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Chuuk v Secretary of Department of Finance [1999] FMSC 5; 9 FSM Intrm. 99 (Pon. 1999) (13 April 1999)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99 (Ponape 1999)

[1999] FMSC 5; [9 FSM Intrm. 99]

STATE OF CHUUK, STATE OF KOSRAE, STATE OF POHNPEI and STATE OF YAP,
Plaintiffs,

vs.

SECRETARY OF DEPARTMENT OF FINANCE and FEDERATED STATES OF MICRONESIA,
Defendants.

CIVIL ACTION NO. 1995-085

ORDER

Andon L. Amaraich
Chief Justice

Hearing: February 2, 1999
Decided: April 13, 1999

APPEARANCES:

For the Plaintiffs:
Jon M. Van Dyke (argued)
William S. Richardson School of Law
2515 Dole St.
Honolulu, Hawaii 96822

Andrea S. Hillyer, Esq. (brief)
P.O. Drawer D
Kolonia, Pohnpei FM 96941

For the Defendants:
Julia K. Fries, Esq. (brief)
Elizabeth M. McCormick, Esq. (argued)
Assistant Attorneys General
Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941

* * * *

HEADNOTES

Civil Procedure; Judgments - Alter or Amend Judgment
A court may alter or amend a judgment under Rule 59 on any of four grounds: 1) to correct a manifest error of law or fact upon which the judgment is based; 2) the court is presented with newly discovered or previously unavailable evidence; 3) to prevent a manifest injustice; or 4) there is an intervening change in the controlling law. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 100 (Pon. 1999).

[9 FSM Intrm. 100]

Fishing; Taxation; Taxation - License and Permit Fees
A four-part analysis is applied to determine whether fishing fees are taxes: 1) the source of the levy, 2) the effect of the levy on the general public, 3) the means by which the levy is made, and 4) the relationship between the levy and government costs. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 102 (Pon. 1999).

Fishing; Taxation; Taxation - License and Permit Fees
Whether fishing fees are uniform is immaterial to a finding that fishing fees do not constitute a tax. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 102 (Pon. 1999).

Fishing; Taxation; Taxation - License and Permit Fees
How Congress appropriates fishing fees is irrelevant to whether they are a tax. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 102 (Pon. 1999).

Civil Procedure - Summary Judgment
Affidavits containing disputed facts about custom and tradition do not preclude summary judgment when custom and tradition do not apply to the case. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 102 (Pon. 1999).

Fishing; Taxation - License and Permit Fees
The FSM national government has the exclusive right to regulate and harvest living marine resources in the EEZ and is therefore entitled to a reasonable compensation from those whom it allows to share that right. A determination of ownership of the living marine resources does not affect the national government's right. Chuuk v. Secretary of Finance, [1999] FMSC 5; 9 FSM Intrm. 99, 102 (Pon. 1999).

* * * *

COURT'S OPINION

ANDON L. AMARAICH, Chief Justice:

This matter comes before the Court on plaintiffs' Motion to Alter or Amend Judgment and plaintiffs' Motion for Relief from Judgment.

On July 17, 1998, the Court granted defendants' Motion for Summary Judgment and dismissed plaintiffs' Second Amended Complaint with prejudice. [Chuuk v. Secretary of Finance, [1998] FMSC 19; 8 FSM Intrm. 353 (Pon. 1998).] On July 27, 1998, plaintiffs filed a Motion to Alter or Amend Judgment pursuant to Rule 59(e) of the FSM Rules of Civil Procedure. On August 24, 1998, plaintiffs filed a Motion for Relief from Judgment pursuant to Rule 60 of the FSM Rules of Civil Procedure. On February 2, 1999, this Court heard oral argument on plaintiffs' motions.

The Court may alter or amend a judgment under Rule 59(e) on any of the following four grounds: (1) to correct a manifest error of law or fact upon which the judgment is based; (2) the Court is presented with newly discovered or previously unavailable evidence; (3) to prevent a manifest injustice; or (4) there is an intervening change in controlling law. 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810. 124-27 (2d ed. 1995).995).

Defendants argue that plaintiffs have not satisfied any of the four grounds for altering or amending a judgment under Rule 59(e), and are simply rearguieir Motion for Summary Judg Judgment. Defendants also argue that because plaintiffs' Motion to Alter or Amend Judgment only requested additional time to brief certain issues, plaintiffs are limited to that relief. Plaintiffs asked during oral

[9 FSM Intrm. 101]

argument for relief far beyond that which they requested and argued for in their Motion.

Plaintiffs asked this Court during oral argument to vacate the Order and Judgment of July 17, 1998, yet in their Motion argued only that the Order and Judgment should be altered or amended. Despite this serious discrepancy, and conflicting demands by the plaintiffs, the Court shall determine whether the Order and Judgment of July 17, 1998 should be altered, amended or vacated pursuant to Rule 59(e).

Plaintiffs argue that this Court committed a manifest error of law when it found that the Fishing Fees do not constitute a tax under Article IX, Section 5 of the FSM Constitution. Plaintiffs argue that Bernard Thoulag's affidavit (See Thoulag affidavit, attached to defendants' Cross-Motion for Summary Judgment), which represents that Fishing Fees are individually negotiated and range from 5% to 11% of the estimated landed catch, conflicts with the affidavits of Fred Ramp and Gerson A. Jackson (See Ramp and Jackson affidavits, attached to plaintiffs' Motion for Summary Judgment), which represent that Fishing Fees are generally set at 5% of the value of the estimated landed catch. Plaintiffs argue that these conflicting affidavits create a genuine dispute over a material fact and preclude the Court from granting summary judgment.

