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AHPW Inc v Federated States of Micronesia [2002] FMSC 5; 10 FSM Intrm. 507 (Pon. 2002) (13 February 2002)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

Cite as AHPW, Inc. v. FSM
[2002] FMSC 5; 10 FSM Intrm. 507 (Pon. 2002)

[2002] FMSC 5; [10 FSM Intrm. 507]

AHPW, INC.,
Plaintiff,

vs.

GOVERNMENT OF THE FEDERATED STATES
OF MICRONESIA and GOVERNMENT OF
THE STATE OF POHNPEI,
Defendants.

CIVIL ACTION NO. 1999-053

ORDER AND MEMORANDUM

Martin Yinug
Associate Justice

Decided: February 13, 2002

APPEARANCES:

For the Plaintiff:
Martin Mix, Esq.
P.O. Box 143
Kolonia, Pohnpei FM 96941

For the Defendant (FSM):
R. Anthony Welch, Esq.
Assistant Attorney General
FSM Department of Justice
P.O. Box PS-105
Palikir, Pohnpei FM 96941

* * * *

HEADNOTES

Civil Procedure - Admissions; Civil Procedure - Discovery; Civil Procedure - Sanctions
When a defendant has not complied with all of the discovery requests as directed in a court order, the court will consider sanctions, including Civil Rule 37(b)(2) sanctions that designated facts will be taken to be established for the purposes of the action in accordance with the plaintiff's claim, and that defendant ought to be aware that deeming certain facts established is tantamount to entering a default judgment. AHPW, Inc. v. FSM, [2002] FMSC 5; 10 FSM Intrm. 507, 508 (Pon. 2002).

Civil Procedure - Discovery; Civil Procedure - Sanctions
When a party has yet to comply with the court's discovery order and discovery has been outstanding for an extended period, then that is one fact that the court will consider when contemplating sanctions if compliance is not forthcoming. AHPW, Inc. v. FSM, [2002] FMSC 5; 10 FSM Intrm. 507, 508 (Pon. 2002).

[10 FSM Intrm. 508]

Civil Procedure - Discovery
When only one of a defendant's offices has produced any discovery documents and when it is unlikely that other affected offices would have no documents related to the litigation, it raises the issue of the thoroughness of the searches done by the offices involved. The court will therefore order that defendant's counsel to designate an appropriate individual in each of the offices to conduct a search of relevant records to determine if any such documents exist and who will prepare an affidavit indicating what was done to locate relevant documents, and the result of that search. AHPW, Inc. v. FSM, [2002] FMSC 5; 10 FSM Intrm. 507, 509 (Pon. 2002).

Civil Procedure - Discovery
The FSM Development Bank is an agency of the FSM government for purposes of discovery when the request for production plainly comprehends documents within the possession of the Bank, which is specifically named. AHPW, Inc. v. FSM, [2002] FMSC 5; 10 FSM Intrm. 507, 509 (Pon. 2002).

Civil Procedure - Discovery; Civil Procedure - Sanctions
Pohnpei may be held liable for discovery sanctions of motion related expenses such as attorney's fees, but the FSM is exempt from such sanctions under Rule 37(f). AHPW, Inc. v. FSM, [2002] FMSC 5; 10 FSM Intrm. 507, 509 (Pon. 2002).

* * * *

COURT'S OPINION

MARTIN YINUG, Associate Justice:

The following motions are disposed of as indicated.

1. The motion to compel discovery filed on November 27, 2001, by plaintiff AHPW, Inc. ("AHPW") against the defendant State of Pohnpei.

Pohnpei has not responded to the motion. The motion is granted according to its terms with the exception of the last paragraph, which seeks sanctions. Sanctions are addressed below.

Pohnpei's counsel will designate a specific individual within the Governor's Office, as well as the Pohnpei state offices of Conservation and Resource Surveillance, Economic Development Authority, and Marine Resources to conduct a thorough search for the documents sought. Each individual will then prepare an affidavit indicating the efforts they undertook to locate the documents, and the result. Pohnpei's counsel will then collect the affidavits and file them with the court by February 27, 2002. Any documents discovered as a result of the searches will also be produced to AHPW no later than that date.

In the event that Pohnpei does not comply with all of AHPW's discovery requests as directed in this order, the court will consider sanctions, including sanctions under Rule 37(b)(2) of the FSM Rules of Civil Procedure "that designated facts shall be taken to be established for the purposes of [this action] in accordance with the [plaintiff's] claim." Pohnpei ought to be aware that "deeming [certain facts] established is tantamount to . . . entering a defjudg ent." nt." 7 JAMES WM. MOORE ET AL., MOORE'S FEDERAL PRACTICE § 37.51[2] at 37-90 (3d ed. 1999). According to AHPotionnpei has yet to comply with the court's discovery order of February 19, 2001. If . If this this be the case, and if compliance with trder is not forthcoming, then the fact that discovery has bhas been outstanding for such an extended period is one fact that the court will consider.

