FSM SUPREME COURT TRIAL DIVISION
CIVIL ACTION NO. 2019-009

ANN PANUELO, individually and as Administratrix of the Estate of Ioanis Panuelo,
Plaintiff,

vs.

NORA SIGRAH,
Defendant.
_____________________________________________

ORDER GRANTING DEFENDANT SUMMARY JUDGMENT

Larry Wentworth
Associate Justice

Hearing:  September 10, 2019
Decided:  October 21, 2019

APPEARANCES:

For the Plaintiff:	Yoslyn G. Sigrah, Esq.
P.O. Box 3018
Kolonia, Pohnpei FM 96941

For the Defendant:	Nora E. Sigrah, Esq.
P.O. Box 1237
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Motions - Unopposed
By rule, a party’s failure to oppose a motion is deemed that party’s consent to the motion, but even then, proper grounds to grant the motion must exist before the court can grant it.  Panuelo v. Sigrah, 22 FSM R. 341, 349 (Pon. 2019).

Civil Procedure - Motions - Unopposed
When a party fails to respond in writing to a written motion, not only is it deemed that party’s consent to the motion, but it is also deemed that party’s waiver of the right to orally respond to or oppose the motion, but the court may allow the party to orally argue even though she did not file a written opposition.  Panuelo v. Sigrah, 22 FSM R. 341, 350 (Pon. 2019).

Jurisdiction - Removal
An oral assertion that the state court retained jurisdiction and that the FSM Supreme Court had not acquired it was a motion to remand the matter to state court, because any opposition to a case’s removal is, regardless of how it is styled, actually a motion to remand the case on the ground it was improvidently removed.  Panuelo v. Sigrah, 22 FSM R. 341, 350 (Pon. 2019).

Jurisdiction - Removal
A case is "improvidently removed" when either the FSM Supreme Court did not have subject-matter jurisdiction over it when it was removed, or the party that removed the case had already waived its right to proceed in the FSM Supreme Court.  An improvidently-removed case will be remanded to the court it was removed from.  Panuelo v. Sigrah, 22 FSM R. 341, 350 (Pon. 2019).

Jurisdiction - Subject-Matter
Since subject-matter jurisdiction is a threshold matter, the court will address this point before considering the motion’s merits.  Panuelo v. Sigrah, 22 FSM R. 341, 350 (Pon. 2019).

Jurisdiction - Diversity
The FSM Supreme Court has diversity jurisdiction over a case where an FSM citizen sues a foreign citizen regardless of how long the foreign citizen has resided in the FSM or whether she is married to an FSM citizen.  Panuelo v. Sigrah, 22 FSM R. 341, 351 (Pon. 2019).

Bankruptcy; Jurisdiction - Arising Under
Congress’s power to regulate bankruptcy and insolvency is an exclusive national power, and bankruptcy cases are, by law, assigned to the FSM Supreme Court trial division.  Panuelo v. Sigrah, 22 FSM R. 341, 351 (Pon. 2019).

Bankruptcy; Jurisdiction - Arising Under
Any claim that a bankruptcy receiver was overcompensated is solely a matter of national (bankruptcy) law, and a claim that a bankruptcy receiver paid the creditors of a debtor, who had sought bankruptcy protection, more than was their due is also a matter arising only under national bankruptcy law.  Panuelo v. Sigrah, 22 FSM R. 341, 351 (Pon. 2019).

Jurisdiction - Removal
The Chief Justice by rule may govern the transfer of cases between state and national courts, and FSM General Court Order 1992-2 is the rule the Chief Justice promulgated to govern the transfer of cases between state and national courts when cases are removed from a state court.  It is thus the applicable rule and must be followed.  Panuelo v. Sigrah, 22 FSM R. 341, 351 (Pon. 2019).

Civil Procedure - Dismissal - Before Responsive Pleading; Civil Procedure - Summary Judgment
If, on a motion to dismiss, matters outside the pleading are presented to and not excluded by the court, the motion will then be treated as one for summary judgment.  Panuelo v. Sigrah, 22 FSM R. 341, 352 (Pon. 2019).

Evidence - Judicial Notice
A court may take judicial notice of its own reported decisions and of papers and pleadings on file in other cases before it when parts of those cases have been introduced into evidence, and the court may take judicial notice of its own files in related cases.  Panuelo v. Sigrah, 22 FSM R. 341, 352 (Pon. 2019).

Evidence - Judicial Notice
A court must take judicial notice if requested by a party and supplied with the necessary information and the necessary information is not subject to reasonable dispute.  Panuelo v. Sigrah, 22 FSM R. 341, 352 (Pon. 2019).

Bankruptcy
Under FSM bankruptcy law, only a corporation can apply for chapter 3 (reorganization) bankruptcy protection.  Panuelo v. Sigrah, 22 FSM R. 341, 353 n.3 (Pon. 2019).

Bankruptcy - Receiver/Trustee
The FSM bankruptcy statute specifically bars receiver’s compensation based solely on time referenced billing.  Panuelo v. Sigrah, 22 FSM R. 341, 353 (Pon. 2019).

Bankruptcy
When the debtor is an individual, an "insider" is a relative of the debtor, who is related by blood or marriage within the third degree as determined by common law, or a person who is considered a close relative under applicable Micronesian custom, or a step or adoptive relationship within such third degree.  Panuelo v. Sigrah, 22 FSM R. 341, 353 n.4 (Pon. 2019).

Civil Procedure - Summary Judgment - Procedure
To overcome a prima facie case of entitlement to summary judgment, the non-moving party cannot rely on unsubstantiated denials to carry her burden, but must present some competent evidence that would be admissible at trial which demonstrates that there is a genuine issue of fact, and, in responding to a summary judgment motion, an adverse party may not rest upon the mere allegations or denials in her pleading, but her response, by affidavits or as otherwise provided in Rule 56, must set forth specific facts showing a genuine issue for trial.  If she does not so respond, summary judgment, if appropriate, will be entered against her.  Panuelo v. Sigrah, 22 FSM R. 341, 355 (Pon. 2019).

Civil Procedure - Summary Judgment - Procedure
Once the movant has made out a prima facie case that there are no triable issues of fact, the nonmovant then has the burden to show by competent evidence that there is a triable issue of material fact.  Panuelo v. Sigrah, 22 FSM R. 341, 355 (Pon. 2019).

Civil Procedure - Summary Judgment - Procedure
When the nonmovant did not respond in writing at all to the summary judgment motion, let alone produce any competent evidence that could show that there is a genuine issue of material fact in dispute, the court will turn to the question of whether the movant is entitled to judgment as a matter of law.  Panuelo v. Sigrah, 22 FSM R. 341, 355 (Pon. 2019).

Bankruptcy
An "interested party" is the debtor, any creditor of the debtor and any other party the court supervising the bankruptcy application may determine to have a right to be heard on issues pertaining to that application.  Panuelo v. Sigrah, 22 FSM R. 341, 356 n.6 (Pon. 2019).

Constitutional Law - Case or Dispute - Standing
Standing is a threshold issue.  To have standing to bring a matter before a court, the plaintiff must allege facts establishing a concrete injury and a sufficient causal relationship between the injury and the alleged violation and that the injury can be remedied by a judicial decree.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Constitutional Law - Case or Dispute - Standing
To have standing, a party must allege a sufficient stake in the controversy’s outcome and it must have suffered some threatened or actual injury resulting from the allegedly illegal action or erroneous court ruling.  And, the injury must be such that it can be traced to the challenged action and must be of the kind likely to be redressed by a favorable decision.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Bankruptcy; Constitutional Law - Case or Dispute - Standing
An individual lacks standing and should be dismissed when she has no sufficient stake in the outcome of a dispute over a bankruptcy receiver’s compensation or payments to creditors because she was neither an "interested party" nor a co-debtor, but, since her involvement with the case was as an insider who had improperly received property of the debtor’s estate and converted it to her use, she as an individual, arguably, as the insider recipient of a fraudulent transfer, may be an "interested party" solely with respect to the fraudulently transferred property.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Domestic Relations - Probate
The general principle is that an administratrix stands in decedent’s shoes and has no greater or other rights or powers than the decedent would have if living.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Constitutional Law - Case or Dispute - Standing; Domestic Relations - Probate
If the decedent would, if living, have standing to bring the suit, then the administratrix of his estate would have standing to do so.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Bankruptcy; Constitutional Law - Case or Dispute - Standing; Judgments - Relief from Judgment
The debtor, as an interested party, has sufficient stake in the matter for standing to try to reopen his own bankruptcy case.  Panuelo v. Sigrah, 22 FSM R. 341, 356 (Pon. 2019).

Bankruptcy; Judgments - Relief from Judgment
Although under Bankruptcy Rule 5010, a case may be reopened on motion of the debtor or other interested party pursuant to 31 F.S.M.C. 311(2), a lawsuit is not a motion and 31 F.S.M.C. 311(2) applies only to a corporate debtor that is unable to implement a part of its reorganization plan or comply with a provision of the court’s confirmation order. Bankruptcy Rule 5010 does not apply to an individual debtor or to a liquidation case.  Panuelo v. Sigrah, 22 FSM R. 341, 356-57 (Pon. 2019).