As set forth on pages 49 through 67 of this Court's July 17, 1998 Order and Judgment, a four part analysis was applied to determine whether the Fishing Fees constituted a tax. This Court found that (1) the source of the levy, (2) the effect of the levy on the general public, (3) the means by which the levy is made, and (4) the relationship between the levy and the government costs all supported a finding that the Fishing Fee is not a tax. The 5% to 11% range attested to by Bernard Thoulag was not discussed nor relied upon by this Court as part of this analysis. Thus, whether the range attested to by Thoulag is different than the range attested to by Jackson and Ramp is not material to this Court's determination of whether the Fishing Fees constitute a tax under Article IX, Section 5 of the FSM Constitution. The Thoulag affidavit does not dispute any fact relied upon by this Court in finding that the Fishing Fees do not constitute a tax, and provides no basis for altering, amending, or vacating this Court's Order and Judgment of July 17, 1998.

Plaintiffs next challenge this Court's finding on page 67 of its July 17, 1998 Order and Judgment that the Fishing Fees are not uniform. Plaintiffs argue that the Fishing Fees are geographically uniform, and thus would not be found unconstitutional if labeled a tax. Plaintiffs cite the Journal of the First Constitutional Convention, SCREP No. 38, Volume 2, at 865, which states as follows:

"First, tax legislation must be uniform in its application throughout the nation. This requirement in no way prohibits the Legislature from defining reasonable classes and establishing appropriate rate structures for each class subject to the tax. For instance, the uniformity requirement would not prohibit the Legislature from imposing a graduated income tax which establishes reasonable classifications and varying rates. The requirement, however, does mean that all tax laws enacted by the National Legislature must be implemented and enforced equally, consistently and uniformly in every part of the nation."

Whether the members of the Constitutional Convention intended a rule of geographic uniformity in the FSM is not clear from the above excerpt. Further, even if geographic uniformity was recognized in the FSM, this Court disagrees with plaintiffs that the evidence presented on summary judgment established the existence of geographic uniformity. The affidavit of Gerson A. Jackson submitted by plaintiffs acknowledged that rebates are only "sometimes" given to Micronesians, suggesting that the fees are not geographically uniform. See Pls.' Motion for Summary Judgment, Aff. of Gerson A. Jackson, para. 5. More importantly, a finding that the Fishing Fees are uniformly applied would not

[9 FSM Intrm. 102]

change this Court's ruling that the Fishing Fees do not constitute a tax. The Court's conclusion that the Fishing Fees do not constitute a tax was based on an extensive analysis of a number of factors, including (1) the source of the levy, (2) the effect of the levy on the general public, (3) the means by which the levy is made, and (4) the relationship between the levy and the government costs. The discussion of uniformity consisted of only 5 lines of the 68 page opinion. The lack of uniformity is immaterial to this Court's finding that the Fishing Fees do not constitute a tax, and thus provides no basis for altering, amending, or vacating this Court's Order and Judgment of July 17, 1998. Finally, whether or not uniformity exists, plaintiffs' citation to the Journal of the First Constitutional Convention does not support their argument that the fees are a tax. The citation requires National Legislation. The Fishing Fees are not set by the National Legislature, but set by the MMA.

Plaintiffs also argue that this Court committed a manifest error of law when it found that custom and tradition may not be relied upon to determine whether the States or national government is legally entitled to the Fishing Fees. Plaintiffs reason that the affidavits of Rufino Mauricio and Emensio Eperiam conflict and thus preclude the Court from granting summary judgment. This Court found that custom and tradition do not apply, and thus did not find the Mauricio or Eperiam affidavits relevant to whether the States or the national government is legally entitled to the Fishing Fees. Accordingly, the fact that the affidavits contain disputed facts does not preclude summary judgment.

Plaintiffs also argue that this Court should alter, amend, or vacate its ruling based on newly discovered evidence. However, the only new information presented by plaintiffs is a June, 1998 issue of the Congressional Advisor which references recent appropriations of the Fishing Fees by Congress. The Congressional Advisor is a publication containing commentary by Senator Resio S. Moses. The statements are hearsay. More importantly, how Congress appropriates the Fishing Fees is irrelevant to the issues involved in this case.

Plaintiffs challenge the Court's description of the Fishing Fees as revenue from the sale of national assets by questioning whether the national government owns the living marine resources. As set forth in this Court's Order, the FSM National Government has the exclusive right to regulate and harvest living marine resources in the EEZ, and is therefore entitled to reasonable compensation from those whom it allows to share that right. A determination of ownership of the living marine resources does not affect the national government's right to compensation.

Finally, plaintiffs accused this Court during oral argument of failing to take Judicial Notice of hearings of the First Constitutional Convention relating to why fishing and mineral resources are treated differently. No request for Judicial Notice was ever made by plaintiffs. More importantly, this Court gave extensive analysis to both the Constitutional and Legislative history surrounding the treatment of offshore resources. All relevant material was addressed in the Order and Judgment of July 17, 1998.

Conclusion

Plaintiffs have not satisfied any of the four grounds for altering or amending a judgment under Rule 59(e) of the FSM Rules of Civil Procedure. Plaintiffs have failed to provide, even remotely, any basis to vacate the July 17, 1998 Order and Judgment. Plaintiffs' Motion to Alter or Amend Judgment is therefore denied. Plaintiffs' Motion to Vacate Order and Judgment is also denied.

At the request of both parties, plaintiffs' Motion for Relief from Judgment pursuant to Rule 60 of the FSM Rules of Civil Procedure is hereby granted. The Order of July 17, 1998 Denying Plaintiffs' Motion for Summary Judgment and Granting Defendants' Cross-Motion for Summary Judgment is hereby amended to reflect that the claims made in Paragraph 13 of Count 1 and Paragraph 3 of the Claim for Relief of plaintiffs' Second Amended Complaint are dismissed without prejudice.