FSM SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 2015-008

CLEMENT PELEP,				)					
)
Plaintiff/Counter-Defendant,	)
)
vs.					)
)
MAI XIONG INC.,				)
)
Defendant/Counter-Claimant.	)
__________________________________________	)

	FINDINGS OF FACT AND CONCLUSIONS OF LAW

	Beauleen Carl-Worswick
	Associate Justice

	Trial:  January 12-13, 2016 & September 28, 2016
	Submitted:  October 14, 2016
	Decided:  March 3, 2017

APPEARANCES:

For the Plaintiff:	Salomon M. Saimon, Esq.
Directing Attorney
Micronesia Legal Services Corporation
P.O. Box 129
Kolonia, Pohnpei FM 96941

For the Defendant:	Steven V. Finnen, Esq.
P.O. Box 1450
Kolonia, Pohnpei FM 96941

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	HEADNOTES

Evidence  Burden of Proof
Preponderance of the evidence is not evidence to a "moral certainty" or "clear and convincing evidence."  As a standard of proof, "preponderance of the evidence" means that the facts asserted by the plaintiff are more probably true than false.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 187 (Pon. 2017).

Evidence  Burden of Proof
If the plaintiff’s evidence is more convincing than that which defendant offers in opposition, then the plaintiff has met its burden of showing that the facts for which it contends are more probably true than false.  If, on the other hand, the plaintiff’s evidence is less convincing than that offered in opposition, then the defendant’s version of events is the more likely, and the plaintiff fails to meet its burden of proof.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 187 (Pon. 2017).

Torts  Negligence
Because tort law is primarily state law, a negligence action will be governed by the substantive state law and the FSM Supreme Court’s duty is to try to apply the law the same way the highest state court would.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 187 (Pon. 2017).

Torts  Negligence
For purposes of Pohnpei law, "negligence" is the failure to use such care as a reasonably prudent and careful person would use under similar circumstances.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 187 (Pon. 2017).

Torts  Duty of Care
Although a party has a duty not to destroy another’s property, that duty is not breached when the property’s removal was authorized.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 187 (Pon. 2017).

Torts  Duty of Care; Torts  Negligence
When a reasonable person, in considering the totality of the circumstances, would find that the defendant did not breach its duty of care, the plaintiff’s claim for negligence is not substantiated.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 188 (Pon. 2017).

Evidence  Burden of Proof

In a civil case, a plaintiff must prove the allegations by a preponderance of evidence in order to prevail.  Preponderance of the evidence is not evidence to a moral certainty or clear and convincing evidence.  As a standard of proof, preponderance of the evidence means that the facts asserted by the plaintiff are more probably true than false.  But, if the plaintiff’s evidence is less convincing than that offered in opposition, then the defendant’s version of events is the more likely, and the plaintiff fails to meet its burden of proof.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 188 n.7 (Pon. 2017).

Torts  Conversion
The elements of a conversion cause of action are:  1) the plaintiffs’ ownership and right to possession of the personal property in question; 2) the defendant’s unauthorized or wrongful act of dominion over the property that is hostile or inconsistent with the owner’s right; and 3) damages resulting from such action.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 189 (Pon. 2017).

Torts  Conversion
An owner consented to the taking of his property by instructing the defendant to remove the vehicle, and the consent was direct because the owner requested that the defendant take the vehicle from his home, and indirect through the person at his home who directed the defendant to take the vehicle.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 189 (Pon. 2017).

Torts  Conversion
A defendant may successfully defend a conversion action by proving that the plaintiff consented to the defendant’s taking, or that the defendant had rights in the property superior to the plaintiff’s, or that the plaintiff has waived its cause of action, or that the plaintiff is estopped from asserting any right to the property.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 189 (Pon. 2017).

Property  Personal  Bailment
A bailment is created by the delivery of personal property by one person to another, in trust for a specific purpose, pursuant to an express or implied contract to fulfill the trust.  The delivery of property to another under an agreement to repair is a bailment.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 189 (Pon. 2017).

Evidence  Burden of Proof
The court will not speculate as to under what authority was the plaintiff’s vehicle being kept at an auto shop, because the burden is on the plaintiff to establish why the vehicle was being kept by the shop.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 189 (Pon. 2017).

