In addition, the defense raised several counterclaims, including unjust enrichment, breach of contract and conversion of state property.

     In essence, plaintiff claims that he is entitled to the salary of Acting Director of Public Works, if not the position, until his resignation.  Plaintiff's claim will be treated here as this salary claim, having made no request for reinstatement. Furthermore, plaintiff's claims to unspecified damages for violation of his constitutional rights are also treated as a claim for salary.  Defendant essentially argues that it overpaid plaintiff, and should be reimbursed for such overpayment.

BREACH OF CONTRACT
     Plaintiff alleges that the series of events over a six-year period are properly seen as a contract and a breach thereof by defendant.  Defendant at one point appeared to argue that a contract is involved here, then argued that

[4 FSM Intrm. 297]

the employment relationship did not constitute a contract, based primarily on the recent case of Sohl v. FSM, 4 FSM Intrm. 186 (Pon. 1990).  This Court finds that the Sohl decision determines the outcome of many of the issues in the case at hand.

     In that case, plaintiff became Chief Federal Program Coordinator for OPS in 1980.  In 1983, plaintiff became the acting director of OPS, per appointment of the President.  Though such appointments may not last over 60 days2, plaintiff continued in the capacity as acting director until 1987, when his nomination for Director was made.  Plaintiff claimed the difference in salary between that which he received, and the established rate for Director of OPS, because plaintiff performed the functions of that office for a period of years.

     In its detailed legal analysis of the case, the Sohl Court analogized  to United States case law, after finding no directly controlling statutes or cases in the FSM. Sohl, 4 FSM Intrm. at 191.  The most important area of analogy for our purposes here is the issue of the applicability of contract law to situations such as those present before us now.  In this regard, the Sohl Court held:

     A basic premise of public employment law is that the rights of a holder of public office are determined primarily by reference to constitutional, statutory, and regulatory provisions, not by the principles of contract which govern private employment relationships.  Subject to constitutional limitations, the public has the power through its laws, to fix the rights, duties and emoluments of public service, and the public officer neither bargains for, nor has contractual entitlements to them.

     Thus, the contract arguments urged by the plaintiff are simply inapposite to disputes over the benefits of public office.

Id. at 191-92 (citations omitted).  Similarly, this Court understands the system of the Kosrae State Government to include the basic proposition that a public officer's right to a given salary is based primarily upon constitutional, statutory, and regulatory provisions.  The statutory and regulatory provisions applicable to the present case include both Trust Territory and State Law.

     The Trust Territory Public Service System Regulation 17.8 states:  "[T]he employee must be informed in advance and agree, in writing, that at the expiration of the temporary promotion, he will be returned to the former salary (grade and step) that he would be receiving had he remained in the former position."

[4 FSM Intrm. 298]

     This section contemplates the plaintiff's movement from PWO I to Acting Director.  The Trust Territory Government complied with the requirements of information and consent contained in that section.  See Plaintiff Exhibit # 1. However, plaintiff claims that defendant breached that section by extending the temporary promotion beyond one year.

     We note that the language of 17.8 and the surrounding sections provide no penalty for exceeding one year.  Under the rule established in Panuelo v. Pohnpei, 3 FSM Intrm. 76 (Pon. S. Ct. App. 1986), the one year limitation is therefore directory, and will be used by this Court only as general evidence of the intent of that section.  See Obet v. Kosrae, Civ. No. 34-88 (Kos. S. Ct. 1988) (Unpublished).  The evidence established here that the movement of plaintiff to acting director was extended at the end of the first year.  Though it was not renewed thereafter, neither plaintiff nor defendant considered it necessary.  Both parties at that time were satisfied with the procedural arrangement.  Plaintiff's claim to the title of Acting Director of Public Works was undisputed from 1980 to 1984.  Therefore, this Court will not rule the subsequent extension of plaintiff's acting appointment a nullity under the Trust Territory Executive Service System Regulations.3

     Statutes also exempt directors of departments and agencies from the Executive Service.  See 61 TTC 9(h).  Kosrae State Code provides as follows:

     KC 5.101 Definitions
     . . .