Bankruptcy; Judgments - Relief from Judgment
Bankruptcy Rule 9024 permits reopening a bankruptcy case by providing that FSM Civil Procedure Rule 60 applies in cases under Title 31.  Panuelo v. Sigrah, 22 FSM R. 341, 357 (Pon. 2019).

Bankruptcy; Constitutional Law - Case or Dispute - Standing; Judgments - Relief from Judgment
The administratrix of an estate of a former debtor would have standing to seek relief under Bankruptcy Rule 9024 for alleged overpayments to creditors and to the bankruptcy receiver because she seeks reconsideration of, or relief from, the bankruptcy case orders allowing those claims by the creditors and the receiver.  Panuelo v. Sigrah, 22 FSM R. 341, 357 (Pon. 2019).

Bankruptcy; Judgments - Relief from Judgment; Judgments - Relief from Judgment - Independent Actions
A new lawsuit obviously cannot be a motion to reopen a case under Bankruptcy Rule 9024 (or for relief from judgment under Civil Procedure Rule 60), since such a motion would necessarily be filed in the original bankruptcy case, but Civil Procedure Rule 60 (and thus Bankruptcy Rule 9024) authorizes one other procedure for relief - an independent action for relief.  Rule 60(b) does not limit a court’s power to entertain an independent action to relieve a party from a judgment.  Panuelo v. Sigrah, 22 FSM R. 341, 357 (Pon. 2019).

Bankruptcy; Judgments - Relief from Judgment - Independent Actions
When the debtor’s administratrix named only the bankruptcy receiver as the sole defendant, she would have standing in the action, to recover alleged overpayments to the receiver, but to recover alleged overpayments to the creditors, she would have to proceed against those creditors.  Panuelo v. Sigrah, 22 FSM R. 341, 357 (Pon. 2019).

Civil Procedure - Summary Judgment - Procedure; Statutes of Limitation
Even though it is an affirmative defense, a court may dismiss claims (or grant summary judgment thereon) based on the statute of limitations, when the allegations in the plaintiff’s complaint demonstrate that its claims are subject to that defense.  Panuelo v. Sigrah, 22 FSM R. 341, 357 (Pon. 2019).

Domestic Relations - Probate; Statutes of Limitation - Which Limitation Applies
Any action by or against the executor, administrator, or other representative of a deceased person for a cause of action in favor of, or against, the deceased shall be brought only within two years after the executor, administrator, or other representative is appointed or first takes possession of the assets of the deceased.  Panuelo v. Sigrah, 22 FSM R. 341, 358 (Pon. 2019).

Statutes of Limitation - Which Limitation Applies; Torts - Damages
A "personal injury" is any harm caused to a person, such as a broken bone, a cut, or a bruise; bodily injury or any invasion of a personal right, including mental suffering and false imprisonment.  This does not describe claimed damages that are all monetary losses.  Panuelo v. Sigrah, 22 FSM R. 341, 358 n.8 (Pon. 2019).

Bankruptcy; Statutes of Limitation - Which Limitation Applies
It seems likely that the six-year, catch-all statute of limitations would apply to purely monetary damages.  Panuelo v. Sigrah, 22 FSM R. 341, 358 & n.8 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions; Judgments - Relief from Judgment - Time Limits; Equity - Laches; Statutes of Limitation - Which Limitation Applies
For an independent action for relief, no statute of limitations would apply because there is no time limit on when an independent action may be brought, but the doctrine of laches is applicable and undue delay can bar relief.  Panuelo v. Sigrah, 22 FSM R. 341, 358 (Pon. 2019).

Bankruptcy; Equity - Laches
Laches is an important consideration in bankruptcy proceedings because the chief purpose of the bankruptcy laws is to secure a prompt and effectual administration of and settlement of the estate of all bankrupts within a limited period.  Panuelo v. Sigrah, 22 FSM R. 341, 358 (Pon. 2019).

Civil Procedure - Dismissal - Before Responsive Pleading; Civil Procedure - Res Judicata
Res judicata, although an affirmative defense, can be raised in a motion to dismiss made before an answer has been filed when the prior action’s preclusive effect can be determined from the complaint’s face.  Panuelo v. Sigrah, 22 FSM R. 341, 358-59 (Pon. 2019).

Civil Procedure - Res Judicata
The res judicata doctrine bars the relitigation by parties or their privies of all matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits, and which has been affirmed on appeal or for which time for appeal has expired.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Civil Procedure - Res Judicata - Privity; Domestic Relations - Probate
An administratrix of a decedent’s estate is the successor in interest to the decedent, and is his privy.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Civil Procedure - Res Judicata
Under the res judicata doctrine, a judgment entered in a cause of action conclusively settles that cause of action as to all matters that were or might have been litigated and adjudged therein.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Civil Procedure - Res Judicata; Judgments - Relief from Judgment - Independent Actions
Res judicata would bar any suit by an administratrix of a decedent’s estate, over a closed bankruptcy proceeding unless the suit is an independent action for relief because an independent action seeks to set aside a judgment in another case that is presumed to be final and res judicata unless the independent action succeeds.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Bankruptcy; Judgments - Relief from Judgment - Independent Actions
A suit that seeks to vacate or alter the bankruptcy court’s orders in the bankruptcy case, but is not a motion to reopen that case under either Bankruptcy Rule 5010 or 9024, could be an independent action for relief as allowed by Bankruptcy Rule 9024 adopting Civil Procedure Rule 60(b) by reference.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions
Under FSM case law, an independent action to set aside a judgment or final order must satisfy five essential elements:  1) a judgment which ought not, in equity and good conscience, to be enforced; 2) a good defense to the alleged cause of action on which the judgment is founded; 3) fraud, accident, or mistake which prevented the defendant in the judgment (who would be the plaintiff in an independent action) from obtaining the benefit of his defense; 4) the absence of fault or negligence on the part of the defendant; and 5) the absence of any adequate remedy at law.  If any element is missing, the court cannot take equitable jurisdiction of the case.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions
If Rule 60(b) is to be interpreted as a coherent whole, independent actions must be reserved for those cases of injustices which, in certain instances, are deemed sufficiently gross to demand departure from rigid adherence to the doctrine of res judicata.  Due to the universal interest in the finality of judgments, resort to an independent action is only permitted under unusual and exceptional circumstances.  Panuelo v. Sigrah, 22 FSM R. 341, 359 (Pon. 2019).

Bankruptcy
When an FSM court has not previously construed an FSM bankruptcy rule which is identical or similar to a U.S. counterpart, the court may look to U.S. sources for guidance in interpreting the rule.  Panuelo v. Sigrah, 22 FSM R. 341, 359-60 n.9 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions
A court will not grant relief if the complaining party has or by exercising proper diligence would have had, an adequate remedy at law, or by proceedings in the original action to open, vacate, or otherwise obtain relief against, the judgment.  Panuelo v. Sigrah, 22 FSM R. 341, 359-60 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions
When the proponent’s own fault, negligence, or carelessness, however innocent, contributed to the entry of the original judgment, an independent action for relief is improper unless the evidence to establish injustice is practically conclusive.  Panuelo v. Sigrah, 22 FSM R. 341, 360 (Pon. 2019).

Torts - Fraud
The elements of fraud or intentional misrepresentation are:  1) a knowing or deliberate misrepresentation by the defendant, 2) made to induce action by the plaintiff, 3) with the plaintiff’s justifiable reliance upon the misrepresentations, 4) to the plaintiff’s detriment.  Panuelo v. Sigrah, 22 FSM R. 341, 360 (Pon. 2019).

Civil Procedure - Pleading - With Particularity; Torts - Fraud
Civil Procedure Rule 9(b) requires that in allegations of fraud that the circumstances constituting the fraud must be stated with particularity, and the extent of this particularity is guided by Rule 8(a), which requires a short and plain statement of the claim.  Panuelo v. Sigrah, 22 FSM R. 341, 360-61 (Pon. 2019).

Civil Procedure - Pleading - With Particularity; Torts - Fraud
When alleging fraud, a plaintiff must state with particularity the circumstances constituting fraud and must identify particular statements and actions and specify why they are fraudulent.  Conclusory allegations do not satisfy the requirements of Rule 9(b) and subject the pleader to dismissal.  Panuelo v. Sigrah, 22 FSM R. 341, 361 (Pon. 2019).

Civil Procedure - Dismissal - Before Responsive Pleading; Torts - Fraud
When, even assuming the plaintiff’s allegations are true, she does not state that she relied upon the misrepresentations she alleges to be the basis of the fraud, much less that her reliance induced her to act to her detriment, and when she does not state that the defendant prevented her from presenting her case to the court, the court, viewing the facts and inferences in the light most favorable to the non-movant, cannot but conclude that the defendant is entitled to judgment as a matter of law.  Panuelo v. Sigrah, 22 FSM R. 341, 361 (Pon. 2019).

