FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 2017-059

BERNIE HELGENBERGER and ROCKSON
HELGENBERGER, as administrators of the
Estate of Bernard Helgenberger,
Plaintiffs,

vs.

DERRICK HELGENBERGER, MARTIN JANO,
and PACIFIC BASIN CORPORATION,
Defendants.

MARTIN JANO,
Counterclaimant,

vs.

BERNIE HELGENBERGER and ROCKSON
HELGENBERGER, as administrators of the
Estate of Bernard Helgenberger,
Counter-Defendants.
__________________________________________

ORDER OF DISMISSAL AND GRANT OF SUMMARY JUDGMENT ON COUNTERCLAIM

Larry Wentworth
Associate Justice

Hearing:  April 23, 2019
Decided:  May 31, 2019

APPEARANCES:

For the Plaintiffs:	David C. Angyal, Esq.
Ramp & Mida Law Firm
P.O. Box 1480
Kolonia, Pohnpei FM 96941

For the Defendant:	Salomon M. Saimon, Esq.
       (Jano)		P.O. Box 911
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Dismissal - Lack of Jurisdiction
Whenever it appears that the court lacks subject matter jurisdiction, the court must dismiss the action, and the dismissal will, of course, be without prejudice to any litigation filed in another court.  Helgenberger v. Helgenberger, 22 FSM R. 244, 247 (Pon. 2019).

Civil Procedure - Dismissal - Lack of Jurisdiction; Jurisdiction - Subject-Matter
When the court lacks subject-matter jurisdiction over a case, the court may still adjudicate the counterclaim if the court has an adequate independent basis for subject-matter jurisdiction over the counterclaim.  Helgenberger v. Helgenberger, 22 FSM R. 244, 248 (Pon. 2019).

Civil Procedure - Pleadings; Jurisdiction - Arising Under; Torts - Defamation
Whether an allegedly defamatory pleading in a case filed in a national court is privileged or actionable should be decided as a matter of national law and is thus a matter arising under national law.  Helgenberger v. Helgenberger, 22 FSM R. 244, 249 (Pon. 2019).

Common Law
Although FSM courts are not bound to adopt common-law doctrines, the courts can, by statute, use the Restatements of the Law as the rules of decision to determine and apply the common law in the absence of written law while keeping in mind any given common law principle’s suitability for the FSM.  Helgenberger v. Helgenberger, 22 FSM R. 244, 249 (Pon. 2019).

Common Law
The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute are the rules of decision in applicable cases.  Helgenberger v. Helgenberger, 22 FSM R. 244, 249 (Pon. 2019).

Common Law; Torts - Defamation; Torts - Immunity
A private litigant is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of or during the course and as a part of, a judicial proceeding in which he participates, if the matter has some relation to the proceeding.  This privilege is based upon the public interest in according to all men the utmost freedom of access to the courts of justice for the settlement of their private disputes.  Like the privilege of an attorney, it is absolute.  Helgenberger v. Helgenberger, 22 FSM R. 244, 249-50 (Pon. 2019).

Torts - Immunity
"Absolute privileges" are properly classified as immunities, since they are based upon the actor’s personal position or status.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 n.4 (Pon. 2019).

Torts - Abuse of Process
One against whom civil proceedings are initiated may recover in an action for the wrongful initiation of the proceedings, if the proceedings have terminated in his favor and were initiated for an improper purpose.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 n.5 (Pon. 2019).

Torts - Defamation; Torts - Immunity
The absolute privilege or immunity for litigants and their attorneys is necessary for them to be protected not only from civil liability but also from the danger of even an unsuccessful civil action.  It is thus necessary that the court not inquire into the propriety of their conduct in civil proceedings brought against them for misconduct in their position.  The privilege, or immunity, is absolute and the protection is complete, and is not conditioned upon the honest and reasonable belief that the defamatory matter is true or upon the absence of ill will on the actor’s part, but is based upon a policy that treats the ends to be gained by permitting defamatory statements as outweighing the harm that may be done to the reputation of others.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 (Pon. 2019).