     (18)     "Position", whether occupied or vacant, is a defined set of work responsibilities in the Executive, assigned by competent authority for performance by one person working in a full or part-time capacity except:  (a)  a position filled by appointment by the Governor following consent of the Legislature;

     Directors, as appointees of the Governor, may be hired, fired, or demoted at will.  We also note that plaintiff here was not at any time appointed the Director of Public Works.  His title remained Acting Director of Public Works until 1986. This does not mean that plaintiff is entitled to no procedural protections for his job.  On the contrary, when he was moved4 from the Acting Director position, he returned to the Executive Service, and all the attendant procedures, which will be discussed below.

[4 FSM Intrm. 299]

The "Acting" Assignment

     Even in his "acting" assignment, plaintiff had enjoyed some security through operation of statute.  The Kosrae State Code contemplates the problem of persons performing services in excess of their prescribed duties, and KC 5.427 provides a means for compensating such extra labor.  The Executive Service Regulations of the State of Kosrae5 also contemplate this problem, and contain specific reference to temporary promotions and acting assignments:

     6.5  Compensation for detail, "Acting" and Temporary Promotion Assignments.   If the provisions of Kosrae Code Section 5.427 are met, an employee temporarily assigned to a position by detail, "acting" assignment, or temporary promotion shall be compensated at the step in the new pay level which is equivalent to a two step increase above his regular salary.

     This Court holds that this section is the "clear warrant of law" required by the Sohl decision.

     In all cases, the officer claiming certain compensation or other benefits must show a clear legal basis for his right to those emoluments... Hopes and expectations, even reasonable ones, are not enough to create that legal entitlement, nor are any moral obligations which may be incurred; clear warrant of law is an absolute necessity.  4 FSM Intrm. at 193.

     Here, the plaintiff was entitled to two steps above his PWO I salary for the period during which he was appointed to that position.  He received that and more, therefore his claim to additional amounts is barred.  Likewise, defendant has failed to show how it is entitled to reimbursement of salary paid over and above two steps higher than PWO I salary.  Indeed, there is no such provision in the laws of this State.

     There is language in the Sohl opinion which may soften the harsh "clear warrant of law" requirement for the emoluments of public office.  The Court in Sohl noted that representations made by the government may be a basis for introducing contract notions into the analysis of rights.  In its conclusion, the Court stated: "No constitutional provision, statute, or regulation provides for such an increase, and no executive officer with legal discretion to set salaries for exempt positions made any representations that plaintiff would receive additional pay."  4 FSM Intrm. at 198.

     This language leads this Court to believe that representations by officials with authority to set and change salaries can alter the general rule that salaries are set by law and not contract.  Plaintiff here has alleged

[4 FSM Intrm. 300]

that several representations gave rise both to a contract and to a property right in the Acting Director's salary, but has pointed to no "legal discretion" required by Sohl.

     Plaintiff first claims that the extension of the temporary promotion or acting assignment beyond the one-year limitation of the Trust Territory Public Services System Regulations   17.8, gave plaintiff the reasonable expectation that he was entitled to the Acting Director's salary until his retirement.  Indeed, plaintiff claims that after ninety days plaintiff had this expectation.  This argument is meritless.  No evidence was introduced that plaintiff was conversant with the sections described: therefore, he could not "rely" upon the representations made therein to his detriment.  Furthermore, this Court holds that this is not the type of representation contemplated by the Sohl decision.

     Plaintiff also claims that the two step increases which he received while in the position of Acting Director of Public Works constituted a representation that plaintiff would receive that salary with similar increases until his retirement.  This also is not a representation contemplated by the Sohl decision.  That decision contemplates only direct representations made to a specific plaintiff regarding the fixing of a salary not otherwise determined by law, by an official with legal discretion to do so. This Court holds that plaintiff's salary from his initial acting assignment until his movement down from that position in 1986 was specifically provided for in the statutes and regulations of the State of Kosrae.
 
COUNTER CLAIMS
     Similarly, the contract-based counterclaims of unjust enrichment and breach of contract are also barred by application of the Sohl decision.  These are contract and quasi-contract claims and are specifically excluded by Sohl.  Defendant's counterclaim alleging conversion of public property was not argued at trial, and was wholly unsupported by the evidence; therefore, judgment on defendant's counterclaims will be denied.