Civil Procedure - Dismissal - Before Responsive Pleading; Judgments - Relief from Judgment - Independent Actions; Torts - Fraud
If a fraud allegation, that failed to adequately plead a regular fraud cause of action, was meant to be an allegation of fraud on the court, which is a further ground to set aside a judgment that Bankruptcy Rule 9024 (by adopting Civil Procedure Rule 60) permits to be brought in an independent action, that allegation will also be wanting because the doctrine of fraud upon the court is narrow and limited in scope and not every allegation of fraud rises to the level of fraud upon the court.  Panuelo v. Sigrah, 22 FSM R. 341, 361 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions; Torts - Fraud
A finding of fraud on the court is justified only by the most egregious misconduct directed to the court itself, such as bribery of a judge or fabrication of evidence by counsel, and must be supported by clear, unequivocal and convincing evidence.  Panuelo v. Sigrah, 22 FSM R. 341, 361 (Pon. 2019).

Judgments - Relief from Judgment - Independent Actions; Judgments - Relief from Judgment - Time Limits; Torts - Fraud
A grant of relief for fraud on the court ordinarily requires that:  1) the fraud is directed to the judicial machinery itself and is not fraud between the parties or fraudulent documents, false statements or perjury; 2) the fraud involves the most egregious conduct, such as bribery of a judge or the fabrication of evidence in which an attorney is implicated; and 3) the party perpetrating the fraud acted with an intent to deceive or defraud the court.  Further, the fraud must have actually deceived the court.  These requirements are strictly applied because a finding of fraud on the court is exempt from time limits and because it permits the severe consequence of allowing a party to overturn the finality of a judgment.  Panuelo v. Sigrah, 22 FSM R. 341, 361 (Pon. 2019).

Torts - Conversion
The elements of a conversion action are the plaintiff’s ownership and right to possession of the personal property, the defendant’s wrongful or unauthorized act of dominion over the plaintiff’s property inconsistent with or hostile to the owner’s right, and resulting damages.  Panuelo v. Sigrah, 22 FSM R. 341, 361-62 (Pon. 2019).

Bankruptcy - Debtor’s Estate; Bankruptcy - Receiver/Trustee
The bankruptcy receiver is required, subject to court order, to administer the assets of the receivership estate, and, with the court’s approval, to distribute those assets to the debtor’s creditors pursuant to the priorities set out in 31 F.S.M.C. 107 and 108.  And, to accomplish those ends, the receiver is granted, but not limited to, certain powers, including the powers to void preferences and fraudulent transfers.  Panuelo v. Sigrah, 22 FSM R. 341, 362 (Pon. 2019).

Bankruptcy - Debtor’s Estate
The receivership estate consists of all of the debtor’s property at the time of the bankruptcy application, except exempt property, plus certain other property acquired afterwards.  Panuelo v. Sigrah, 22 FSM R. 341, 362 n.11 (Pon. 2019).

Bankruptcy - Debtor’s Estate
The debtor’s death does not abate a liquidation case under chapter 2 of Title 31.  In such event, the estate will be administered and the case concluded in the same manner, so far as possible, as though the death had not occurred.  Panuelo v. Sigrah, 22 FSM R. 341, 363 (Pon. 2019).

Courts - Recusal - Procedure
The relevant statute requires that a disqualification motion shall be accompanied by an affidavit stating the reasons for the belief that grounds for disqualification exist.  A disqualification motion may be denied solely because the movant failed to accompany it with an affidavit setting forth the motion’s factual basis.  Panuelo v. Sigrah, 22 FSM R. 341, 363 n.15 (Pon. 2019).

Courts - Recusal - Procedure
When there is an actual disqualification motion, the court would have to address it first.  A contemporaneous denial should suffice when the denial and a substantive order are included in the same document and issued simultaneously.  Panuelo v. Sigrah, 22 FSM R. 341, 363 n.15 (Pon. 2019).

Courts - Recusal
Law clerks are generally bound by the same ethical rules as the judges they serve.  The clerk is forbidden to do all that is prohibited to the judge.  Panuelo v. Sigrah, 22 FSM R. 341, 363 (Pon. 2019).

Courts - Recusal - Extrajudicial Knowledge
A judge’s disqualifying ground must come from an extrajudicial source or conduct.  The general rule is that the judge’s knowledge of disqualifying facts must have originated from an extrajudicial source.  Extrajudicial means outside court; outside the functioning of the court system.  Panuelo v. Sigrah, 22 FSM R. 341, 363 (Pon. 2019).

Courts - Recusal - Bias or Partiality
The type of partiality at which 4 F.S.M.C. 124(1) is aimed is extrajudicial bias, or bias resulting from information received by the judge outside of the judicial proceeding or proceedings in which the judge has participated.  Panuelo v. Sigrah, 22 FSM R. 341, 363-64 (Pon. 2019).

Courts - Recusal - Judicial Statements or Rulings
Judicial rulings, even if adverse, made in the course of other judicial proceedings are not grounds for disqualification under 4 F.S.M.C. 124(1).  Panuelo v. Sigrah, 22 FSM R. 341, 364 (Pon. 2019).

Courts - Recusal - Judicial Statements or Rulings
When judicial rulings could not be a basis to disqualify either of the justices who presided over a case from presiding over a different case, their rulings cannot be a basis to disqualify a former law clerk for his service under them.  Panuelo v. Sigrah, 22 FSM R. 341, 364 (Pon. 2019).

Courts - Recusal - Judge’s Duty
Except when the judge is disqualified under 4 F.S.M.C. 122 or 124, a judge is obligated to hear the cases assigned to that judge.  This is because a judge must exercise the power to recuse conscientiously and cannot use it to avoid difficult or controversial cases or to merely accommodate nervous litigants or counsel.  Panuelo v. Sigrah, 22 FSM R. 341, 364 (Pon. 2019).

Courts - Recusal - Judge’s Duty
When it is not the judge’s duty to disqualify himself from a case to which he has been assigned, it is the judge’s duty to serve.  A judge cannot "voluntarily recuse" himself except when that recusal is required.  Then it would be the judge’s duty to do so.  Panuelo v. Sigrah, 22 FSM R. 341, 364 (Pon. 2019).

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COURT’S OPINION

LARRY WENTWORTH, Associate Justice:

On September 10, 2019, the court heard the Defendant’s Motion to Dismiss Complaint, filed April 15, 2019, with supporting exhibits "A" to "U."  Despite the long time between the motion’s filing and the hearing, the plaintiff did not file an opposition or seek more time to do so.  By rule, a party’s failure to oppose a motion is deemed that party’s consent to the motion, FSM Civ. R. 6(d); Actouka v. Etpison, 1 FSM R. 275, 276 (Pon. 1983), but even then, proper grounds to grant the motion must exist before the court can grant it.  Senda v. Mid-Pacific Constr. Co., 6 FSM R. 440, 442 (App. 1994); Helgenberger v. Mai Xiong Pacific Int’l, Inc., 17 FSM R. 326, 330 (Pon. 2011).  Since proper grounds do exist, the motion is granted in the form of a summary judgment.  The court’s reasoning follows.

I.  Procedural History

On March 22, 2019, Ann Panuelo, Ioanis Panuelo’s widow, filed this suit in the Pohnpei Supreme Court, alleging that Nora Sigrah, the court-appointed Receiver in Ioanis Panuelo’s 2007 bankruptcy case (Bankr. No. PB 001-2007), had, by fraud and conversion, received excessive compensation as Receiver and that, because of Sigrah’s actions as Receiver, Ioanis Panuelo’s creditors received more than was their due.  For relief, Panuelo asks that Sigrah be ordered to pay Panuelo all of Sigrah’s bankruptcy receiver compensation ($36,356.80 plus another $95.81 allegedly not returned to Ioanis Panuelo’s heirs); to pay Panuelo further sums equal to alleged overpayments ($100,000) to Ioanis Panuelo’s creditors; to release to Panuelo unspecified documents that were allegedly illegally taken from Panuelo; to award Panuelo additional unspecified general and compensatory damages, lost business income, and consequential damages; to award Panuelo punitive damages; and to award Panuelo her attorney’s fees and costs.

On March 28, 2019, Sigrah filed a verified petition for removal from the Pohnpei Supreme Court, and on March 29, 2019, she filed an additional document that constituted proof that the entire verified petition had also been filed in the Pohnpei Supreme Court.  Under FSM General Court Order 1992-2, § II(A), these filings effected removal.

II.  Removal Jurisdiction

A.  Subject-Matter Jurisdiction and Remand

When a party fails to respond in writing to a written motion, not only is it deemed that party’s consent to the motion, but it is also deemed that party’s waiver of the right to orally respond to or oppose the motion.  See Actouka v. Kolonia Town, 5 FSM R. 121, 123 (Pon. 1991) (court will usually decline to hear oral argument from the non-responding party); see also FSM v. Kansou, 13 FSM R. 167, 169 n.2 (Chk. 2005).  Nevertheless, the court did allow Panuelo to orally argue even though she did not file a written opposition.