[10 FSM Intrm. 509]

2. AHPW's motion to compel discovery filed on December 5, 2001, against the defendant FSM.

AHPW contends that thus far, only the FSM Office of Economic Affairs has produced any documents. The court agrees that it would be unlikely that none of the other affected offices would have any documents relating to the subject of this litigation. This is especially the case since in related litigation, FSM Development Bank v. Arthur et al., Civil Action 2001-007, two letters from the President's Office signed by then President Bailey Olter, about a loan for the pepper and trochus shell businesses that are the subject of this litigation, have been made a part of the record in that case.^[1] All things being equal, it would seem that a copy of these documents should have been tendered to AHPW by the President's Office. This failure to produce at least raises the issue of the thoroughness of the searches done by the government offices involved.

Accordingly, the FSM's counsel will designate an appropriate individual in the President's Office, the Vice President's Office, and the FSM Embassy in the United States to conduct a search of relevant records to determine if any such documents exist. Each designated individual will prepare an affidavit indicating what was done to locate relevant documents, and the result of that search. If documents have been located, they will be provided to the AHPW. The FSM is charged with securing the affidavits and filing them with the court no later than March 15, 2002. Any documents located as a result of the searches will also be tendered to AHPW by that time.

AHPW's motion is denied as to the Department of Foreign Affairs, and the FSM's Embassies in Japan and Fiji. The court stands to be corrected, but at this juncture the court cannot locate anything in the record thus far indicating that discovery has been requested from these agencies.

In its response to the December 5, 2001, motion to compel, counsel for the FSM has indicated that the FSM Development Bank ("the Bank") will not respond to discovery because it denies that it is an agency or department of the national government for discovery purposes. This position appears to be that of the Bank, as opposed to that of the FSM, although the Bank has filed nothing on its own behalf alone. The court will proceed on the basis that the FSM's attorney has correctly represented the Bank's position.

The trial division of the FSM Supreme Court has repeatedly held that the Bank is an agency of the FSM government and part of the government for purposes of determining diversity jurisdiction under Article XI, Section 6(a) of the FSM Constitution. FSM Dev. Bank v. Ifraim, [2001] FMSC 45; 10 FSM Intrm. 1 (Chk. 2001) (holding that the FSM Dev. Bank was an agency of the national government, but further holding that a forum selection clause might place the suit in Chuuk state court); FSM Dev. Bank v. Mori, [1986] FMSC 14; 2 FSM Intrm. 242, 243-44 (Truk 1986); FSM Dev. Bank v. Estate of Nanpei, [1986] FMSC 8; 2 FSM Intrm. 217, 221. At issue in Nanpei was enforcement of a promissory note. The court focused on the Bank's public role under statutes creating the Bank in finding it to be an agency of the national government for diversity jurisdiction purposes. The Bank's role is no less public on the facts of this case than it was in Nanpei.

Accordingly, the Bank is an agency of the FSM government for purposes of discovery in this case. AHPW's request for production filed on June 22, 2000, plainly comprehends documents within the possession of the FSM Development Bank, which is specifically named. Further, there is sufficient defining language in that request to provide sufficient guidance to the Bank to enable it to meaningfully comply. In the event that the Bank fails to comply with discovery as required by this order on or before

[2002] FMSC 7; [10 FSM Intrm. 510]

March 15, 2002, then the court will consider the appropriate sanction under Rule 37 of the FSM Rules of Civil Procedure, including deeming certain facts to be established.

3. AHPW's motion to compel and motion for sanctions filed on December 12, 2001, against Pohnpei.

These motions reiterate the November 27, 2001, motion, based on Pohnpei's failure to respond, and are rendered moot by the granting of the November 27, 2001, motion as set out above.

4. AHPW and the FSM filed a joint motion for extension of time on October 31, 2001. On November 27, 2001, AHPW also filed a motion for extension of time for Pohnpei to complete discovery. The time frames for discovery compliance set out in this order effectively disposes of these motions.

The FSM's motion for an extension of time to file its December 28, 2001, response is granted.

Lastly, at the trial in this case, the court will also decide the question of attorney fees incurred by AHPW in the bringing of the motion to compel against Pohnpei as required by Rule 37(a)(4) of the FSM Rules of Civil Procedure. The FSM is exempted from such motion related expenses under subsection (f) of Rule 37.

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^[1] The two documents are a five page letter dated November 12, 1993, from President Bailey Olter to Mr. Manny Mori, President of the FSM Development Bank, and a one page letter dated April 7, 1997, from Acting President Jacob Nena to Mr. Robert Arthur.