     With respect to defendant's motion at trial to amend the answer to include affirmative defenses, we note that the language of the Rule is clear: "When issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised in the pleadings," Kos. Civ. R. 15(b).

     Defendant argues that since plaintiff presented evidence regarding the lack of a hearing on the "demotion," that it should be heard on the defense of failure to exhaust administrative remedies.  This argument is meritless for two reasons. First, this Court is not at all convinced that the issue of exhaustion of administrative remedies was "tried" by the passing reference to the lack of a hearing.  Second, this issue, if ever, was raised upon the filing of the complaint, when plaintiff alleged due process violations.  To hold that this issue is not raised by a due process claim in a salary dispute would be contrary to all reason.     

[4 FSM Intrm. 301]

TITLE 5 KOSRAE CODE
     Plaintiff here has pointed to no provision of statute or regulation which would require the defendant to pay plaintiff the salary of the Acting Director of Public Works after he was moved from that position in 1986.  Plaintiff has made a claim that the due process clause of the state and federal constitutions requires such a result, but has pointed to no case authority for this proposition.

     The foregoing analysis precludes recovery by plaintiff for the period of 1980 to 1986, when he was moved from his position as Acting Director of Public Works. The remaining area for consideration, then, is the period of time between plaintiff's movement from the Acting Director position until the time of his resignation in 1987.

Return to Public Works Officer I
     Plaintiff has argued many different theories of recovery.  The breach of contract theory was explained in the previous section.  Plaintiff also argued that he had a property right to the salary of Acting Director indefinitely.  That assertion was also disproved in the previous section.  Though plaintiff had no property right in the salary of Acting Director indefinitely, the following analysis will show that plaintiff had a property right not in the Acting Director's salary, but in the salary of Public Works Officer I at the time he was moved from the "Acting" position.

Nature of Property Right
     Under the rule established in Suldan v. FSM (II), l FSM Intrm. 339 (Pon. 1983), and subsequently adopted by this Court, this Court finds that the statutes and regulations of both Kosrae State and the Trust Territory Government provide for reasonable job security for the plaintiff in returning to the salary which he left.

     The Suldan (II) court stated the principle in the following terms:

     To be property protected under the constitution the employment right must be supported by more than merely the employee's own personal hope.  There must be a claim of entitlement based upon governmental assurance of continual employment or dismissal for only specified reasons.  These assurances may come from various sources, such as statute, formal contract or actions of a supervisory person with authority to establish terms of employment.  Only if an employment arrangement meets this property test does the Federated States of Micronesia Constitution require procedural due process as a condition to its termination.

Suldan (II), at 352.

[4 FSM Intrm. 302]

     Here, no formal contract is involved; the personnel action forms can hardly be regarded as tailor-made expressions of the intent of the parties.  Neither was any evidence introduced regarding the actions of authorized supervisors making representations to plaintiff.  Therefore, the remaining source of assurance is statute.

     The Kosrae Code speaks specifically in terms of a right:
 
Employee Rights
     A permanent employee has the right to: "(l)  hold his position during good behavior, subject to suspension, demotion, reduction-in-force, or dismissal as provided in this chapter, except when an employment contract provides otherwise."

     KC 5.402

     The parties stipulated that plaintiff was a permanent employee of the Trust Territory Government and had never had disciplinary action taken against him throughout the period of his employment with the Trust Territory Government or the State of Kosrae.  Therefore, plaintiff's good behavior is proven.  As we have discussed above, we find contract law inapplicable to the employment transaction here.  The statute then restricts the right of the employee to hold his job, even during good behavior.  Only two of the four areas there are relevant here: demotion and reduction-in-force, as there was no evidence concerning suspension or dismissal.

     KC 5.418 discusses the procedures to be taken in demotions and dismissals:

     KC 5.418 Dismissal; demotion.
 
      For disciplinary reasons based on good cause a management official may dismiss or demote an employee.  A dismissal or demotion of an employee is not effective for any purpose until the management official gives the employee written notice stating the reasons for the dismissal or demotion and the employee's right of appeal.

     This Court reads this section as limiting the right of the defendant to demote for reasons other than disciplinary reasons.  The language of the statute is clear. We agree with plaintiff's assertion that the Kosrae State Code prohibits the use of non-disciplinary demotions even though the Executive Service Regulations provide therefor.  See Section 6.5.

