PONNPEI SUPREME COURT
BERNARD HELGENBERGER a/b/a BERNARD'S ENTERPRISES,
MOBIL OIL MICRONESIA,
PCA No. 102-99
ORDER DENYING MOTION FOR ISSUANCE OF TEMPORARY RESTRAINING
The motion for temporary restraining order came on to be heard before me on June 1, 1999 in the Trial Division of this Court. Present were Billarmine Helgenberger and counsel Martin Jano, Esq. for plaintiff Bernard Helgenbenger, dba Bernard's Enterprises hereinafter Bernard's, and Fredrick Ramp, Esq. for the defendant, hereinafter Mobil.
In this action, Bernard's seeks, inter alia, the issuance of a temporary restraining order to restrain the defendant from removing certain equipment from the business of Bernard's commonly known as Bernard's Service Station.
In support of its motion, Beranrd's contended that on May 1, 1997, the Mobil executed a loan agreement with the 24, Bernard's for the sum of $232, 072.19 for the construction of the Barnard's Service Station in Kolonia, Pohnpei. That
on July 31, 1998, Mobil filed a civil suit against Bernard's in the Supreme Court of the Federated States of Micronesia, treated as Civil Action No. 1998-049, seeking for the payment of the balance of the loan. That in that action, Bernard's counter claimed Mobil for damages caused Bernard's. That on May 4, 1999, Bernard's secured from the Bank of Guam, a cashier's check in the amount of $239,531.38 for payment of the balance of the loan. That even though payment of the balance of the loan had been made, Mobil demanded that Bernard's execute a full supply agreement with Mobil, and further demanded that Bernard's dismiss its counter-claim in Civil Action 1998-049. That before Bernard's could have the opportunity to review Mobil's demands, Mobil sent its employees to close down Bernard's Service Station and remove certain equipment from the premises of the Service Station no later than June 1, 1999. Equipment according to Bernard's argument, included tanks and pumps.
Bernard's argued that the equipment has become part of the fixtures on Bernard's Service Station, so that removal of such equipment would cause serious damage to the premises and the surrounding properties of Bernard's.
Bernard's also contends that the equipment as demanded by Mobil is the basis of Bernard's counter-claim filed in Civil Action No. 1998-049 against Mobil, now pending before Supreme Court of the Federated States of Micronesia. Bernard's concludes that it has sustained serious economic damage as a direct result of Mobil's interference in Bernard's business. It is for these reasons that Bernard's seeks issuance of a temporary restraining order.
Mobil opposed issuance of a temporary restraining. Mobil's opposition to restraining order challenges jurisdiction of this Court. A jurisdictional challenge ordinarily requires priority determination because of its dispositive nature. We therefore first address the jurisdictional issues in this matter.
1. Diversity of citizenship of parties.
Mobil contends that because the parties are diverse as to each other, Bernard's being a citizen of the Federated States of Micronesia, domicile in Pohnpei, and Mobil being a non-citizen foreign investment corporation, this Court lacks jurisdiction pursuant to Article XI, Section 6(a) of the Constitution of the Federated States of Micronesia.
Bernard's argues that this Court has jurisdiction over the subject matter and parties to this action pursuant to Article 10, Section 4 of the Pohnpei Constitution and title IV, Section 4-1 of S.L. No. 3L-99-95, the Pohnpei Judiciary Act of 1995. Further, Bernard's contends that the FSM Supreme Court has held that the FSM Constitution Article XI Section 6(b) does not prevent state courts from exercising jurisdiction over diversity cases, citing Bank of Guam v. Semes. 3 FSM Interim. 370, 379 (Pon. 1988).
