FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2003-008

FSM DEVELOPMENT BANK,
PLAINTIFF

V

MILO ABELLO, ERLEEN ABELLO, and LUCIANA SORECH a/k/a LUCY SORECH,
DEFENDANT

ORDER AND MEMORANDUM OF INJUNCTION

Martin G. Yinug
Chief Justice

Hearing: February 17, 2012
Decided: February 22, 2012

APPEARANCES:

For the Plaintiff: Nora E. Sigrah, Esq.
P.O. Box M
Kolonia, Pohnpei FM 96941

For the Defendants: Milo Abello, Erleen Sorech, Luciana Sorech, all pro se
P.O. Box 588
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure – Motions

When there were at least three power outages and additional unscheduled outages during the first week of February which imposed difficulties on the defendants in producing the required documents and because the power outages were out of the defendants' control and the defendants had no reason or way to know of the unscheduled power outages, the defendants' failure to file their opposition by February 10, 2012, was due to excusable neglect and the court will grant an enlargement since a court may enlarge time to perform an act after the expiration of the period if the failure to do the act within the period was the result of excusable neglect.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 196 (Pon. 2012).
 
Civil Procedure – Injunctions

In reviewing a motion for a preliminary injunction, the court weighs four factors:  1) the possibility of irreparable harm to the moving party; 2) the balance of injuries between the parties; 3) likelihood of success on the merits; and 4) the public interest.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 196 (Pon. 2012).
 
Civil Procedure - Injunctions - Irreparable Harm

Irreparable harm may include the loss of goodwill, loss of customers and potential customers, lost sales, and similar harms because they are not readily compensable by money damages.  The court does not need to compute the exact degree to which the movant will suffer loss of goodwill, customers and potential customers when the other party clearly intends to cause it to suffer these harms.  Since the court need only examine the possibility of irreparable harm, not merely the probability, it is enough that the movant has suffered harm and that the party to be enjoined intends irreparable harms.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 196 (Pon. 2012).
 
Civil Procedure - Injunctions - Balance of Injuries

When the movant's potential and possible injuries are more imminent and lasting than any injury to the defendant from an injunction prohibiting, until after the sale of the lot, publication of allegedly defamatory statements - the injunction would be a lesser injury than the injury to the movant if it could not conduct the sale or if the bidders lower their bids or decline to attend the auction.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 196 (Pon. 2012).
 
Constitutional Law - Freedom of Expression; Torts – Defamation

Free speech is not a limitless right.  One limitation comes from defamation law.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 196 (Pon. 2012).

Contempt

Contempt of court is the intentional obstruction of administration of justice, or the intentional disobedience or resistance to the court's lawful writ, process, order, rule, decree, or command.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 197 (Pon. 2012).

Civil Procedure - Injunctions - Likelihood of Success

The bank has therefore shown that it is likely to succeed on the merits of its motion for an order to show cause why the defendant should not be held in contempt when, in continuing publicly to assert, against the evidence, that the bank had engaged in fraudulent conduct in obtaining not just the amended order of assignment, which is a final order, but also the stipulated judgment from which his grievances arise, which is a final judgment, the defendant intends not only to obstruct the administration of justice, but also to disobey or resist the court's lawful writ, process, order, rule or command.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 197 (Pon. 2012).
 
Torts – Defamation

Libel is a subset of defamation, and is defined as a false and unprivileged publication by writing or other fixed representation to the eye which exposes any person to hatred, contempt, ridicule, or obloquy or which causes him to be shunned or avoided or which has a tendency to injure him in his occupation.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 197 (Pon. 2012).
 
Torts – Defamation

A court considers whether the allegedly defamatory statement:  exposes the plaintiff to (public) hatred, contempt, ridicule or obloquy (shame or disgrace); causes people to shun or avoid the plaintiff; or has a tendency to injure the plaintiff in his occupation or adversely affect the plaintiff's trade or business.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 197 (Pon. 2012).
 
Constitutional Law - Freedom of Expression; Torts – Defamation

Considerations of constitutional law and free speech sometimes apply in defamation cases, as when the action involves a public official, a public figure, or a matter of substantial public controversy.  In such cases, beyond the other elements of defamation, the plaintiff must show that the defendant knew that the defamatory statement was false, or acted with malice or a reckless disregard for the truth.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 197 (Pon. 2012).
 
Civil Procedure - Injunctions - Public Interest

The public interest weighs in favor of issuing an injunction when it is limited in scope to protect the public from statements which are more likely to mislead than to inform the public.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 198 (Pon. 2012).
 