Common Law; Torts - Defamation; Torts - Immunity
At common law, parties to judicial proceedings are granted an absolute privilege to use defamatory language because of the overriding public interest that persons should speak freely and fearlessly in litigation, uninfluenced by the possibility of being brought to account in an action for defamation.  This common law principle is eminently suitable for the FSM because it is difficult to see how any court system could function otherwise.  It is sound public policy.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 (Pon. 2019).

Civil Procedure - Pleadings; Torts - Defamation; Torts - Immunity
Statements contained in pleadings, affidavits, depositions and other documents directly related to the case partake of this privilege; they cannot serve as the basis for an action for defamation.  Since this privilege is absolute and the immunity is complete, whether counsel made a reasonable inquiry into the facts before filing the complaint is irrelevant.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 (Pon. 2019).

Civil Procedure - Sanctions - Rule 11
Whether an objectively reasonable inquiry was made into the facts before filing a paper is part of the Rule 11 sanctions standard, but is not applicable when there has been no Rule 11 motion.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 n.6 (Pon. 2019).

Civil Procedure - Pleadings; Torts - Defamation; Torts - Immunity
Statements in pleadings, if relevant and pertinent to the issues, are absolutely privileged even if the statements are false and made maliciously.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 (Pon. 2019).

Torts - Defamation; Torts - Immunity
False, misleading, or defamatory communications, even if made with malicious intent, are not actionable if they are material to, and made in the course of, a judicial or quasi-judicial proceeding.  Helgenberger v. Helgenberger, 22 FSM R. 244, 250 (Pon. 2019).

Torts - Defamation; Torts - Immunity
Statements made by counsel and parties in the course of judicial proceedings are privileged as long as such statements are material and pertinent to the questions involved irrespective of the motive with which they are made.  Helgenberger v. Helgenberger, 22 FSM R. 244, 251 (Pon. 2019).

Torts - Defamation; Torts - Immunity
Because the plaintiffs have an absolute privilege or complete immunity from defamation liability to the counterclaimant, the court must grant the plaintiffs summary judgment on the defamation counterclaims and the court must deny the counterclaimant’s cross motion for summary judgment.  Helgenberger v. Helgenberger, 22 FSM R. 244, 251 (Pon. 2019).

Torts - Defamation; Torts - Immunity; Torts - Infliction of Emotional Distress; Torts - Invasion of Privacy

A litigant’s absolute privilege applies not only to defamation actions, but to any tort action based on statements made in connection with a judicial proceeding.  These include the intentional infliction of emotional distress, the invasion of privacy, and false light actions, including false light invasion of privacy claims that fail to meet the standards for defamation.  Helgenberger v. Helgenberger, 22 FSM R. 244, 251 n.7 (Pon. 2019).

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COURT’S OPINION

LARRY WENTWORTH, Associate Justice:

On April 23, 2019, the court heard the counter-defendants’ Motion for Partial Summary Judgment on Counterclaims, filed January 28, 2019, and counterclaimant Martin Jano’s Opposition to Motion for Partial Summary Judgment, filed March 15, 2019.  Martin Jano’s Motion for Summary Judgment, filed April 5, 2019, and Plaintiffs’ Opposition to Defendant Jano’s Motion for Summary Judgment, filed April 12, 2019, were also pending before the court.1

On May 7, 2019, the plaintiffs filed and served their Motion to Dismiss, in which they ask the court to dismiss this case because the court lacks subject-matter jurisdiction.

I.  Subject-Matter Jurisdiction for the Complaint’s Claims

The plaintiffs, in their complaint, pled that the court had subject-matter jurisdiction over this conversion action based on the parties’ diversity of citizenship.  In their motion to dismiss, they now acknowledge that, based on what they received in discovery, all parties are Pohnpei citizens, including the Pacific Basin Corporation, which they had originally believed to be foreign owned and thus a foreign citizen for diversity jurisdiction purposes.  They therefore ask for dismissal of this action under Rule 41(a)(2).

