THE  SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
TRIAL DIVISION
Cite as Island Dev. Co. v. Yap ,
9 FSM Intrm. 288 (Yap 1999)

[9 FSM Intrm. 288]

ISLAND DEVELOPMENT COMPANY,
Plaintiff/Counterdefendant,

vs.

STATE OF YAP,
Defendant/Counterplaintiff,
 

STATE OF YAP,
Counterclaim Plaintiff,

vs.

MICHAEL HAUGE and MERCY HAUGE,
Counterclaim Defendants.

CIVIL ACTION NO. 1999-3000

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided:  December 27, 1999

APPEARANCES:
For the Plaintiff:          Douglas Parkinson, Esq.
                                     P.O. Box 2069
                                     Kolonia, Pohnpei FM 96941

For the Defendant:     Jennifer M. Link, Esq.
                                     Office of the Yap Attorney General
                                     P.O. Box 435
                                     Colonia, Yap FM 96943

[9 FSM Intrm. 289]

*    *    *    *

HEADNOTES
Civil Procedure ) Joinder, Misjoinder and Severance; Civil Procedure ) Pleadings
     A counterclaim may not be directed solely against persons who are not already parties to the original action, but must involve at least one existing party.  Island Dev. Co. v. Yap, 9 FSM Intrm. 288, 290 n.1 (Yap 1999).

Civil Procedure ) Joinder, Misjoinder and Severance; Civil Procedure ) Pleadings
     Civil Procedure Rule 13(h) provides that persons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rule 19 and 20.  Island Dev. Co. v. Yap, 9 FSM Intrm. 288, 290 (Yap 1999).

Jurisdiction ) Diversity
     In order to invoke the FSM Supreme Court's diversity jurisdiction under article XI, section 6(b) of the FSM Constitution, only one plaintiff need have citizenship different from one defendant.  Island Dev. Co. v. Yap, 9 FSM Intrm. 288, 290 (Yap 1999).

Civil Procedure ) Joinder, Misjoinder and Severance; Civil Procedure ) Pleadings
     A defendant is not required to obtain leave of court before naming additional defendants on its counterclaim, when the counterclaim is brought in the original answer, but although not required by Rule 13(h), the general practice is to obtain a court order to join an additional party.  Island Dev. Co. v. Yap, 9 FSM Intrm. 288, 291 (Yap 1999).

Civil Procedure ) Joinder, Misjoinder and Severance; Civil Procedure ) Parties
     When a defendant counterclaims against the original plaintiff and new additional parties, as to claims between the original parties the original plaintiff is designated plaintiff/counterdefendant while the original defendant is designated defendant/counterplaintiff, and as to new parties on the counterclaim, the original defendant is designated counterclaim plaintiff, while the new parties are designated counterclaim defendants.  Island Dev. Co. v. Yap, 9 FSM Intrm. 288, 291 (Yap 1999).

*    *    *    *

COURT'S OPINION
MARTIN YINUG, Associate Justice:
     On November 1, 1999, plaintiff Island Development Company ("IDC") filed its Motion to Strike.  On November 8, 1999, defendant State of Yap ("Yap") filed in a single submission its Response to Plaintiff's Motion to Strike/Counter Claim [sic]/Motion to Join Parties/Motion to Amend Technical Defects.  On November 29, 1999, IDC filed its Opposition to State's Motion to Join Parties and to Amend Technical Defects.

     IDC's motion to strike is denied.  Yap's motion to add Michael and Mercy Hauge ("the Hauges") as parties to the counterclaim is granted because in short, but as explored more fully below, leave of court is not required to add parties to a counterclaim where the counterclaim is filed along with the original answer to the complaint.  Yap's motion to amend technical defects is also granted.

     IDC's motion to strike is directed toward Yap's counterclaim filed with its answer on September 28, 1999.  The counterclaim names Michael and Mercy Hauge ("the Hauges"), along with IDC.  The

[9 FSM Intrm. 290]

pleading containing the answer is styled "Answer/Affirmative Defenses/Counterclaim."  Although the caption itself does not contain the names of Michael and Mercy Hauge, the following subtitle immediately follows the affirmative defenses portion of the pleading:  "COUNTERCLAIM AGAINST ISLAND DEVELOPMENT COMPANY,/MICHAEL HAUGE AND MERCY HAGUE/FIRST CAUSE OF ACTION."  This was sufficient to put the Hauges on notice that Yap is pursuing them on the counterclaim; indeed, it was this designation that formed the basis of IDC's motion to strike the Hauges from the counterclaim.  IDC asks in its motion that the Hauges be stricken as counterdefendants on the basis that 1) because the Hauges are not plaintiffs, they cannot be counterdefendants1; the counterclaim asserts claims only against IDC; and 3) the counterclaim seeks a judgment only against IDC, and not against the Hauges personally.  Further, at page 2 of IDC's response to Yap's motion to join parties and amend technical defects, IDC contends that the Hauges should not be made involuntary plaintiffs, because "[t]here is nothing preventing the State from using the usual, simple method of asserting claims against persons who are not plaintiffs."  What that method would be is not specified, although this may be an elliptical reference to adding the Hauges as defendants on the counterclaim.  In any event, Yap is not asking that the Hauges be designated involuntary plaintiffs, but rather that they "be added as parties to the counterclaim as defendants."  Response to Plaintiff's Motion to Strike Counter Claim [sic]/Motion to Join Parties/Motion to Amend Technical Defects at unnumbered 5 (Nov. 8, 1999).