     KC 5.408's only remaining limitation on the plaintiff's property right is reduction-in-force.  The Code provides that if certain procedures are followed, the government may impinge upon the property right of an employee, and dismiss him:          
 
[4 FSM Intrm. 303]

     KC 5.416 Reduction-in-force,  Regulation provide:
 
      (l) the conditions under which the Executive may dismiss an employee from his position when an absence of funds or work requires; and (2) that, in establishing the order of termination of more than one employee, the Executive gives consideration to the following factors in the order stated:  (l) an employee's individual merit, as shown by performance evaluations, (2) his qualifications through education, training, and experience, and (3) his seniority as measured by total creditable Executive employment.

Id.

     Clearly the drafters of the Code intended that the Government retain the right at all times to adjust its employment scheme according to the availability of funds and work.  This is a reasonable restriction placed upon the property interest of government employees.  However, the drafters also intended that when shortage of work or funds requires dismissal of an employee, that certain procedures be followed to ensure that seniority and qualifications are given due consideration.

     The Code section quoted above requires the Executive to promulgate regulations regarding reduction-in-force procedures.  The Executive complied with this mandate by promulgating Section 12.3 of the Executive Service Regulations:

     12.3  Reduction-in-force.  Department and agency heads may terminate the services of any employee because of the abolition of his position, for lack of work or funds, or for other reasons outside the employee's control which reflect no discredit on the services of such employee.

     This section then goes on to prescribe procedures for determining the order of termination for employees.  One might argue that reduction-in-force does not apply in the present case because no dismissal is involved, and only one employee is involved.  Though section 5.416 speaks in terms of dismissal, we find this section relevant and indeed determinative of the claims before this Court.

     Defendant has argued that its acts in moving plaintiff to Road and Grounds Foreman II were a reasonable restriction on plaintiff's property right because of the State's need to reallocate positions when a lack of work requires.  This Court holds that though a valid reason for not returning defendant to the position and salary of Public Works Officer I existed (i.e. the abolition of PWO I position), defendant did not comply with the authorizing statute, KC 5.416.  A brief view of the history involved points up the need to review this case in terms of reduction-in-force.

     The Court cannot determine whether plaintiff and defendant understood in 1980 that the position of PWO I would be made unnecessary by the new

[4 FSM Intrm. 304]

independence of Kosrae as a district and later a state.  However, both plaintiff and defendant agree that the position of PWO I is required only when Kosrae was a subdistrict.  When a subdistrict achieves independence, the need for a sub-district department head is obviated.

     At least some time prior to the arrival of the first Director of Public Works for Kosrae State, Mr. Pualoa, defendant must have been aware that the PWO I position would be abolished for lack of work.  Rather than proceeding under the Kosrae State Code, defendant instead attempted to "demote", "reallocate" and "downgrade" plaintiff or his position, two years after plaintiff's replacement arrived.

     It should be noted that the Executive Service Regulations were not promulgated until 1987, after the transactions at issue here.  Some would argue that the precatory language of KC 5.416 ("Regulations provide:") places no burden upon defendant until such regulations are promulgated.  That argument is rejected here because that section is essential to the delineation of the property rights of all title 5 employees.

     From the facts adduced at trial, the Court can find no indication that the Executive considered plaintiff's individual merit, his qualifications, nor his seniority in determining what to do with this acting director.  The brief reference in the personnel action form "reallocating" defendant's position is insufficient.  See Plaintiff Exhibit 5.  Plaintiff's Exhibit 6 states: "Action is based on review and evaluation of incumbent's daily duties and responsibilities..." (emphasis added).

     A review of the duties of plaintiff might be relevant on the questions of the employee's individual merit; however, there is no reference to the other considerations required by the Code.  Had defendant taken these reduction-in-force steps upon the arrival of Mr. Pualoa or even thereafter, a proper position would have been found for defendant, perhaps obviating the present action.

     Finally, defendant asserts that the movement of plaintiff was authorized as a "reallocation" of plaintiff's position.  The statute in question states as follows: "KC 5.410(5) The Director may change a position from one class to another when substantial changes occur in the duties of the position.  The Director determines the status of a person holding a reclassified position."  Id.
 