Civil Procedure - Injunctions - Public Interest

The public interest factor weighs in the bank's favor when there has not been any judicial determination that the bank has done anything improper and there have been judicial determinations against the defendant's claims of fraud against the bank as insufficiently pled, otherwise improper, unsubstantiated, or barred under res judicata and when the defendant's actions show an intent not only to obstruct the administration of justice but also to disobey or resist the court's lawful writ, process, order, rule, or command and continued pursuit of this course of action undermines public trust in the judicial system by undermining court orders and denying finality of judgment.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 198 (Pon. 2012).
 
Civil Procedure – Injunctions

When each of the factors for injunctive relief weighs in the bank's favor, the court will grant the bank's motion for injunction and order the defendant to remove all statements alleging fraud on the bank's part, whether on the Internet or in hard copy, and refrain from making such statements until the bank's auction has been completed.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 198 (Pon. 2012).

Contempt

A person accused of committing civil contempt has a right to notice of the charges and an opportunity to present a defense and mitigation.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 198 (Pon. 2012).

Civil Procedure - Injunctions; Contempt

When the court has enjoined the defendant from the activity that is the source of the bank's grievance against him, the court will hold the show cause motion in abeyance until such time as the bank either requests a show cause hearing or withdraws the motion.  FSM Dev. Bank v. Abello, 18 FSM Intrm. 192, 198 (Pon. 2012).

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COURT'S OPINION

MARTIN G. YINUG, Chief Justice:

This matter comes before the court on a motion for injunction and a motion for an order to show cause which plaintiff FSM Development Bank ("the Bank") filed on January 31, 2012.  The court held a telephonic hearing on these motions on Friday, February 17, 2012.

I. Background

This matter is an action for collection, which the Bank filed on March 26, 2003.  On June 26, 2006, the parties filed a stipulation to entry of judgment and a joint motion for entry of a stipulated order in aid of judgment.  Abello and Sorech were represented by counsel, and both signed the stipulated order in aid of judgment.  The court entered both the judgment and the order in aid thereof on July 6, 2006.  On September 10, 2009, the Bank moved the court to amend the order in aid; the court agreed, and on June 8, 2011, issued an order of assignment and an order of sale.  On October 18, 2011, the Bank, having performed the survey required in the original order of assignment, requested an amendment to accommodate a "concrete slab apron . . . 0.57 meters wide, or approximately 1.75 feet" which is part of the residence of Luciana Sorech a/k/a Lucy Soret ("Sorech"), most of whose residence is on an adjacent parcel.  Pl.'s Req. Am. Order at 2.  The amended order of assignment would exclude this concrete apron from assignment and sale under the June 8, 2011 order, as well as "provide . . . Sorech access to the eastern side of her house . . . ."  Id.  The court issued the amended order on October 27, 2011, which order included the easement in favor of Sorech.  Am. Order of Assignment at 5.  The judgment and orders are final for purposes of appeal.
 
The Bank set March 15, 2012 as the auction deadline date for sale of the subject leasehold interests and improvements.  Mot. Order to Show Cause; Mot. Inj. at 3.  In January 2012, Milo Abello ("Abello") purchased a domain name, www.fsmdbfraud.tk, and posted statements on that website which the Bank alleges are false, defamatory and threatening.  Id. at 4.  The Bank found printed copies of those statements posted at public locations in Kolonia.  Id.  The Bank believes that such statements "confuse[] potential bidders [and] discourages potential bidders."  Id. at 5.  Further, the Bank believes that Abello's actions "if continued will likely reduce the bid amounts obtained at the . . . auction, or possibly deter all bidding."  Id. at 6-7.  The Bank seeks an injunction or restraining order prohibiting Abello from posting such statements either in print or on the Internet.
 
At the telephonic hearing on the motion for injunction, Abello did not dispute that he is the owner of the domain name and the author of the statements the Bank finds objectionable.

II. Analysis

A.  Erleen Abello's Motion for Leave to Waive Personal Appearance

Defendant Erleen Abello requested the court to waive her personal appearance at the hearing.  Because the Bank's motions were directed at Milo Abello, Erleen Abello's presence was not necessary to hear the motion.  Moreover, because the hearing is now past, the motion is moot.