Contracts  Account Stated
An account stated is a species of contract action, in which the plaintiff must prove that the defendant agreed to pay a specific amount to the plaintiff.  It is an agreement, based on prior transactions between the parties, that all terms of the account are true and that the balance struck is due and owing from one party to the other.  An account stated is an agreement, expressed or implied, that an examination of the account between the parties has occurred, a statement of that account has been asserted, and accepted as correct.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 190 (Pon. 2017).

Contracts  Account Stated
When there was no evidence produced by the plaintiff, other than the defendant’s check to the plaintiff that was clearly for the defendant’s loan to the plaintiff and not a partial payment to the plaintiff for the destruction of the plaintiff’s vehicles, the plaintiff’s claim for account stated is unsupported.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 190 (Pon. 2017).

Contracts

A contract is a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 190 (Pon. 2017).

Contracts
A contract is a promise between two parties for the future performance of mutual obligations.  For the promise to be enforceable, there must be an offer, acceptance, consideration and definite terms.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 191 (Pon. 2017).

Remedies  Restitution
When no contract exists for lack of definite terms, the court may use its equity power to fashion a remedy under the doctrine of restitution.  The doctrine of unjust enrichment also applies where there is an unenforceable contract.  It is based upon the idea that one person should not be permitted unjustly to enrich himself at the expense of another.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 191 (Pon. 2017).

Remedies  Restitution
When the court can find no contract, restitution is a remedy which returns the benefits already received by a party to the party who gave them.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 191 (Pon. 2017).

Civil Procedure  Dismissal  After Plaintiff’s Evidence
Once a plaintiff has finished presenting evidence during her case-in-chief, a defendant may, without waiving its right to present evidence if the motion is not granted, move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief.  The court, as the factfinder, may then determine the facts and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence.  Pelep v. Mai Xiong Inc., 21 FSM R. 182, 191 (Pon. 2017).

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	COURT’S OPINION

BEAULEEN CARL-WORSWICK, Associate Justice:

	I.  Background

The complaint in this matter was filed by the plaintiff, Clement Pelep (herein "Pelep") on February 27, 2015, and an Answer and Counter-claims was entered by the defendant, Mai Xiong Inc. (herein "Mai Xiong"), on March 16, 2015.1  Pelep filed a Reply Counterclaims with affirmative defenses on March 26, 2015.

Trial was held on January 12-13, 2016, and resumed on September 28, 2016.  During trial, the court received testimony from the following witnesses: Clement Pelep, Leon Hairens, Juan San Nicolas, Shang Guan Mai, and Quincy Alexander.  At the closing of the plaintiff’s case in chief, the defendant made a motion for dismissal.

An Order entered on February 5, 2016 deferred the ruling on the defendant’s motion until the closing of all evidence.  At the end of Trial, both parties were instructed to submit their written closing arguments by October 14, 2016.  The defendant filed its Closing Arguments on October 14, 2016, the plaintiff’s closing was not filed until October 18, 2016.  Because the plaintiff did not seek an enlargement to file its closing arguments, the court will not consider the late submission.

	II.  Findings of Fact

The court finds that there are undisputed and disputed facts in this matter.  The following are the undisputed facts:

1.  Pelep is a councilman for Nett Municipality, and is employed by VCS construction company.  At one point, Pelep was employed by Mai Xiong as a negotiator.

2.  Mai Xiong is engaged in the business of recycling wrecked and inoperative vehicles throughout Pohnpei.  Individuals would contact Mai Xiong and request that vehicles be removed, and Mai Xiong would make arrangements for the vehicles to be taken.  Pelep, when he was employed by Mai Xiong, would negotiate the pickup of vehicles for recycling.  Mai Xiong performs this service free of charge.

3.  Pelep owned 2 vehicles at different points in time.  The first vehicle was purchased in 2012 (herein "Skyline 1") and a second vehicle purchased in 2013 (herein "Skyline 2").  Skyline 1 was purchased by Pelep for $1,900.00 from Leon Hairens, and Skyline 2 was purchased for $2,500.00 from Rodney Seiola.2

4.  Skyline 1 was taken from Pelep’s home in Nett, and Skyline 2 was taken from Donny’s Auto Shop.3  Both vehicles were taken by Mai Xiong employees and crushed for recycling.  Skyline 1 was taken by Mai Xiong in 2012, and Skyline 2 was taken in 2013.

5.  There were a total of 2 cars taken when Skyline 1 was taken, a third car was left behind because it was located at the bottom of a hill and could not be removed.  Approximately 10 vehicles were removed from Donny’s Auto Shop when Skyline 2 was taken.

