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[11 FSM Intrm. 14]
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MARTIN YINUG, Associate Justice:
The plaintiff Bank of the Federated States of Micronesia ("the Bank") seeks to recover amounts owed by the defendants on a promissory note. It filed its motion for summary judgment on February 23, 2001. The defendants did not respond to the motion. Under Rule 6(d) of the FSM Rules of Civil Procedure, failure to respond to a motion may be deemed consent to the granting of the motion. At the same time, even where a party fails to respond, the motion may be granted only if it is grounded both in law and fact. Kyowa Shipping Co. v. Wade, 7 FSM Intrm. 93, 95 (Pon. 1995). Further, the movant must go forward as to the nonmovant's affirmative defenses, since the burden of demonstrating that no triable fact issues exist encompasses affirmative defenses as well as the movant's own factual allegations. FSM Dev. Bank v. Rodriguez Corp., 2 FSM Intrm. 128, 130 (Pon. 1985). The Bank's unopposed motion for summary judgment discussed the usury defense, but not sufficiently to show that no triable fact issues existed with respect to that defense. By order of August 7, 2001, the court requested additional briefing on the point, and also directed the defendants to file any response within five days of service upon them of the additional briefing. Delays apparently resulted from a change of the Bank's counsel, and the additional briefing was not filed until May 17, 2002. The defendants did not respond to the additional briefing, just as they did not respond to the motion for summary judgment in the first instance.
For the reasons below, the motion for summary judgment is granted.
The promissory note at issue was executed on June 25, 1995. Governing law in effect at that time was 34 F.S.M.C. 204, which provided in pertinent part as follows.
(1) In commercial credit transactions in which the principal amount is less than $1,000,000, no person may directly or indirectly receive or charge interest which exceeds the prime rate in effect on the date of the transaction plus four percent.
(2) The provisions of subsection (1) of this section notwithstanding, in commercial credit transactions in which the principal amount is $1,000,000 or less, no person may directly indirectly receive or charge interest which exceeds an annual percentage rate of 24 percent per annum, or if the lender is a commercial bank or savings institution, no person may directly or indirectly receive or charge interest which exceeds by more than 8 percent the lowest rate paid by the lender on any saving deposits or savings account not including certificates of deposit.
[11 FSM Intrm. 15]
According to the motion, the interest rate the Bank charged the defendants never exceeded 12%. The Bank further urges in its motion that the interest it charged was at all relevant times within the limits established by 34 F.S.M.C. 204 as it was in effect when the note was signed. However, this contention is potentially at odds with § 204(2) if the lowest rate paid by the Bank on savings deposits or savings account plus 8% was less than the interest charged. Section 207 of the predecessor statute and § 206 of the present statute confer remedies on the borrower where the lender charges interest in excess of the specified limits. The Bank did not address this possible usury violation under § 204(2) in its original motion, and the court requested additional briefing.
The portion of 34 F.S.M.C. set out immediately above was subsequently amended by Public Law No. 10-52. Congress passed Public Law No. 10-52 on October 23, 1997. Pursuant to Article IX, Section 22 of the FSM Constitution, the legislation subsequently became law without the President's signature ten days later on November 2, 1997. This suit was filed on October 19, 2000. The new § 204 provides in its entirety that "[i]n commercial credit transactions, no person may directly or indirectly receive or charge interest which exceeds an annual percentage rate of twenty-four percent." Thus the new § 204 deletes any reference to the lowest rate plus 8 percent as a limit on interest charged by a commercial bank. "[T]he repeal of a statutory prohibition against usury releases any penalties imposed, and permit[s] enforcement of the debtor's obligation in accordance with the agreement of the parties." 45 Am. Jur. 2d Interest and Usury § 13 (1969) (footnotes omitted, but citing in n.17 to Ewell v. Daggs, 108 U.S. 143, 2 S. Ct. 408, 27 L. Ed. 682 (1883)). It follows that the parties' agreement is governed by existing law. Even assuming that the 12% annual interest rate violated the prior § 204 at some point in the past, it is well within the 24% annual interest rate limit contained in § 204 as it is now in effect. There is no usury violation.
Accordingly, the Bank's motion for summary judgment is granted. Within 10 days of the date hereof the Bank should submit an affidavit of attorney's fees along with a proposed form of judgment.
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