1.  Removal and Remand

Panuelo’s oral presentation mostly questioned the court’s subject-matter jurisdiction and asserted, without authority, that the case still remained under state court jurisdiction.1  Panuelo maintained that her assertion (that the state court retained jurisdiction and that this court had not acquired it) was not a motion to remand the matter to state court, but the court can only consider it to be such.  That is because any opposition to a case’s removal is, regardless of how it is styled, actually a motion to remand the case on the ground it was improvidently removed.  Setik v. Perman, 22 FSM R. 105, 115 (App. 2018); Saimon v. Nena, 19 FSM R. 608, 610 (Kos. 2014); Etscheit v. McVey, 13 FSM R. 477, 479 (Pon. 2005); Gilmete v. Adams, 11 FSM R. 105, 107 & n.1 (Pon. 2002); Porwek v. American Int’l Co. Micronesia, 8 FSM R. 436, 438 (Chk. 1998).

A case is "improvidently removed" when either the FSM Supreme Court did not have subject-matter jurisdiction over it when it was removed, or the party that removed the case had already waived its right to proceed in the FSM Supreme Court.  Etscheit v. McVey, 13 FSM R. 477, 479 (Pon. 2005); Mailo v. Chuuk, 12 FSM R. 597, 600 (Chk. 2004); Enlet v. Bruton, 10 FSM R. 36, 39 (Chk. 2001).  An improvidently-removed case will be remanded to the court it was removed from.  San Nicholas v. Neth, 16 FSM R. 70, 73 (Pon. 2008); Mailo, 12 FSM R. at 600; Gilmete, 11 FSM R. at 110; Enlet, 10 FSM R. at 39.

Panuelo does not suggest that Sigrah has somehow waived her right to proceed in the FSM Supreme Court.  Nor does she point to any action by Sigrah that could constitute a waiver.  Panuelo questions the FSM Supreme Court’s subject-matter over this case because, in her view, the state court is the only proper forum when she pled two state law causes of action in her complaint and filed it in state court.  Since subject-matter jurisdiction is a threshold matter, the court will address this point before considering the motion’s merits.

2.  FSM Supreme Court’s Subject-Matter Jurisdiction

Sigrah maintains that the court has subject-matter jurisdiction over this case on two bases - because of the parties’ diversity of citizenship and because the case arises under national law.  This is correct.

a.  Diversity of Citizenship

It is undisputed that the plaintiff, Ann Panuelo, is a Pohnpei citizen, and that the defendant, Nora Sigrah, is a United States citizen.  Panuelo argues that, since Sigrah has lived in the FSM for many years and is married to a Kosraean, she should be considered a "local" and since, in Panuelo’s view, diversity jurisdiction’s purpose is to protect "outsiders" from local prejudices in state courts, Sigrah should be unable to assert diversity jurisdiction.  Panuelo even suggests that a difference between Pohnpei (Panuelo) and Kosrae (Sigrah) citizenship should not matter.

This argument, while inventive, is frivolous.  The Constitution is clear.  The FSM Supreme Court has diversity jurisdiction "in disputes . . . between citizens of different states, and between a state or a citizen thereof, and a foreign state, citizen, or subject."  FSM Const. art. XI, § 6(b).  The court thus has jurisdiction over this dispute between a citizen of a state and a foreign citizen.2

b.  Arising Under National Law

Panuelo, although she couched her complaint in state law causes of action (fraud and conversion), what she actually seeks is a (state court) judicial review of the court-appointed receiver’s conduct in a bankruptcy case, and the vacation or reversal of multiple bankruptcy court orders approving that conduct.  "The national courts, including the trial division of the Supreme Court, have concurrent original jurisdiction in cases arising under this Constitution; national law or treaties . . . ."  FSM Const. art. XI, § 6(b).

Congress’s power "to regulate . . . bankruptcy and insolvency," is an exclusive national power.  FSM Const. art. IX, § 2(g).  Bankruptcy cases are, by law, assigned to the FSM Supreme Court trial division.  31 F.S.M.C. 104.  A state court cannot have the jurisdiction to review, override, reverse or grant relief from FSM bankruptcy court orders and rulings, but that is precisely what Panuelo seeks.

Any claim that a bankruptcy receiver was overcompensated is solely a matter of national (bankruptcy) law.  And a claim that a bankruptcy receiver paid the creditors of a debtor, who had sought bankruptcy protection, more than was their due is also a matter arising only under national bankruptcy law.

Accordingly, this is a case or dispute, over which the FSM Supreme Court trial division has subject-matter jurisdiction.  FSM Const. art. XI, § 6(b).

B.  Application of FSM General Court Order 1992-2

During her oral presentation, Panuelo also questioned whether "an old general court order" should govern this case’s removal from the Pohnpei Supreme Court, or, by implication, whether it should apply to any cases anymore.  Panuelo does not contend that Sigrah did not faithfully follow the removal procedures required by General Court Order 1992-2.  She just suggests that the general court order should be disregarded.

This suggestion is devoid of merit.  "The Chief Justice . . . by rule may . . . (d) govern the transfer of cases between state and national courts."  FSM Const. art. XI, § 9.  FSM General Court Order 1992-2 is the rule the Chief Justice promulgated to "govern the transfer of cases between state and national courts," FSM Const. art. XI, § 9(d), when cases are removed from a state court.  It is thus the only applicable rule and must be followed.

III.  Nora Sigrah’s Motion

Sigrah moves to dismiss Panuelo’s complaint for failing to state any claim for which the court could grant relief because Panuelo lacks standing to bring this action; because the complaint is barred by the statute of limitations; because the doctrine of res judicata bars the complaint; and because neither the fraud nor the conversion count states a claim for which relief could be granted.  These will be addressed in turn, once the court determines the motion’s nature.

A.  Motion’s Nature

Sigrah’s motion contains twenty-one supporting exhibits, all material outside of Panuelo’s pleadings.  If, on a motion to dismiss, matters outside the pleading are presented to and not excluded by the court, the motion will then be treated as one for summary judgment.  FSM Civ. R. 12(b); Fuji Enterprises v. Jacob, 21 FSM R. 355, 363 (App. 2017) ("when either party, in support or in opposition to a Rule 12(b)(6) motion, submits matters to the court outside of the pleadings, the court . . . may accept those outside matters and treat the motion as one for summary judgment").

Nineteen exhibits (Exs. "A"-"S") are In re Panuelo filings of record (mostly court orders, but also including Ioanis Panuelo’s voluntary Chapter 2 bankruptcy application (Ex. "A"); Receiver’s Inventory (Ex. "I"); Receiver’s Report (Ex. "N"): Receiver’s Motion for Approval of Settlement (Ex. "O")).  The other two are the October 11, 2011 Petition to Probate Estate Ioanis Panuelo (Ex. "T") filed in Pohnpei Supreme Court to start PCA No. 251-11 and that court’s February 1, 2017 Order Granting Petition to Probate the Estate of Ioanis Panuelo (Ex. "U"), which, among other things, "admitted" Ann Panuelo "as administratrix and representative of the estate with full powers . . . ."  The court will not exclude any of this outside material.  It accurately portrays the Bankruptcy Case No. PB 001-2007 history.

Sigrah asks the court to take judicial notice of the court records in In re Panuelo, Bankr. No. PB 001-2007 and in In re  Estate of Ioanis Panuelo, Pohnpei Supreme Court PCA No. 257-11.  A court may take judicial notice of its own reported decisions.  Berman v. FSM Supreme Court (I), 7 FSM R. 8, 11 n.2 (App. 1995).  A court may also take judicial notice of papers and pleadings on file in other cases before it when, as here, parts of those cases have been introduced into evidence, Arthur v. Pohnpei, 16 FSM R. 581, 588 n.3 (Pon. 2009), and the court may take judicial notice of its own files in related cases, Onanu Municipality v. Elimo, 20 FSM R. 535, 541 (Chk. 2016).  The court will therefore take judicial notice of the attached In re Panuelo, Bankr. No. PB 001-2007 filings.

Also, a court must take judicial notice if requested by a party and supplied with the necessary information.  FSM Evid. R. 201(d); Berman v. College of Micronesia-FSM, 15 FSM R. 582, 595 (App. 2008).  Sigrah has supplied the necessary information for the two In re Estate of Ioanis Panuelo, Pohnpei Supreme Court PCA No. 257-11, filings.  The court will take judicial notice of these as they are not subject to reasonable dispute.  FSM Evid. R. 201(b).

Therefore, the court must treat Sigrah’s motion to dismiss as a motion for summary judgment on the merits.

B.  Facts Not Subject to Genuine Material Dispute

On January 15, 2007, Ioanis Panuelo, represented by attorney Ron Moroni, filed his voluntary application for Chapter Two (liquidation) bankruptcy protection.3  This was docketed as Bankruptcy Case No. PB 001-2007.  Eventually, three of Ioanis Panuelo’s creditors, as authorized by 31 F.S.M.C. 103(1)(b), applied for the appointment of a receiver for the debtor’s estate and nominated Nora Sigrah.  At a March 28, 2008 court hearing before Chief Justice Andon L. Amaraich, all interested parties (debtor Panuelo and his creditors) indicated either their support or non-opposition to Sigrah’s appointment.  No one objected.