The following are the disputed facts:

6.  A $500.00 check was given to Pelep from Shang Guan Mai.  It is disputed whether this was a loan to Pelep or payment for the destruction of Skyline 1.

7.  It is disputed whether or not Mai Xiong was authorized to remove Skyline 1 from Pelep’s home.

8.  It is disputed whether or not Mai Xiong was authorized to remove Skyline 2 from Donnie’s Auto Shop.

The plaintiff’s complaint asserts causes of action for negligence, conversion, and account stated.  The defendant makes a counter-claim for breach of contract against the plaintiff.  The court looks at each claim in turn.

	III.  Conclusions of Law

Burden of Proof

Preponderance of the evidence is not evidence to a "moral certainty" or "clear and convincing evidence."  As a standard of proof, "preponderance of the evidence has been held to mean that "the facts asserted by the plaintiff are more probably true than false."  FSM Telecomm.  Corp. v. Worswick, 9 FSM R. 6, 12 (Yap 1999).  See also Burch v. Reading Co., 240 F.2d 547, 579 (3d Cir. 1957).

If the plaintiff’s evidence is more convincing than that which defendant offers in opposition, then plaintiff has met its burden of showing that the facts for which it contends are more probably true than false.  If, on the other hand, plaintiff’s evidence is less convincing than that offered in opposition, then defendant’s version of events is the more likely, and the plaintiff fails to meet its burden of proof.  Worswick, 9 FSM R. at 12.

Negligence Claim

Because tort law is primarily state law, a negligence action will be governed by the substantive state law and the FSM Supreme Court’s duty is to try to apply the law the same way the highest state court would.  Fabian v. Ting Hong Oceanic Enterprises, 8 FSM R. 63, 64-65 (Chk. 1997).

"Negligence" for purposes of Pohnpei law, has been defined as the "failure to use such care as a reasonably prudent and careful person would use under similar circumstances."  Amor v. Pohnpei, 3 FSM R. 519, 531 (Pon. 1988) (citing Koike v. Ponape Rock Products, 3 FSM R. 57, 66 (Pon. S. Ct. Tr. 1986)).

In his complaint, Pelep argues that Mai Xiong had a duty to not destroy plaintiff’s property, the duty was breached, injuries to plaintiff were the legal and proximate cause of the breach, and plaintiff suffered damages in the amount of $3,900.00.  Pl.’s Compl. at 2-3.  The court finds that Mai Xiong did have a duty to not destroy Pelep’s property without authorization, a duty that is owed to all of its customers.  However, through a review of the evidence, Pelep did not prove that there was a breach of that duty.

During trial, the court received the testimony of Shang Guan Mai, owner of Mai Xiong, and Quincy Alexander (herein "Alexander"), the individual employed by Mai Xiong whose task was to pick up vehicles for recycling.  In regards to Skyline 1, Alexander received instructions from Mai Xiong and directions to Pelep’s residence.  The testimony received shows that Pelep’s residence is located off of the main road, therefore, specific directions by the plaintiff were needed to locate the home where the vehicles were.  Shang Guan Mai testified that Pelep had asked him on numerous occasions to remove Skyline 1 from his home.  The court finds the testimony of Shang Guan Mai and Alexander to be reliable.

Alexander also stated that upon reaching Pelep’s residence, an individual at the home instructed Alexander to remove two (2) vehicles, Skyline 1 being one of those vehicles.4  In working for Mai Xiong, Alexander stated that it was normal procedure to arrive at a house where cars would be picked up, and receive instructions from individuals at the site as to which cars to remove.  The court finds that a reasonable person in the defendant’s position would have concluded that authorization was granted to remove Skyline 1.

Quincy Alexander further testified that based on his observation and his experience in removing vehicles to be recycled, the vehicles were on blocks and in non-serviceable conditions.5  Alexander also attested that he had removed numerous cars during his employment with Mai Xiong, and this was the first time that there was a complaint about the taking of a vehicle.

In regards to Skyline 2, similar to Skyline 1, Alexander asserted that he was given permission by the family at Donny’s auto shop to remove several vehicles, including Skyline 2.  Shang Guan Mai testified that Donny called Mai Xiong and requested that ten (10) vehicles be removed from the auto shop.6

Juan San Nicolas took the stand and testified that he had contacted Pelep and told him that employees of Mai Xiong were going to take Skyline 2.  The next day after the call, Skyline 2 was taken from Donny’s auto shop, which was witnessed by Juan San Nicolas.