It is clear that there is diversity of citizenship of the parties in this matter, Bernard's being a citizen of the Federated States of Micronesia, domiciled in Pohnpei, and Mobil being a non-Citizen of the Federated States of Micronesia. It is clear also that the Supreme Court of the Federated States of Micronesia has held, even in the light of Article XI, Section 6(b) of the FSM Constitution, that States are not prevented from exercising jurisdiction in diversity cases unless removed by a party to the Supreme Court of the Federated States of Micronesia. It is noted in this action, too, that Mobil has not specifically removed this matter to the Supreme Court of the Federated States of Micronesia. But particular note should be made
of the existence of Civil Action No. 1998-049 in the Supreme Court of the Federated States of Micronesia. In Civil Action no. 1998-049, Mobil sues Bernard's to collect money it alleges that Bernard's owes Mobil based on a loan agreement which is involved in the case at bar. Mobil elected to bring the controversy before the Supreme Court of the Federated States of Micronesia. The election of Mobil to bring the controversy before the Supreme Court of the Federated States of Micronesia involving similar issues between the same parties in this action in my view, effectively removes jurisdiction of this court over the subject matter of this action because of diversity of citizenship of the parties. Thus, even though this Court has jurisdiction over diversity cases, in this case, Mobil has previously removed jurisdiction by its election to bring the similar litigation before the Supreme Court of the Federated States of Micronesia. The issues are now before that Court. In my view, comity dictates that we refrain.
2. That essentially identical litigation between parties is pending in the Supreme Court of the Federated States of Micronesia, since July 31, 1998.
Mobil contends that paragraphs 4 and 5 of Bernard's complaint in this action disclose that the underlying cause of action is the same as the cause of action in Civil Action 1998-049 before the Supreme Court of the Federated States of Micronesia. That Bernard's in this action is seeking a restraining order involving removal by Mobil, of certain equipment from the premises of Bernard's Service Station. Bernard's has admitted that the equipment involved in this action are the basis of Bernard's counterclaim in Civil Action no. 1998-049, now in active litigation before the Supreme Court of the Federated States of Micronesia.
Bernard's argues that the cause of action in Civil Action No. 1998-049 involves Bernard's principal debt to Mobil in amount of $232,072.19.Bernard's argues that its payment of $239,531.38 to Mobil satisfies the loan disputed in Civil Action 1998-049, removing diversity. Bernard's therefore contends that diversity having removed, jurisdiction exists in this Court to grant restraining order against Mobil. In my view, this argument cannot stand. In Civil Action No. 1998-049, Mobil seeks the repayment of the loan agreement principal of $232,072.19
plus interest. Thus, even if Bernard's paid Mobil the principal amount loaned, Bernard's still owes the accrued interest on the loan, which is involved in this litigation. In other words, the interest of 8% on the principal loaned by Bernard's is a subject of litigation in this action.
While the Supreme Court of the Federated States of Micronesia has held that State Courts have diversity jurisdiction unless removed, in my view, it is proper in the interest o judicial harmony, that where issues are already in active litigation in a court, another court before which the same issues are brought involving the same parties, ought to refrain from invoking jurisdiction.
In this action, the equipment Bernard's seeks this Court to restrain Mobil from removing are the tanks and pumps at the Bernard's Service Station. These are the subjects of Bernard's counter-claim in Civil Action No. 1998-049 now pending before the Supreme Court of the Federated States of Micronesia. See paragraph 11 of the complaint. Further, the equipment involved in this action is a subject of the loan agreement entered into between the parties on May 1, 1987. With respect to the loan agreement, as security for the loan and any other sums owed
by Bernard's to Mobil, Bernard's granted to Mobil a security interest in all of Bernard's inventory, equipment and fixtures, including, without limitation, the equipment purchased with the proceeds of the loan, collectively referred to as collateral. The collateral is defined in the loan agreement as two hundred thirty-two thousand dollars and nineteen cents service station building located at the State of Pohnpei on parcel Nos. 009-A-28 and 009A-29 in Kolonia Town, and its attendant equipment. This collateral, the agreement states that, in the event Bernard's fails to pay the loan together with all interest thereon when due, Mobil shall have all the rights and remedies afforded to a secured party by the Code of the Federated States of Micronesia. In that conjunction, the agreement provides that Mobil may enter Bernard's premises, take possession of the collateral, dispose of the collateral in the manner provided for in the Code of the Federated States of Micronesia and apply the proceeds from the sale to repayment of the loan, including payment of attorney fees and expenses incurred by Mobil. We refer to this portion of the, loan agreement not meaning to construe the agreement and the referenced provisions of the FSM
Code, as we have found that we lack jurisdiction in this matter, but merely to point out another obstacle that we will have, had we to assume jurisdiction over the subject matter. For these reasons, while we much sympathize the plight of Bernard's in this action, our hands are tied for having no jurisdiction over the subject matter in this action.
It is accordingly Ordered that the motion for issuance of a temporary restraining order be, and it is hereby denied.
Dated: Jun 3, 1999.
Judah C. Johnny