      This section speaks specifically of positions which are to remain in existence after they are placed in a different class.  Here, the position of PWO I was not "reclassified" or "reallocated" to a different classification; i.e. Road and Grounds Foreman I.  The evidence showed that the position of PWO I was abolished. There were no substantial changes to the duties of the PWO I position; it was eliminated.  Certainly, elimination is a substantial change; however, not the type of change contemplated by section 5.410.  That section only provides the State the power to place a position in another class when that position will continue to exist, with changed duties.  The movement of

[4 FSM Intrm. 305]

plaintiff to Road and Grounds Foreman I was simply not a reclassification.

     Further, defendant presented no evidence that it had complied with the requirement stated in KC 5.410 for reclassification.  That section requires the Director to assess "the position's duties."  We find no evidence that the Director considered the changed duties of PWO I.  Instead, the movement of plaintiff was purportedly based upon an evaluation of the work which plaintiff had performed after the arrival of Mr. Pualoa but before "reallocation."  The movement of plaintiff from his acting position was a reduction-in-force, not a reallocation or reclassification, because the position was abolished, and found no place under another class.

DAMAGES
     Having found a violation of Title 5 of Kosrae Code, in that defendant failed to properly deal with the elimination of the Public Works Officer I position, the Court is faced with the issue of damages.  We are concerned here only with the time period between plaintiff's movement down from Acting Director to the time of his resignation:  2-14-86 to 5-13-87, or a period of approximately thirty-two bi-weekly periods.  The following is a calculation of the difference between PWO I salary and that which plaintiff received:

     Plaintiff Received

     2/14/86 to 5/11/86  =  202.16 bi weekly x 6

     5/11/86 to 5/13/87  =  283.52 bi weekly x 26

     Total - - - - $8,584.48

     PWO I PL 21/6

     2/14/86 to 5/13/87  =  347.36 x 32

     Total - - - -$11,115.52

     $ 2,531.04

     Both parties' estimates of damages are rejected because they are based upon erroneous conclusions of law.  Admittedly, the calculation above is at best reconstructive; however, this Court does not hold that defendant was obligated to pay plaintiff the PWO I salary even when it appears that a position is to be abolished.  Instead, this Court holds that the Executive must follow the procedures established by the Code which delineate the property rights of title 5 employees.
  
     With no more accurate determination of damages before the court, this calculation is deemed to be the most appropriate for assessing damages for violation of title 5.     

[4 FSM Intrm. 306]

CONCLUSION
     In summary, plaintiff has not shown a clear statutory authorization for the salary which he claims.  Nevertheless, the return to his former salary was a property right protected under both our state and federal Constitutions.  The Kosrae Code legitimately limits this property right, providing for dismissal, demotion, suspension, reduction-in-force, and reclassification.  The movement of plaintiff to a lower position than he occupied previously because of the abolition of his former position is a classic example of reduction-in-force.  The procedures required by the Kosrae Code for exercise of the reduction-in-force provisions were not complied with by defendant.  Therefore, defendant has violated Title 5 of the Kosrae Code, and plaintiff is entitled to the difference between the salary he actually received, and that which he would have received in his former salary as PWO I, until his retirement.

     Judgment is hereby rendered in favor of plaintiff in the amount of two thousand five-hundred thirty-one dollars and four cents.
 
      SO ORDERED, ADJUDGED, AND DECREED.

*    *    *    *
 
Footnotes:
 
1.  "PWO I" shall refer to the position of Public Works Officer I herein.
 
2.  See 2 F.S.M.C. 208.
 
3.  We note that the Sohl Court stated in dicta that plaintiff did not occupy the position of acting director after the failure of the Executive to renew the 60-day appointment under 2 F.S.M.C. 208.  Sohl, 4 FSM Intrm. at 195.  However, our result here remains unchanged in that defendant treated plaintiff as the acting director for four years, and extended the promotion once.
 
4.  The terms "move" and "movement" are used here to avoid the conflicting and conclusory legal terms which have been used by the parties to this action; i.e. demotion, reallocation, down-grade, and reclassification.
 
5.  The Executive Service Regulations in use today were enacted January 27, 1987.  Regulation 1-87.
                                                                                                                                                                                                                                                                                                           
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