The Chief Justice duly appointed Sigrah as the Receiver, and, since it was the court’s duty to fix a receiver’s compensation, 31 F.S.M.C. 112(4), ordered her, and invited the others, to propose an appropriate compensation scheme.  Order Appointing Receiver at 2 (Mar. 31, 2008).  Sigrah proposed a compensation scheme, drawn from a U.S. bankruptcy practice, that set an hourly rate, capped by certain percentages of funds recovered and disbursed to the creditors.  In re Panuelo, 15 FSM R. 640, 641 (Pon. 2008).  Chief Justice Amaraich rejected that proposal because the FSM bankruptcy statute specifically barred receiver compensation "based solely on time referenced billing."  Id. at 641-42 (quoting 31 F.S.M.C. 112(4)).  Sigrah submitted an amended proposal, in which she proposed that she be compensated by "10% of all funds distributed to the bankruptcy estate’s creditors, including those holding secured claims; and 10% of voided preferences obtained for the bankruptcy estate; and 10% of voided fraudulent transfers obtained for the bankruptcy estate."  Chief Justice Amaraich approved this proposal.  Order Approving Compensation Proposal at 1 (July 9, 2008).

Receiver Sigrah (and the creditors) learned that debtor Ioanis Panuelo had transferred various properties of the receivership estate to "insiders."  In re Panuelo, 16 FSM R. 339, 343 (Pon. 2009).  Ann Panuelo was the principal insider.4  Order Directing Issuance of Subpoena at 1 (June 4, 2009).  Because Ann Panuelo was uncooperative in her telephonic deposition and because Ioanis Panuelo, in his testimony was unable to answer various questions about his finances and properties but said his wife would know, Chief Justice Amaraich approved, in advance, the Receiver’s expected expenses to depose Ann Panuelo in Honolulu.  Order Approving Expenses and Creditors’ Meeting(s) at 2 (August 12, 2009).5

At the December 22, 2009 hearing, the parties informed the court that

the debtor was not insolvent and that the Application for an Initial Distribution, which had been prepared with the debtor’s assistance and agreement, represented the parties’ best efforts to create a plan whereby the creditors’ claims would be paid in an orderly manner and that the debtor’s counsel and the Receiver had agreed to work together on a second distribution plan to continue the process after the first distribution was started.
Order Authorizing Parties to Implement Their Agreed Initial Distribution Plan at 1 (Dec. 31, 2009).  Chief Justice Amaraich ordered

that the Receiver and the debtor, Ioanis Panuelo, shall be permitted to proceed as outlined in the December 15, 2009 Application for an Initial Distribution, and that the Receiver shall open a bank account, in her capacity as the court-appointed Receiver in this case, for the purpose of receiving and depositing the funds collected pursuant to the Initial Distribution plan, and from which the funds will be disbursed when payments are authorized by court order.

Id. at 2.

On July 6, 2010, the court convened a hearing on all pending matters, at which counsel for all creditors, debtor Ioanis Panuelo and his counsel, and Ann Panuelo, Ioanis’s wife, were present.  Order at 1 (Aug. 8, 2010).  Ann Panuelo appeared pro se and waived her right to separate counsel.  Id. at [unnumbered] 3.  The hearing was recessed so that all persons present could negotiate an "agreement on the payments to be made by Debtor on the creditor claims."  Id. at 1.  A comprehensive agreement was reached and presented to the court and the hearing was "recessed to July 7, 2010[,] to allow time for the execution of the deeds by Debtor and Mrs[.] Panuelo required for implementation of the agreement."  Id. at [unnumbered] 2.  The court accepted the parties’ agreement and ordered its implementation.  Id.  Ann Panuelo conveyed one property back to Ioanis who then conveyed it to a trustee to hold while the debtor made monthly payments to the Receiver for the benefit of the creditors whose claims the debtor acknowledged and agreed to pay off in full by January 9, 2011, and further agreed that if they were not, then the transferred property was, as both Panuelos had agreed, to be sold.  Id. at [unnumbered] 3-5.  Various pending motions were either withdrawn or deferred until to a hearing to be set in mid-January, 2011.  Id. at [unnumbered] 5-8.  The debtor’s payments were tardy and then ceased.

Ioanis Panuelo died intestate on November 8, 2010.  After the scheduled January 18, 2011 hearing, the court granted various motions, allowed the creditors to submit supplemental claims because Ioanis Panuelo had not been insolvent when he applied for bankruptcy protection, and ordered the property held in trust to be sold.  Order Granting Motions at 3-4 (Jan. 18, 2011).  The court also ordered the receiver to assume the tenants’ lease payments at that and another property, Order on Assumption of Lease Payments at [Unnumbered] 2 (Jan. 26, 2011), and ordered those tenants to make their rental payments to the receiver, Order Directing Payments from Lessees at 1 (Jan. 26, 2011).  The next month’s receiver’s report indicated partial success in collecting lease payments and interference from Ann Panuelo and Leilani Shoniber.  Receiver’s Rep. on Assumption of Lease Payments; Mot. for Approval of Necessary Admin. Expenses; Application for Distrib. at 2-4 (Feb. 14, 2011).  Shortly afterwards, settlement was reached with the Panuelo family through its representative, David Panuelo.

The Receiver then, with all creditors’ approval, accepted a $391,960.43 payment from the debtor’s family as a full and complete settlement of all claims in the bankruptcy case, and stated that the sum was available for distribution by court order.  Order Approving Settlement at 1 (Feb. 25, 2011).  The court approved the settlement, FSM Bankr. R. 9019(a), and ordered specific sums be paid to the creditors in their order of priority under the bankruptcy statute.  Order Approving Settlement at 1-2 (Feb. 25, 2011).  The court next, on March 2, 2011, issued a series of orders terminating the sale of the property held in trust; terminating the orders assuming lease payments and directing those payments to the receiver; terminating orders related to Ioanis Panuelo’s properties in Hawaii; and ordering that the title to the property then held in trust be transferred to Ioanis Panuelo’s estate.

On March 7, 2011, Sigrah filed the Receiver’s Application for Final Compensation and the Receiver’s Motion for Distribution and Closure of Bank of Guam account.  The court approved receiver compensation of $35,570.78 as reasonable because it conformed to the court’s July 9, 2008 Order Approving Compensation Proposal; to the compensation statute, 31 F.S.M.C. 112(4); and to the bankruptcy rule for a receiver’s application for compensation or reimbursement, FSM Bankr. R. 2016(a).  Order Approving Application for Compensation at 1 (Mar. 21, 2011).  The court commented that "in light of the case’s complexity and the Receiver’s diligence, the compensation sought was well-earned."  Id.  The court then noted that the creditors had all been paid, and the receiver’s compensation and reimbursement approved, and ordered the receiver to close the receivership account and distribute any remaining sum therein to the debtor.  Order Closing Case at 1 (Mar. 21, 2011).  The court thanked Sigrah for her efforts, hard work, diligence, and persistence.  Id. at 2.  The bankruptcy case was closed on March 21, 2011.

On October 11, 2011, Ann Panuelo filed in the Pohnpei Supreme Court, a Petition to Probate Estate [of] Ioanis Panuelo, with several attachments, including a certified copy of the bankruptcy court’s March 2, 2011 Order to Transfer Title to Parcel No. 023-A-121, in which the bankruptcy court returned that lot’s ownership to Ioanis Panuelo’s heirs.  The probate case was docketed as PCA No. 257-11.  On February 1, 2017, the probate court made Ann Panuelo the "administratrix and representative of the estate [of Ioanis Panuelo] with full powers."  Order Granting Pet. to Probate the Estate of Ioanis Panuelo at 2 (Pon. Sup. Ct. PCA No. 257-11 Feb. 1, 2017).

IV.  Prima Facie Case and Summary Judgment Procedure

Since there is no genuine issue about these material facts gleaned from the files of the Ioanis Panuelo bankruptcy case and the Ioanis Panuelo probate case, Sigrah has made out a factual basis for a prima facie case for summary judgment.

To overcome a prima facie case of entitlement to summary judgment, the non-moving party cannot rely on unsubstantiated denials to carry her burden, but must present some competent evidence that would be admissible at trial which demonstrates that there is a genuine issue of fact.  See, e.g., Chuuk v. Secretary of Finance, 8 FSM R. 353, 362 (Pon. 1998).  In responding to a summary judgment motion, an adverse party may not rest upon the mere allegations or denials in her pleading, but her response, by affidavits or as otherwise provided in Rule 56, must set forth specific facts showing that there is a genuine issue for trial.  Suldan v. Mobil Oil Micronesia, Inc., 10 FSM R. 574, 579 (Pon. 2002); Bank of the FSM v. Hebel, 10 FSM R. 279, 282 (Pon. 2001).  If she does not so respond, summary judgment, if appropriate, will be entered against her.  Suldan, 10 FSM R. at 579 (Pon. 2002); Hebel, 10 FSM R. at 282.