The court finds that Mai Xiong had a duty not to destroy Pelep’s property, similar to the duty owed in regards to Skyline 1.  The court finds that the duty was not breached because the removal of Skyline 2 was authorized by individuals at Donny’s auto shop.  The court notes that Skyline 2 was in the immediate possession of Donny’s auto shop when the vehicle was taken.  The auto shop may have been negligent in authorizing the removal of the vehicle, however, Donny’s auto shop was not named as a defendant in this action.

Because the court finds the testimony of Alexander, Shang Guan Mai, and Juan San Nicolas to be credible, Pelep has not met its burden of proof to show that Mai Xiong was negligent in the removal of Skyline 1 and 2.  Certain witnesses, such as the person at Pelep’s residence and individuals at Donny’s auto shop, could have been summoned to support the plaintiff’s position, however, these witnesses did not testify.

A reasonable person, in considering the totality of the circumstances, would find that Mai Xiong did not breach its duty of care.  Therefore, Pelep’s claim for negligence is not substantiated.  George v. Albert, 15 FSM R. 323, 327 (Kos. S. Ct. Tr. 2007).7

Conversion

The elements of a conversion cause of action are:  1) the plaintiffs’ ownership and right to possession of the personal property in question; 2) the defendant’s unauthorized or wrongful act of dominion over the property that is hostile or inconsistent with the right of the owner; and 3) damages resulting from such action.  Ihara v. Vitt, 18 FSM R. 516, 529 (Pon. 2013); Individual Assurance Co. v. Iriarte, 16 FSM R. 423, 438 (Pon. 2009); Rudolph v. Louis Family, Inc., 13 FSM R. 118, 128-29 (Chk. 2005); Bank of Hawaii v. Air Nauru, 7 FSM R. 651, 653 (Chk. 1996).

Through the testimony of the witnesses, Pelep had ownership and a right to possess the vehicles in question because he had purchased both vehicles for value.  The declarations of the witnesses also show that Pelep consented to the taking of Skyline 1 by instructing Mai Xiong to remove the vehicle.  The consent was direct because in court testimony shows that Pelep requested that Mai Xiong take Skyline 1 from his home, and indirect through the person at Pelep’s home who directed Quincy Alexander to take the vehicle.

A defendant may successfully defend a conversion action by proving that the plaintiff consented to the defendant’s taking, or that the defendant had rights in the property superior to the plaintiff’s, or that the plaintiff has waived its cause of action, or that the plaintiff is estopped from asserting any right to the property.  Iriarte v. Individual Assurance Co., 18 FSM R. 340, 357 (App. 2012).

In regards to Skyline 2, the court finds that the vehicle was in the custody of Donny’s auto shop, however, no evidence was produced to establish under what authority was the vehicle kept by the shop.  A bailment is created by the delivery of personal property by one person to another, in trust for a specific purpose, pursuant to an express or implied contract to fulfill the trust.  Palik v. PKC Auto Repair Shop, 13 FSM R. 93, 96 (Kos. S. Ct. Tr. 2004).  The delivery of property to another under an agreement to repair is a bailment.  Id.

There was no proof of an agreement to repair the vehicle, no verification of a mechanic’s lien, whether or not the vehicle was purchased by Donny’s auto shop, if the car was to be used for parts, nor was the shop named as a co-defendant in this matter.

The court will not speculate as to under what authority was the vehicle being kept at Donny’s auto shop, because the burden is on the plaintiff to establish why the vehicle was being kept by the shop, to satisfy a claim of conversion against Mai Xiong.  Further, Pelep could have filed a claim against Donny’s auto shop, or Mai Xiong could have impleaded the auto shop under FSM Civ. R. 14 (a), which was not done in this matter.8  Accordingly, the plaintiff has not met his burden of proof, and the court will deny the conversion claim against both vehicles.

Account Stated

An account stated is a species of contract action, in which the plaintiff must prove that the defendant agreed to pay a specific amount to the plaintiff.  It is an agreement, based on prior transactions between the parties, that all terms of the account are true and that the balance struck is due and owing from one party to the other.  An account stated is an agreement, expressed or implied, that an examination of the account between the parties has occurred, a statement of that account has been asserted, and accepted as correct.  Saimon v. Wainit, 16 FSM R. 143, 146-47 (Chk. 2008).  See also S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1091 (9th Cir. 1989); Polygram, S.A. v. 32-03 Enterprises, Inc., 697 F. Supp. 132, 136 (E.D.N.Y. 1988).