B.  Defendants' Motion for Enlargement of Time

A court may in its discretion, and for cause shown, enlarge time to perform an act after the expiration of the period, if the failure to do the act within the period was the result of excusable neglect.  FSM Civ. R. 6(b).  The defendants' opposition to the Bank's motions was due on February 10, 2012.  The actual response was filed on February 13, 2012.  The defendants cite at least three power outages, and additional unscheduled outages, during the first week of February which imposed difficulties on the defendant in producing the required documents.  Because power outages are out of the defendants' control, and the defendants had no reason or way to know of the unscheduled power outages, the court finds that the defendants' failure to file their opposition by February 10, 2012 was due to excusable neglect.  Good cause having been shown, the court grants the motion for enlargement of time.
 
C.  Motion for Injunction
 
In reviewing a motion for a preliminary injunction, the court weighs four factors:  (1) the possibility of irreparable harm to the moving party; (2) the balance of injuries between the parties; (3) likelihood of success on the merits; and (4) the public interest.  Foods Pacific, Ltd. v. H.J. Heinz Co. Australia, 10 FSM Intrm. 409, 416 (Pon. 2001).
 
1.  Irreparable Harm
 
The Bank argues that Abello's actions and statements confuse and discourage potential bidders, and if allowed to continue will likely reduce bid amounts obtained at the sale, or possibly deter all bidding.  Mot. Inj. at 5-7.  The defendants do not address this factor.  Irreparable harm "may include the loss of goodwill, loss of customers and potential customers, lost sales, and similar harms because they are not readily compensable by money damages . . . ."  Yang v. Western Sales Trading Co., 11 FSM Intrm. 607, 616 (Pon. 2003).  The court does not now compute the exact degree to which the Bank will suffer loss of goodwill, customers and potential customers.  Abello clearly intends to cause the Bank to suffer these harms.  Because under this factor the court need only examine the possibility of irreparable harm, not merely the probability, it is enough that the Bank has suffered harm, and that Abello intends irreparable harms.  This factor weighs in favor of the Bank.

2.  Balance of Injuries

The Bank's potential and possible injuries are described above.  They are more imminent and lasting than any injury to Abello from an injunction prohibiting, until after the sale of the lot, publication of statements such as those in Exhibit D of the Bank's motion for injunction.  Abello has protested that such an injunction harms his right of free speech.  However, free speech is not a limitless right.  One limitation comes from defamation law, and as noted below, although the Bank has not initiated a defamation action against Abello, it has alleged enough facts in its motion for injunction that, under the notice pleading standard in the FSM, Abello would be on notice that the Bank may have such a cause of action against him.  The court need not address whether Abello's statements constitute "commercial speech" to find that temporarily prohibiting Abello's allegedly defamatory statements is a lesser injury than the injury to the Bank if it could not conduct the sale.  Moreover, if by Abello's actions bidders lower their bids or decline to attend the auction, he himself suffers, as the sale will fall farther short of satisfying the final judgment of July 6, 2006, which judgment he has not appealed.

3.  Likelihood of Success on the Merits

As stated above, the Bank has not initiated a defamation action against Abello; however, the motion for injunction was accompanied by a motion for an order to show cause why the defendants-specifically Abello-should not be held in contempt of court for obstruction of a court order.  Mot. Inj. at 2.

a.  Contempt.  Contempt of court is the intentional obstruction of administration of justice, or the intentional disobedience or resistance to the court's lawful writ, process, order, rule, decree, or command.  4 F.S.M.C. 119(1).  The Bank asserts that Abello's statements to the public constitute intentional obstruction of the administration of justice because they contain "false, misleading and threatening statements".  Mot. Inj. at 7-8.  The statements-the domain name "www.fsmdbfraud.tk" itself-suggests fraudulent conduct by the Bank.  Abello has also brought two separate actions against the Bank as Civil Action Nos. 2009-054 and 2011-019.  Both have been dismissed with prejudice:  Civil Action No. 2009-054 was dismissed by a Decision and Order of May 19, 2011; Civil Action No. 2011-019 was dismissed by an Order of January 20, 2012.  In continuing publicly to assert, against the evidence, that the Bank had engaged in fraudulent conduct in obtaining not just the amended order of assignment, which is a final order, but also the stipulated judgment from which Abello's grievances arise, which is a final judgment, Abello intends not only to obstruct the administration of justice, but also to disobey or resist the court's lawful writ, process, order, rule or command.  The Bank has therefore shown that it is likely to succeed on the merits of its motion for an order to show cause why the defendant should not be held in contempt.