Jacob v. Johnny, 20 FSM R. 612, 618-19 (Pon. 2016).  Once the movant has made out a prima facie case that there are no triable issues of fact, the nonmovant then has the burden to show by competent evidence that there is a triable issue of material fact.  Helgenberger v. Bank of Hawaii, 19 FSM R. 139, 143 (App. 2013) (citing Nanpei v. Kihara, 7 FSM R. 319, 325 (App. 1995)); Neth v. FSM Social Sec. Admin., 20 FSM R. 362, 366 (Pon. 2016) (once the summary judgment movant presents a prima facie case of entitlement to summary judgment, the burden shifts to the non-movant to produce evidence showing that a genuine issue of material fact remains for resolution); Pacific Int’l, Inc. v. FSM, 20 FSM R. 220, 222 (Pon. 2015) (same).  But here, the nonmovant did not respond in writing at all, let alone produce any competent evidence that could show that there is a genuine issue of material fact in dispute.

V.  The Motion’s Merits

Since no genuine issues of material fact are subject to dispute, only Panuelo’s conclusory claims of overpayment, the court will turn to the question of whether Sigrah is entitled to judgment as a matter of law.

A.  Plaintiff Ann Panuelo’s Standing

1.  Ann Panuelo, individually

Sigrah first contends that Ann Panuelo lacks standing to bring this action because she was not an "interested party"6 in Bankruptcy Case No. PB 001-2007.  Standing is another threshold issue.  Tilfas v. Heirs of Lonno, 21 FSM R. 51, 56 (App. 2016).  To have standing to bring a matter before a court, the plaintiff must allege facts establishing a concrete injury and a sufficient causal relationship between the injury and the alleged violation and that the injury can be remedied by a judicial decree.  Mwoalen Wahu Ileile en Pohnpei v. Peterson, 20 FSM R. 632, 646 (Pon. 2016).  Thus,

First, the party must allege a sufficient stake in the outcome of the controversy and it must have suffered some threatened or actual injury resulting from the allegedly illegal action or erroneous court ruling.  Second, the injury must be such that it can be traced to the challenged action and must be of the kind likely to be redressed by a favorable decision.

FSM v. Udot Municipality, 12 FSM R. 29, 40 (App. 2003).  As an individual, Ann Panuelo has no sufficient stake in the dispute’s outcome.  She was neither an "interested party" nor a co-debtor.  Her involvement with the case was as an insider who had improperly received property of the debtor’s estate and converted it to her use.  Thus, Ann Panuelo, as an individual, lacks standing and should be dismissed.  Although, arguably, as the insider recipient of a fraudulent transfer, Ann Panuelo may be an "interested party" solely with respect to the fraudulently transferred property.

2.  As Administratrix of Ioanis Panuelo’s Estate

Ann Panuelo also brought this action in her capacity as the administratrix of Ioanis Panuelo’s estate.  "The . . . general principle of law is that an administratrix stands in decedent’s shoes and has no greater or other rights or powers than the decedent would have if living."  Pierce v. Higgins, 531 A.2d 1221, 1226 (Del. Fam. Ct. 1987) (quoted by In re Estate of Farren, 131 A.3d 817, 832 (Del. Ch. Ct. 2016)); see also South Trust Bank v. Ford, 835 So. 2d 990, 993 (Ala. 2002) ("an administratrix stands in the shoes of the decedent").  Thus, if Ioanis Panuelo would, if living, have standing to bring this suit, then Ann Panuelo, as administratrix of his estate would have standing to do so.

Ioanis Panuelo was the debtor, and thus an "interested party."  31 F.S.M.C. 102(8).  The court will presume that the debtor, as an interested party, has sufficient stake in the matter for standing to try to reopen his own bankruptcy case.

Under Bankruptcy Rule 5010, "[a] case may be reopened on motion of the debtor or other interested party under § 311(2) of Title 31."  This lawsuit is not a motion and 31 F.S.M.C. 311(2) applies only to a corporate debtor that is unable to implement a part of its reorganization plan or comply with a provision of the court’s confirmation order.  Ioanis Panuelo was an individual debtor, not a debtor corporation, and his bankruptcy case was a liquidation, not a reorganization, case.  Bankruptcy Rule 5010 does not apply.

However, Bankruptcy Rule 9024 also permits reopening a bankruptcy case.  It provides that:

FSM Civil Procedure Rule 60 applies in cases under Title 31 but a motion to reopen a case under Title 31 or for the reconsideration of an order allowing or disallowing a claim against the estate entered without a contest is not subject to the one year limitation prescribed in Rule 60(b).

FSM Bankr. R. 9024.  Panuelo’s suit for alleged overpayments to creditors and to the receiver seeks reconsideration of, or relief from, the bankruptcy case orders allowing those claims by the creditors and the receiver.  Ann Panuelo, as the administratrix of Ioanis Panuelo’s estate, would have standing to seek relief under Bankruptcy Rule 9024.

This lawsuit is obviously not a motion to reopen a case under Bankruptcy Rule 9024 (or for relief from judgment under Civil Procedure Rule 60), since such a motion would necessarily be filed in the original case, in which the final order or judgment, from which relief is sought, was entered.  But Civil Procedure Rule 60 (and thus Bankruptcy Rule 9024) authorizes one other procedure for relief - an independent action for relief.  Rule 60(b)

does not limit the power of a court to entertain an independent action to relieve a party from a judgment, order, or proceeding, or to set aside a judgment for fraud upon the court.  The procedure for obtaining any relief from a judgment shall be by motion as prescribed in these rules or by an independent action.

FSM Civ. R. 60(b).

Since Panuelo named Sigrah, the receiver, as the sole defendant, Panuelo would have standing, in this action, to recover alleged overpayments to her.  Panuelo also seeks to recover alleged overpayments to the creditors but did not name them as defendants.  If Panuelo wishes to recover those alleged overpayments, she would have to proceed against those creditors.  See, e.g., Setik v. Pacific Int’l, Inc., 17 FSM R. 304, 306 (Chk. 2010) (due process requires that any action that seeks to reclaim a property interest must, at a minimum, name the property’s current owner as a party).  She has not.

B.  Statute of Limitations

Sigrah also contends that this lawsuit is barred by the statute of limitations.  In her view, all of Panuelo’s claims, even if she has standing, are barred by a two-year statute of limitations, either because personal injury suits have, under 6 F.S.M.C. 803(4), a two-year limitation period, or because, under 6 F.S.M.C. 804, estate administrators must commence suit within two years of their appointment.

Even though it is an affirmative defense, a court may dismiss claims (or grant summary judgment thereon) based on the statute of limitations, when the allegations in the plaintiff’s complaint demonstrate that its claims are subject to that defense.  Tilfas v. Kosrae, 21 FSM R. 81, 87 (App. 2016); Palikkun v. FSM Social Sec. Admin., 19 FSM R. 314, 317 (Kos. 2014); Aunu v. Chuuk, 18 FSM R. 48, 51 (Chk. 2011).

Even though Ann Panuelo, as the administratrix of Ioanis Panuelo’s estate may have standing, the statute of limitations may still bar her suit.  This is because:

Any action by or against the executor, administrator, or other representative of a deceased person for a cause of action in favor of, or against, the deceased shall be brought only within two years after the executor, administrator, or other representative is appointed or first takes possession of the assets of the deceased.

6 F.S.M.C. 804.7  The Pohnpei Supreme Court appointed Ann Panuelo administratrix of Ioanis Panuelo’s estate on February 1, 2017, although she may well have first taken possession of the assets of the deceased much earlier.  The time within which she, as administratrix, could have filed suit ran out, at the very latest, on February 1, 2019.  This suit was filed on March 22, 2019.  It was thus too late.  It is time-barred.

Ann Panuelo would still be time-barred even if she has standing to sue in her individual capacity, although the court is not convinced that, as Sigrah argues, that the two-year "personal injury" statute of limitations applies because the complaint does not allege any personal injury.8  It seems more likely that the six-year catch-all statute of limitations would apply.  Even then, the six years would start to run no later than the closure of the Ioanis Panuelo bankruptcy case in 2011, and it would have run out in 2017.  Thus, Panuelo’s claims in her individual capacity, would still be time-barred.

But, if, as the court considered above, this is an independent action for relief, then no statute of limitations would apply because there is no time limit on when an independent action may be brought, although the doctrine of laches is applicable and undue delay can bar relief.  Setik v. Mendiola, 21 FSM R. 537, 554 (App. 2018).  "Laches is an important consideration in bankruptcy proceedings because the chief purpose of the bankruptcy laws is ‘to secure a prompt and effectual administration of and settlement of the estate of all bankrupts within a limited period.’"  Crosby v. Mills, 413 F.2d 1273, 1276 (10th Cir. 1969) (quoting Katchen v. Landy, 382 U.S. 323, 328, 86 S. Ct. 467, 472, 15 L. Ed. 2d 391, 396 (1966)).  This will be considered in the next section.

Since Panuelo lacks standing to maintain this lawsuit in her individual capacity and since the statute of limitations bars any action by her as the administratrix of Ioanis Panuelo’s estate, the court need not analyze Sigrah’s motion any further in order to grant her summary judgment, as a matter of law, on the merits.  Nonetheless, in an abundance of caution, the court will consider the motion’s other grounds.