In the plaintiff’s complaint, it is alleged that the actions of the parties created an account stated, based on the partial payments by the defendant and the amount owed to the plaintiff in the total amount of $3,900.00.  Pl.’s Compl. at 3.  The copy of a check issued to Pelep by Shang Guan Mai dated January 18, 2012 was entered into evidence, which Pelep claimed was partial payment for Skyline 1.

However, on the check it states "For:  borrow buy car."  The evidence is clear that the intent of the defendant in issuing the check was that it be a loan, and not a partial payment.9  No other evidence produced by the plaintiff shows that there was an agreement, contractual or otherwise, between the parties indicating that plaintiff be paid by the defendant for the destruction of the vehicles, therefore Pelep’s claim for account stated is unsupported.

Defendant’s Counter-claim

The defendant has made a counter-claim of breach of contract against the plaintiff.  Mai Xiong alleges that an agreement was entered between the parties where Mai Xiong would loan $500.00 to Pelep for the purchase of a vehicle, and Pelep breached the agreement by failure to repay the amount.  Def.’s Answer & Countercl. at 4.

The Restatement (Second) of Contracts, like its predecessor, defines the term contract as a promise or set of promises for breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty.  Williston on Contracts §1.1 (West 1990).

A contract is a promise between two parties for the future performance of mutual obligations.  For the promise to be enforceable, there must be an offer, acceptance, consideration and definite terms.  Livaie v. Weilbacher, 11 FSM R. 644, 647 (Kos. S. Ct. Tr. 2003).

The evidence does not show that a valid agreement was entered into by the parties, nor have the requirements for a valid contract been met.  The defendant’s claim should be invalidated for the lack of definite terms, which is a requirement for a legally enforceable contract.  Because the court finds no enforceable agreement between the parties, as shown under the plaintiff’s claim for accounts stated, the defendant’s claim for breach of contract will be denied.  However, the defendant may recover under the theories of unjust enrichment and restitution.

When no contract exists for lack of definite terms, the court may use its equity power to fashion a remedy under the doctrine of restitution.  The doctrine of unjust enrichment also applies where there is an unenforceable contract.  It is based upon the idea that one person should not be permitted unjustly to enrich himself at the expense of another.  Heirs of Nena v. Sigrah, 14 FSM R. 283, 285 (Kos. S. Ct. Tr. 2006).

Restitution is a remedy which returns the benefits already received by a party to the party who gave them where the court can find no contract.  Jim v. Alik, 4 FSM R. 198, 201 (Kos. S. Ct. Tr. 1989) (citing E. Allan Farnsworth, Contracts § 12.19 (1990)).

Here, the evidence showed that Pelep did receive the $500.00 as a loan to purchase a vehicle, and he did not repay the amount.  No repayment schedule was brought into evidence for the court to consider.  Pelep would be unjustly enriched if he is not required to repay the loan, therefore, Mai Xiong should recover under the theories of unjust enrichment and restitution in the amount of $500.00.

Defendant’s Motion for Dismissal

Once a plaintiff has finished presenting evidence during her case-in-chief, a defendant may, without waiving its right to present evidence if the motion is not granted, move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief.  The court, as the factfinder, may then determine the facts and render judgment against the plaintiff or may decline to render any judgment until the close of all the evidence.  Roosevelt v. Truk Island Developers, 17 FSM R. 207, 210 (Chk. 2010).

In the present matter, the defendant moved for dismissal through a motion filed on January 18, 2016 at the closing of the plaintiff’s case.  The motion was opposed on January 25, 2016.  An Order entered on February 5, 2016 deferred the ruling of the defendant’s motion until the close of all evidence.  Because the court finds against the plaintiff on all claims, the defendant’s Motion for Dismissal is granted.

	IV.  Conclusion

Therefore, the plaintiff’s claims for negligence, conversion, and account stated are hereby dismissed.  The plaintiff is found liable to the defendant in the amount of $500.00 under the defendant’s counter-claim.  The defendant’s Motion for Dismissal is granted.  Judgment shall be entered in favor of the defendant in the amount of $500.00.

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