Under Rule 12(h)(3), "[w]henever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action."  Since it now appears that the court lacks subject-matter jurisdiction over the plaintiffs’ claims, the court must dismiss this action.  This dismissal of the plaintiffs’ claims is, of course, without prejudice to any litigation filed in the Pohnpei state court.

II.  Jano’s Defamation Counterclaims

The plaintiffs seek summary judgment on Martin Jano’s counterclaims against them.  Jano counterclaims that the plaintiffs’ allegations in their complaint filed herein libeled Jano, and that co-plaintiff Bernie Helgenberger slandered Jano when, allegedly, he orally repeated to one of Jano’s clients some of the same allegations later made in the plaintiffs’ complaint.  Jano claims that these statements were not only false and impugned his reputation and integrity but were also written with malice and ill will and the intent to gain an advantage in other litigation.  He further asserts that plaintiffs’ counsel did not exercise due diligence and inquire into the truth of the plaintiffs’ allegations before filing the complaint.

A.  The Parties’ Cross Motions

Martin Jano and co-plaintiffs Bernie Helgenberger and Rockson Helgenberger filed cross-motions for summary judgment on Jano’s counterclaims.  Jano’s libel counterclaim alleges that the allegations in the plaintiffs’ complaint were defamatory.  Jano contends that the plaintiffs should be liable for this defamation because plaintiffs’ counsel did not make an objectively reasonable inquiry into the truth of the plaintiffs’ allegations before filing suit against Jano and because the suit was filed with malice and ill will and with the intent to gain an advantage in other litigation.

The Helgenberger plaintiffs move for summary judgment on the ground that, regardless of the truth or falsity of the complaint’s allegations and of the one oral statement which Bernie Helgenberger supposedly made, those statements were made in the expectation of litigation (the alleged oral statement) or were pleadings in the actual litigation itself, and are thus privileged.  The Helgenberger plaintiffs rely on Chad v. Galton, 559 P.2d 1280 (Or. 1979) and the Restatement (Second) of Torts § 586 (1977) for the principle that attorneys are absolutely privileged from defamation liability for statements made in connection with a judicial proceeding.  The Helgenberger plaintiffs further contend that Jano has, during discovery, provided no competent evidence that the alleged oral statement was ever made (or even to whom it was made) and also assert that Jano has not provided any evidence that his reputation and integrity were actually damaged or that the statements were made with reckless disregard for the truth.

Jano, in his cross motion for summary judgment, contends that a judgment in his favor is warranted because it is now undisputed that the factual allegations underlying the plaintiffs’ conversion claim are untrue.  In opposing the plaintiffs’ summary judgment motion, Jano notes that the authorities that they rely upon only recognize an attorney’s privilege from liability for defamation lawsuits.  Jano asserts that those authorities are thus not applicable because he is not suing the Ramp & Mida Law Firm for defamation, he is suing its clients, the Helgenberger plaintiffs.

B.  Ability to Adjudicate Counterclaim

Before the court can proceed to rule on the cross motions on Jano’s defamation counterclaims, the court must determine whether it has the subject-matter jurisdiction to adjudicate Jano’s counterclaims when it lacks subject-matter jurisdiction over the plaintiffs’ original claims.  The plaintiffs direct the court’s attention to Civil Procedure Rule 41(a)(2) for the proposition that if the plaintiffs’ claims are all dismissed, the court can still exercise jurisdiction over Jano’s counterclaims.  Rule 41(a)(2) provides that

an action shall not be dismissed at the plaintiff’s instance save upon order of the court and upon such terms and conditions as the court deems proper.  If a counterclaim has been pleaded by a defendant prior to the service upon the defendant of the plaintiff’s motion to dismiss, the action shall not be dismissed against the defendant’s objection unless the counterclaim can remain pending for independent adjudication by the court.

It would seem that Jano, by continuing to pursue his summary judgment motion, is implicitly objecting to the dismissal of his counterclaims without the court first ruling on those counterclaims.