C.  Res Judicata

Sigrah also asserts that this action is barred by the res judicata doctrine.  "[R]es judicata, although an affirmative defense, can be raised in a motion to dismiss made before an answer has been filed when the prior action’s preclusive effect can be determined from the complaint’s face."  Setik v. Mendiola, 21 FSM R. 537, 555 (App. 2018) (citing Chuuk Health Care Plan v. Waite, 20 FSM R. 282, 284-85 (Chk. 2016)).  The res judicata doctrine "’bars the relitigation by parties or their privies of all matters that were or could have been raised in a prior action that was concluded by a final judgment on the merits, and which has been affirmed on appeal or for which time for appeal has expired.’"  Waguk v. Waguk, 21 FSM R. 60, 71 (App. 2016) (quoting Iriarte v. Etscheit, 8 FSM R. 231, 237 (App. 1989)).

Ann Panuelo, as the administratrix of Ioanis Panuelo’s estate is the successor in interest to Ioanis Panuelo, and is his privy.  Estate of Gallen v. Governor, 21 FSM R. 477, 488 (Pon. 2018) (estate administrator is in privity with decedent).  Under the res judicata doctrine, "’a judgment entered in a cause of action conclusively settles that cause of action as to all matters that were or might have been litigated and adjudged therein.’"  Waguk, 21 FSM R. at 69 (quoting Berman v. FSM Supreme Court (II), 7 FSM R. 11, 16 (App. 1995)).  The matters of Sigrah’s compensation and the amounts to be paid on the creditors’ claims were all matters litigated in the Ioanis Panuelo bankruptcy case.

Res judicata would thus bar any suit by Ann Panuelo, as administratrix of Ioanis Panuelo’s estate, over this bankruptcy proceeding (and in her individual capacity, she would still lack standing), unless the suit is an independent action for relief.  "An independent action seeks to set aside a judgment in another case that is presumed to be final and res judicata unless the independent action succeeds."  Setik v. Mendiola, 21 FSM R. 537, 555 (App. 2018).  The court has determined, supra pt. V.A.2, that since this suit seeks to vacate or alter the bankruptcy court’s orders in the bankruptcy case, but is not a motion to reopen that case under either Bankruptcy Rule 5010 or 9024, it could be an independent action for relief as allowed by Bankruptcy Rule 9024 adopting Civil Procedure Rule 60(b) by reference.

Under FSM case law, an independent action to set aside a judgment or final order must satisfy five essential elements:  1) a judgment which ought not, in equity and good conscience, to be enforced; 2) a good defense to the alleged cause of action on which the judgment is founded; 3) fraud, accident, or mistake which prevented the defendant in the judgment [who would be the plaintiff in an independent action] from obtaining the benefit of his defense; 4) the absence of fault or negligence on the part of the defendant; and 5) the absence of any adequate remedy at law.  Arthur v. FSM Dev. Bank, 16 FSM R. 653, 659 (App. 2009).  If any element is missing, the court cannot take equitable jurisdiction of the case.  Id.

"Independent actions must, if Rule 60(b) is to be interpreted as a coherent whole, be reserved for those cases of injustices which, in certain instances, are deemed sufficiently gross to demand departure from rigid adherence to the doctrine of res judicata."  United States v. Beggerly, 524 U.S. 38, 46, 118 S. Ct. 1862, 1867-68, 141 L. Ed. 2d 32, 40 (1998).  "Due to the universal interest in the finality of judgments, resort to an independent action is only permitted under unusual and exceptional circumstances."  In re Apex Int’l Mgt. Servs., Inc., 215 B.R. 245, 249 (Bankr. M.D. Fla. 1997) (discussing application of similar U.S. Bankruptcy Rule 9024).9  And a court "will not grant relief if the complaining party has or by exercising proper diligence would have had, an adequate remedy at law, or by proceedings in the original action to open, vacate or otherwise obtain relief against, the judgment."  Winfield Assocs., Inc. v. Stonecipher, 429 F.2d 1087, 1090 (10th Cir. 1970).

Generously construed, Panuelo’s allegations, by alleging fraud, address an independent action’s third element.  But, as seen below in the next part, infra pt. VI.D.1, the fraud claim is not adequately pled.  Panuelo’s allegations do not actually address the other elements.  Panuelo does not mention the final orders and judgment in the bankruptcy case.  She only mentions Sigrah’s alleged actions and her supposed motives for those actions, but not any of the court orders that authorized those actions.  The closest Panuelo comes to asserting a defense is that Sigrah and the creditors benefited from "properties and monies" that did not belong to them.  That is not a defense.  That Sigrah and the creditors did not own the "properties and monies" is not a defense to the creditors’ claim that they were owed the money and that Sigrah was, among other things, paid to get them what they were owed, or as much as legally permissible of what they were owed.  Panuelo does not allege an absence of fault or negligence on her, or on Ioanis Panuelo’s, part.  It is not likely either could.  During the bankruptcy case, Ann Panuelo was the recipient of a fraudulent transfer, and Ioanis Panuelo was the transferor of that transfer.  The only thing unusual or exceptional about the result in the Panuelo bankruptcy case was that the person who voluntarily sought bankruptcy protection turned out not to be insolvent or bankrupt so that the creditors ended up being paid in full after which the debtor still retained substantial assets.  That, of course, cannot be a ground to reopen the Ioanis Panuelo bankruptcy case.

When the proponent’s "own fault, negligence or carelessness, however innocent, contributed to the entry of the original judgment, an independent action for relief is improper unless the evidence to establish injustice is ’practically conclusive.’"  In re Nelson, 234 B.R. 528, 536 (Bankr. M.D. Fla. 1999).  Panuelo, in response to Sigrah’s motion, has not produced any evidence to establish any injustice.  Nor has Panuelo shown that she did not have an adequate remedy at law if she had acted sooner (such as when she first filed the probate case).

D.  Failure to State a Claim

Sigrah also contends that neither count of Panuelo’s complaint states a claim for which the court could grant Panuelo relief.  For the reasons explained below, the court grants Sigrah summary judgment on both the misrepresentation and fraud count and the conversion count.

1.  Misrepresentation and Fraud

Panuelo alleges that Sigrah’s appointment as receiver, Sigrah’s alleged failure to negotiate a reorganization plan with debtor Ioanis Panuelo, Sigrah’s compensation as receiver, all constituted actionable fraud or misrepresentation.  Panuelo further alleges that Sigrah misrepresented certain, but unspecified documents to her and forced her to sign them.  The elements of fraud or intentional misrepresentation are:  1) a knowing or deliberate misrepresentation by the defendant, 2) made to induce action by the plaintiff, 3) with the plaintiff’s justifiable reliance upon the misrepresentations, 4) to the plaintiff’s detriment.  Setik v. Mendiola, 21 FSM R. 537, 556 (App. 2018); Pohnpei v. Kailis, 6 FSM R. 460, 462 (Pon. 1994).

Civil Procedure Rule 9(b) requires that in allegations of fraud that the circumstances constituting the fraud must be stated with particularity,10 and the extent of this particularity is guided by Rule 8(a), which requires a short and plain statement of the claim.  Kailis, 6 FSM R. at 462.  "When alleging fraud, a plaintiff must state with particularity the circumstances constituting fraud and ’must identify particular statements and actions and specify why they are fraudulent.  Conclusory allegations do not satisfy the requirements of Rule 9(b) and subject the pleader to dismissal.’"  Arthur v. Pohnpei, 16 FSM R. 581, 597 (Pon. 2009) (quoting Veal v. First Am. Sav. Bank, 914 F.2d 909, 913 (7th Cir. 1990)).  Panuelo’s fraud allegations are mostly conclusory.  Panuelo does not identify any particular statement as a misrepresentation and specify what that statement was and why that statement is fraudulent, and how Ioanis Panuelo relied on that misrepresentation to his detriment.  Panuelo’s allegations thus do not satisfy Rule 9(b)’s pleading requirements.

When, even assuming Panuelo’s allegations are true, they do not state that she (or Ioanis Panuelo) relied upon the misrepresentations she alleges to be the basis of the fraud, much less that her reliance induced her to act to her detriment, and when they do not state that Sigrah prevented her, or Ioanis Panuelo, from presenting his or her case to the court, the court, viewing the facts and inferences in the light most favorable to the non-movant, cannot but conclude that Sigrah is entitled to judgment as a matter of law.  Sorech v. FSM Dev. Bank, 18 FSM R. 151, 160 (Pon. 2012).

Sigrah is therefore entitled to summary judgment on Panuelo’s misrepresentation and fraud claim.

And, if Panuelo’s fraud allegation was also meant to be an allegation of fraud on the court, a further ground to set aside a judgment that Bankruptcy Rule 9024 (by adopting Civil Procedure Rule 60) permits to be brought in an independent action, that allegation would also be wanting.  "The doctrine of fraud upon the court is narrow and limited in scope.  Not every allegation of fraud rises to the level of fraud upon the court."  Gekas v. Met-L-Wood Corp., 80 B.R. 912, 917 (N.D. Ill. 1987).  A finding of fraud on the court is justified only by the most egregious misconduct directed to the court itself, such as bribery of a judge or fabrication of evidence by counsel, and must be supported by clear, unequivocal and convincing evidence.  FSM Dev. Bank v. Ehsa, 20 FSM R. 286, 291 (Pon. 2016); Ramp v. Ramp, 11 FSM R. 630, 636 (Pon. 2003).  A grant of relief for

fraud on the court ordinarily requires that:  1) the fraud is directed to the judicial machinery itself and is not fraud between the parties or fraudulent documents, false statements or perjury; 2) the fraud involves the most egregious conduct, such as bribery of a judge or the fabrication of evidence in which an attorney is implicated; and 3) the party perpetrating the fraud acted with an intent to deceive or defraud the court.  Further, the fraud must have actually deceived the court.