b.  Defamation.  Libel is a subset of defamation, and is defined as "a false and unprivileged publication by writing . . . or other fixed representation to the eye which exposes any person to hatred, contempt, ridicule, or obloquy or which causes him to be shunned or avoided or which has a tendency to injure him in his occupation."  Pohl v. Chuuk Public Utility Corp., 13 FSM Intrm. 550, 557 (Chk. 2005) (quoting 50 Am. Jur. 2d Libel and Slander § 7 (rev. ed. 1995)).  A court considers whether the allegedly defamatory statement:  "exposes the plaintiff to (public) hatred, contempt, ridicule or obloquy (shame or disgrace); causes people to shun or avoid the plaintiff; or has a tendency to injure the plaintiff in his occupation or adversely affect the plaintiff's trade or business."  Smith v. Nimea, 18 FSM Intrm. 36, 46 (Pon. 2011).  Abello's public statements asserting that the Bank has engaged in fraud in this matter meets this test.

Considerations of constitutional law and free speech sometimes apply, as when the action involves a public official, a public figure, or a matter of substantial public controversy.  Pohl, 13 FSM Intrm. at 557.  In such cases, beyond the other elements of defamation, the plaintiff must show that the defendant knew that the defamatory statement was false, or acted with malice or a reckless disregard for the truth.  Id.; see also Prosser and Keeton on the Law of Torts §§ 113-15, at 805-08, 815-16, 820-23 (W. Page Keeton et al. eds., 5th ed. 1984).  This matter does not involve a public official or figure.  And although the sale of the land is a matter of public concern, as evidenced by the requirement for the Bank to give notice to the public of the transfer of title and the upcoming auction, it does not rise to the level of substantial public controversy.  Even if it did, the fact that Abello has pressed on with his claims of fraud on the Bank's part, despite two courts ruling against him, evidences at least a reckless disregard for the truth.
 
Thus, although the Bank has not initiated a defamation action against Abello, it has pleaded sufficient facts that Abello is on notice of the possible cause of action against him.  Further, the Bank has alleged enough facts that it would be likely to succeed on the merits.
 
4.  The Public Interest
 
The Bank asserts that the Abello statements confuse the public as to the proper title of the land to be sold.  The public interest weighs in favor of issuing an injunction when it is limited in scope to protect the public from statements which are more likely to mislead than to inform the public.  Yang, 11 FSM Intrm. at 618.  In that case, the court found that the public should not be subjected to misleading information regarding the consequences of buying certain goods when there has been no judicial determination that the vendors have done anything improper.  Id.  Here, not only has there not been any judicial determination that the Bank has done anything improper, but there have been judicial determinations against Abello's claims of fraud against the Bank as insufficiently pled, otherwise improper, unsubstantiated, or barred under res judicata.  Further, as stated before in the court's discussion of contempt, Abello's actions evidence an intent not only to obstruct the administration of justice, but also to disobey or resist the court's lawful writ, process, order, rule or command.  Continued pursuit of this course of action undermines public trust in the judicial system by undermining court orders and denying finality of judgment.  The court therefore finds that this factor weighs in favor of the Bank.
 
The court finds that each of the factors for injunctive relief weighs in favor of the bank, and accordingly hereby grants the Bank's motion for injunction.  Specifically, the court hereby orders that Milo Abello remove all statements alleging fraud on the part of the Bank, whether on the Internet or in hard copy, and refrain from making such statements until the auction has been completed.
 
D.  Motion for an Order to Show Cause
 
The Bank also filed a motion for an order to show cause why defendant Milo Abello should not be held in contempt.  A person accused of committing civil contempt has a right to notice of the charges and an opportunity to present a defense and mitigation.  4 F.S.M.C. 119(2)(a).  Abello was present for the telephonic hearing, and filed a response to the Bank's motion.  The court finds that Abello therefore has notice of the motion.  Nevertheless, the court's schedule will not allow it to have a live hearing of this charge until after the scheduled auction.  Further, the court has now enjoined Abello from the activity that is the source of the Bank's grievance against him.  Therefore, the court will hold the motion in abeyance until such time as the Bank requests a show cause hearing or withdraws the motion.

III. Conclusion

For the reasons given above, the court hereby grants Milo Abello's motion for enlargement of time, and the Bank's motion for injunction.  The court hereby orders that Abello remove all statements alleging fraud on the part of the Bank, whether on the Internet or in hard copy, and refrain from making such statements until the auction has been completed.

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