There is some authority that when the court lacks subject-matter jurisdiction over a case, the court may still adjudicate the counterclaim if the court has an adequate independent basis for subject-matter jurisdiction over the counterclaim.  See Jaffe v. Grant, 793 F.2d 1182, 1186-87 (11th Cir. 1986) (trial court erred in dismissing counterclaim when action was dismissed with prejudice because "counterclaim had an independent jurisdictional basis"); Pan Am. World Airways, Inc. v. Abrams, 764 F. Supp. 864, 869 (S.D.N.Y. 1991) (plaintiff withdrew complaint for lack of jurisdiction but jurisdiction over the counterclaims remained despite the plaintiff’s dismissal [counterclaims dismissed on other grounds]); Farmaceutisk Laboratorium Ferrig A/S v. Reid Rowell, Inc., 142 F.R.D. 179, 180-81 (N.D. Ga. 1991) (defendant’s counterclaim for declaratory judgment remained after plaintiff’s case voluntarily dismissed); Nixon Constr. Co. v. Frick Co., 45 F.R.D. 387, 389 (S.D.N.Y. 1968) (when defendant’s counterclaims can "stand irrespective of the jurisdictional grounds alleged in the complaint" the counterclaims would remain after dismissal by plaintiff); but see Gross v. Federal Deposit Ins. Corp., 613 F. Supp. 79, 81 (D. Kan. 1985) ("If the court lacked jurisdiction to entertain the complaint, any counterclaim dependent thereon would be similarly outside of [the court’s] jurisdiction.").

The court cannot imagine that any other court would have subject-matter jurisdiction to determine whether a party in the FSM Supreme Court can be held liable in tort for the papers that party had filed in the FSM Supreme Court, or, whether and to what extent, those filings may be privileged.  Thus, whether an allegedly defamatory pleading in a case filed in a national court is privileged or actionable should be decided as a matter of national law.  It thus "aris[es] under . . . national law," FSM Const. art. XI, § 6(b), and the FSM Supreme Court may entertain jurisdiction over it.  Cf. Nationwide Charters & Conventions, Inc. v. Garber, 254 F. Supp. 85, 87 (D. Mass. 1966) (whether a case filed in federal court was an abuse of the federal court’s process was a federal question arising under federal law).  That being so, the court will turn to the merits of the summary judgment cross motions on Jano’s counterclaims.

C.  Defamation Privileges and Immunities

The Helgenberger plaintiffs urge the court to apply the reasoning in the Restatement (Second) of Torts § 586 (and the cases that follow it), which recognize that attorneys have an absolute privilege from defamation liability and extend that reasoning to litigation parties.  Although FSM courts are not bound to adopt common-law doctrines, they do, by statute, use the Restatements of the Law as the rules of decision to determine and apply the common law in the absence of written law while keeping in mind any given common law principle’s suitability for the FSM.  Iriarte v. Individual Assurance Co., 18 FSM R. 340, 365 (App. 2012).  "The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute . . . shall be the rules of decision . . . in applicable cases . . . ."  1 F.S.M.C. 203.  This is an applicable case.  (A similar Pohnpei state statute applies to actions in the Pohnpei state courts.2)  The court will therefore consult the Restatement (Second) of Torts for the rule to decide this issue.

Unlike Section 586, Section 587 of the Restatement concerns the parties to a judicial proceeding.3  It states:

A party to a private litigation . . . is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of or during the course and as a part of, a judicial proceeding in which he participates, if the matter has some relation to the proceeding.

Restatement (Second) of Torts § 587 (1977).  This privilege "is based upon the public interest in according to all men the utmost freedom of access to the courts of justice for the settlement of their private disputes.  Like the privilege of an attorney, it is absolute."  Id. § 587 cmt. a.  Section 587 "affords to a party to a litigation the same protection from liability for defamatory statements made in his pleadings as that accorded to an attorney under the rule stated in § 586."  Id. § 587 cmt. d.