In re Mucci, 488 B.R. 186, 193 (Bankr. D.N.M. 2013) (citations and internal quotations omitted).  These requirements are strictly applied because a finding of fraud on the court is exempt from time limits and because "’it permits the severe consequence of allowing a party to overturn the finality of a judgment.’"  Id. at 193-94 (quoting Zurich N. Am. v. Matrix Serv., Inc., 426 F.3d 1281, 1291 (10th Cir. 2005)).  Panuelo’s allegations do not meet the fraud on the court requirements and Panuelo did not produce any competent evidence to rebut Sigrah’s motion.

2.  Conversion

Panuelo also alleges a cause of action for conversion.  The elements of a conversion action are the plaintiff’s ownership and right to possession of the personal property, the defendant’s wrongful or unauthorized act of dominion over the plaintiff’s property inconsistent with or hostile to the owner’s right, and resulting damages.  Ihara v. Vitt, 19 FSM R. 595, 602 (App. 2014).

Panuelo alleges that Sigrah "committed fraudulent conversion" by "taking into her possession plaintiff’s monies and properties . . . and using them . . . for her own use and benefit and for the use and benefit of third parties to whom the properties and monies do not belong" and by "collect[ing] funds and plac[ing] them into a Bank of Guam checking account under her own name only and misappropriat[ing] the collected monies and properties of the plaintiffs’ [sic] for her own beneficial use and profit."  Compl. paras. 17-18 (Mar. 22, 2019).  Panuelo seems to misconceive a bankruptcy receiver’s duties.  The receiver is required, subject to court order, to administer the assets of the receivership estate,11 31 F.S.M.C. 203(2), and, with the court’s approval, to distribute those assets to the debtor’s creditors pursuant to the priorities set out in 31 F.S.M.C. 107 and 108.  31 F.S.M.C. 204.  And, to accomplish those ends, the receiver is granted, but not limited to, certain powers, including the powers to void preferences and fraudulent transfers.  31 F.S.M.C. 202.

Sigrah has shown, with competent evidence, that that is what she did with court approval.  Sigrah has shown, with competent evidence, that she was regularly appointed receiver of Ioanis Panuelo’s [voluntary] bankruptcy estate and properly took the estate’s money and property into her possession with the bankruptcy court’s approval and with the full knowledge of the bankruptcy case’s interested parties, and then distributed the receivership estate’s assets to creditors only whenever the court approved the distribution.  Sigrah has also shown, with competent evidence, that her rate of compensation was regularly set by the court and that the court regularly determined its final amount and authorized its payment.12

Panuelo has not, in response, produced any competent evidence showing that there is a genuine issue of material fact in dispute in this regard.  Indeed, Panuelo did not produce any evidence at all in response because she declined to file a written opposition to Sigrah’s motion.  Thus, Sigrah is entitled to summary judgment on Panuelo’s conversion claim.

Furthermore, Panuelo was disingenuous when she pled, as part of a factual basis for her conversion claim, that Sigrah "had full knowledge of" and ignored the "pending" Ioanis Panuelo probate case.  Compl. para. 7 (Mar. 22, 2019).  The Ioanis Panuelo bankruptcy case was wound up and closed in March 2011, about seven months before the Ioanis Panuelo probate case was opened in October 2011 (almost a year after Ioanis Panuelo’s death).13  Sigrah could not ignore a case that did not exist because it had not yet been filed.

But even if the Ioanis Panuelo probate case had been opened before the bankruptcy case was closed, the result would not change.  Ioanis Panuelo voluntarily filed a bankruptcy case under Chapter 2 (liquidation).  "The debtor’s death . . . shall not abate a liquidation case under chapter 2 of Title 31.  In such event, the estate shall be administered and the case concluded in the same manner, so far as possible, as though the death . . . had not occurred."  FSM Bankr. R. 1016.  Thus, the bankruptcy court should have continued to preside over and wind up Ioanis Panuelo’s bankruptcy case even if his probate case was filed before the bankruptcy case was closed.  Thus, no conversion was involved.

VI.  "Voluntary" Recusal and Duty to Serve

Lastly, in both her June 6, 2019 and her July 17, 2019 motions to continue the earlier, court-set motion hearing dates of June 13, 2019 and July 30, 2019,14 Panuelo expresses her belief that the present justice has "conflicts" from previous involvement in the In re Panuelo bankruptcy case and suggests that the justice should "voluntarily recuse" himself.  No actual motion for recusal or disqualification was filed,15 and the suggestion or request was denied from the bench at the start of the September 10, 2019 hearing.

I served as the law clerk under the judges who were assigned the In re Panuelo bankruptcy case.  Law clerks are generally bound by the same ethical rules as the judges they serve.  "[T]he clerk is forbidden to do all that is prohibited to the judge."  Hall v. Small Bus. Admin., 695 F.2d 175, 179, 65 A.L.R. Fed. 766, 772 (5th Cir. 1983); cf. Price Bros. Co. v. Philadelphia Gear Corp., 629 F.2d 444, 447 (6th Cir. 1980) ("a judge may not direct his law clerk to do that which is prohibited to the judge"), cert. denied, 454 U.S. 1099 (1981).

Panuelo does not direct the court’s attention to any particular ground that she believes is disqualifying.  She may be under the impression that either the In re Panuelo (Bankr. No. PB 001-2007) court rulings or that knowledge learned in that case would disqualify any judge, who handled the In re Panuelo case, from presiding over this case.  That is not so.

The disqualifying ground must come from an extrajudicial source or conduct.  Heirs of Tulenkun v. Aliksa, 19 FSM R. 191, 195 (App. 2013); FSM v. Wainit, 13 FSM R. 293, 294-95 (Chk. 2005).  "The general rule is that the jurist’s knowledge of disqualifying facts must have originated from an extrajudicial source."  Halbert v. Manmaw, 20 FSM R. 245, 250 (App. 2015).  Extrajudicial means "[o]utside court; outside the functioning of the court system."  Black’s Law Dictionary 665 (9th ed. 2009).  The In re Panuelo bankruptcy proceeding was not an "extrajudicial" matter.  Also, "[t]he type of partiality at which 4 F.S.M.C. 124(1) is aimed is extrajudicial bias, or bias resulting from information received by the judge outside of the judicial proceeding or proceedings in which the judge has participated."  Berman v. Rosario, 15 FSM R. 337, 341 (Pon. 2007) (citing Hartman v. Bank of Guam, 10 FSM R. 89, 96 (App. 2001)).  I received no such knowledge outside of the judicial proceedings in which I served the assigned justices.

Furthermore, judicial rulings, even if adverse, made in the course of other judicial proceedings are not grounds for disqualification under 4 F.S.M.C. 124(1).  Peterson v. Anson, 20 FSM R. 657, 659 (App. 2016); Halbert v. Manmaw, 20 FSM R. 245, 250 (App. 2015); FSM v. Wainit, 11 FSM R. 424, 431 (Chk. 2003); FSM v. Ting Hong Oceanic Enterprises, 7 FSM R. 644, 649 (Pon. 1996); FSM v. Skilling, 1 FSM R. 464, 484 (Kos. 1984), aff’d, 2 FSM R. 209 (App. 1986).  Since those rulings could not be a basis to disqualify either of the justices who presided over the Ioanis Panuelo bankruptcy from presiding over this case, their rulings cannot be a basis to disqualify me for my service under them.

Except when the judge is disqualified under 4 F.S.M.C. 122 or 124, a judge is obligated to hear the cases assigned to that judge.  See Halbert, 20 FSM R. at 250; Hartman v. Bank of Guam, 10 FSM R. 89, 98 (App. 2001); George v. Palsis, 20 FSM R. 174, 177 (Kos. 2015); Berman v. Rosario, 15 FSM R. at 341.  This is because a judge must exercise the power to recuse conscientiously and cannot use it to avoid difficult or controversial cases or to merely accommodate nervous litigants or counsel.  Fu Zhou Fuyan Pelagic Fishery Co. v. Wang Shun Ren, 7 FSM R. 601, 605 (Pon. 1996); Skilling, 1 FSM R. at 471.  When it is not the judge’s duty to disqualify himself from a case to which he has been assigned, it is the judge’s duty to serve.  A judge cannot "voluntarily recuse" himself except when that recusal is required.  Then it would be the judge’s duty to do so.

VII.  Conclusion

Accordingly, Nora Sigrah is granted summary judgment.  The clerk shall enter judgment in her favor.  As the prevailing party, Sigrah is entitled to her costs of action.  FSM Civ. R. 54(d).

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