     Yap's position is that as general partners of IDC, the Hauges are personally liable for the debts of IDC, and that to this extent they are indispensable parties under Rule 19(a) of the FSM Rules of Civil Procedure.  Yap moves to add the Hauges via Rule 13(h) of the FSM Rules of Civil Procedure, which provides that "persons other than those made parties to the original action may be made parties to a counterclaim or cross-claim in accordance with the provisions of Rule 19 and 20."  Lastly, Yap contends that its failure to name the Hauges throughout the counterclaim was inadvertent and asks leave to amend its counterclaim in this respect.

     At the outset, the court notes that no jurisdictional concerns attach here, since in order to invoke this court's diversity jurisdiction under article XI, section 6(b) of the FSM Constitution, only one plaintiff need be diverse from one defendant, which is already the case.  U Corp. v. Salik, 3 FSM Intrm. 389, 392 (Pon. 1988) ("The Constitution requires only that one plaintiff have citizenship different from one defendant.").  Since IDC, which is the foreign citizen, and Yap remain parties in any case, the addition of parties does not affect jurisdiction.

     The court in Vermont Castings, Inc. v. Evans Products Co., 510 F. Supp. 940, 946 (D. Vt. 1981), addressed the issue now before this court and noted as follows:

Although Professor Moore notes in his Federal Practice treatise that the counterclaim-plaintiff seeking to bring in additional parties pursuant to Rule 13(h) should secure an order from the court that these parties be made defendants to the counterclaim, he also argues persuasively that the 1966 revision of the rule, which dropped the provision that "the court shall order [additional parties] to be brought in," eliminates the need to obtain leave of court where the new parties are being brought in on a counterclaim which is raised in the original answer.  See 3 Moore's Federal Practice 13.39, at 13-998-99 (2d ed. 1980).  We agree that leave of court is no longer required.  

[9 FSM Intrm. 291]

The spirit of the Federal Rules is served by eliminating unnecessary motions. Any abuse of the joinder provisions can be remedied upon motion under Rule 21 which provides that parties may be dropped by order of the court on such terms as are just.  See id. at n.30.

(alteration in original).  Rule 13(h) of the FSM Rules of Civil Procedure is identical to Rule 13(h) of the United States Federal Rules of Civil Procedure discussed in Vermont Castings.  Thus, Yap was not required to obtain leave of court before naming the Hauges as additional defendants on its counterclaim, where the counterclaim was brought in the original answer.

     A subsequent edition of the Wright and Miller treatise referenced by the Vermont Castings court notes that "[a]lthough not required by Rule 13(h), the general practice is to obtain a court order to join an additional party."  6 Charles Alan Wright et al., Federal Practice & Procedure 1434, at 270 (2d ed. 1990). Yap having sought such an order, the motion to add the Hauges as parties on the counterclaim is granted, and the caption is amended accordingly.2  As to the claims between IDC and Yap, IDC is designated "plaintiff/counterdefendant" while Yap is designated "defendant/ counterplaintiff."  As to Yap and the Hauges on the counterclaim, Yap is designated "counterclaim plaintiff," Vermont Castings, 510 F. Supp. at 946, while the Hauges are designated "counterclaim defendants."  Conan Properties, Inc. v. Mattel, Inc., 619 F. Supp. 1167, 1169-70 (S.D.N.Y. 1985).

     Yap's motion to add parties having been granted, Yap's motion to amend technical defects is also granted.  Yap may amend its counterclaim to correct such technical defects as it sees fit.
 
     Finally, as an administrative matter, the court notes that the first anniversary of this case, and its companion case, Civil Action 1999-3001, is less than a month away.  With this in mind, and in the interest of proceeding to the trial of this matter in as deliberate but expeditious manner as practical, the court requests that the parties advise the court on or before January 20, 2000, with respect to what discovery, if any, remains to be undertaken, and a timetable for its completion. The parties should also confer and advise the court as to the earliest convenient trial date that accommodates the schedules of both counsel.  Counsel should also indicate an estimated trial length.  A similar order relating to scheduling is entered herewith in Civil Action 1999-3001.
 
 
Footnotes:
 
1.  This is doubtless true, but is also different from naming additional defendants on a counterclaim that is directed to a least one person already a party:  "a counterclaim . . . may not be directed solely against persons who are not already parties to the original action, but must involve at least one existing party."  6 Charles Alan Wright et al., Federal Practice and Procedure 1435, at 271 (2d ed. 1990).
 
2.  Since Yap may at this point add the Hauges as a matter of course under Rule 13(h) of the FSM Rules of Civil Procedure, the court makes no determination whether the Hauges are indispensable parties under Rule 19, or permissive parties under Rule 20 of the FSM Rules of Civil Procedure.  Per Vermont Castings, Rule 21 of the FSM Rules of Civil Procedure provides the remedy for misjoinder, an issue not now before the court.
                                                                                                                                                                                                                                                                                                           
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