This absolute privilege would make the Helgenberger plaintiffs immune4 from Jano’s defamation counterclaims.5  This absolute privilege or immunity for litigants and their attorneys

is necessary for them to be protected not only from civil liability but also from the danger of even an unsuccessful civil action.  To this end, it is necessary for the propriety of their conduct not be inquired into by . . . court . . . in civil proceedings brought against them for misconduct in their position.  Therefore the privilege, or immunity, is absolute and the protection is complete.  It is not conditioned upon the honest and reasonable belief that the defamatory matter is true or upon the absence of ill will on the part of the actor.

Restatement (Second) of Torts ch. 25, tit. B, intro. note at 243 (1977).  "The ’privileges’ . . . are based upon a policy that treats the ends to be gained by permitting defamatory statements as outweighing the harm that may be done to the reputation of others."  Id. at 242-43.  "At common law, parties to judicial proceedings were granted an absolute privilege to use defamatory language because of the overriding public interest that persons should speak freely and fearlessly in litigation, ’uninfluenced by the possibility of being brought to account in an action for defamation.’" Stewart v. Fahey, 481 P.2d 519, 520-21 (Ariz. Ct. App. 1971) (quoting Laun v. Union Elec. Co., 166 S.W.2d 1065 (Mo. 1942)).  Thus, this common law principle is eminently suitable for the FSM because it is difficult to see how any court system could function otherwise.  It is sound public policy.

"Statements . . . contained in pleadings, affidavits, depositions and other documents directly related to the case partake of this privilege; they cannot serve as the basis for an action for defamation."  Holt v. Camus, 128 F. Supp. 2d 812, 815 (D. Md. 1999) (citing Gill v. Ripley, 724 A.2d 88, 92 (Md. 1999); Milner v. Novotny, 498 A.2d 269 (Md. 1985)).  The Helgenberger plaintiffs are thus absolutely privileged or completely immune from Jano’s libel counterclaim for their allegations in the complaint.  Since this privilege is absolute and the immunity is complete, whether counsel had made a reasonable inquiry into the facts before filing the complaint is irrelevant.6

And whether this lawsuit was brought as a result of malice and ill will is also irrelevant.  "Statements in pleadings, if relevant and pertinent to the issues, are absolutely privileged even if the statements are false and made maliciously."  Westbridge v. Wright, 466 F. Supp. 234, 237 (E.D. Ark. 1979).  "[F]alse, misleading, or defamatory communications, even if made with malicious intent, are not actionable if they are material to, and made in the course of, a judicial or quasi-judicial proceeding."  Lockheed Info. Mgt. Sys. Co. v. Maximus, Inc., 524 S.E.2d 420, 424 (Va. 2000) (citing Penick v. Ratcliffe, 140 S.E. 664, 670 (Va. 1927)).  "[S]tatements made by counsel and parties in the course of judicial proceedings are privileged as long as such statements are material and pertinent to the questions involved irrespective of the motive with which they are made."  Wiener v. Weintraub, 239 N.E.2d 540, 540 (N.Y. 1968).  Furthermore, co-plaintiff Bernie Helgenberger is absolutely privileged or completely immune from Jano’s slander counterclaim for his statement, if he ever made it, when he orally stated to one of Jano’s clients the allegations that were later made in the plaintiffs’ complaint because it would have been a "communication[] preliminary to a proposed judicial proceeding."

Therefore, since the Helgenberger plaintiffs have, in this case, an absolute privilege or complete immunity from defamation liability7 to Jano, the court must grant the Helgenberger plaintiffs summary judgment on Jano’s counterclaims and the court must deny Jano’s cross motion for summary judgment.

III.  Conclusion

Accordingly, the court concludes that the Helgenberger plaintiffs cannot be held liable for defamation because the Helgenberger plaintiffs’ statements were absolutely privileged, making them completely immune.  The Helgenberger plaintiffs are therefore granted judgment on Jano’s counterclaims.  The clerk is directed to enter a judgment in their favor on the libel and slander counterclaims.  The plaintiffs’ complaint is hereby dismissed for lack of subject-matter jurisdiction.  The parties are to bear their own costs and fees.

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