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[12 FSM Intrm. 532]
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YOSIWO P. GEORGE, Chief Justice:
A status hearing was held on June 14, 2004. Canney Palsis, MLSC, appeared on behalf of the Plaintiffs. Defendant Kosrae State Government and Governor Rensley A. Sigrah, in his official capacity ("State") was represented by Arthur Buck, Acting Attorney General. Defendant Rensley A. Sigrah, in his individual capacity, appeared pro se on his own behalf. Tulensa N. Sigrah, Shiro R. Sigrah and Bob R. Sigrah were also present at the hearing. After hearing from the parties, I took the matter under
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advisement. This Order sets forth my further rulings in this case and my reasoning.
I. Parcel 071-K-14
The State and Plaintiff Shiro informed the Court that Plaintiff Shiro R. Sigrah, on behalf of Heirs of Richard P. Sigrah, had reached a settlement with Defendant State. A copy of the Settlement Agreement was submitted to the Court. Plaintiff Shiro also filed a Request for Dismissal with Prejudice, with respect to the Complaint as to the claims by Plaintiff Shiro R. Sigrah, on behalf of Heirs of Richard P. Sigrah only. The State consented to Plaintiff Shiro's Request for Dismissal. Accordingly, the Request for Dismissal is granted. The Complaint, as to Plaintiff Shiro R. Sigrah, on behalf of the Heirs of Richard P. Sigrah only, is dismissed with prejudice. The Temporary Restraining Order, as ordered on June 4, 2004 and entered on June 8, 2004, as it applies to Shiro's parcel 071-K-14, is hereby dissolved immediately. The State may take action in accordance with the Settlement Agreement executed by the parties, in compliance with State Law and applicable regulations. The caption of Civil Action No. 61-04 shall be amended here on forward to reflect the only remaining plaintiff, Tulensa N. Sigrah, on behalf of the Heirs of Nena Sigrah.
II. Parcel 090-K-11
The parties informed the Court that Plaintiff Tulensa Sigrah, on behalf of the Heirs of Nena Sigrah, and Defendant State had agreed to transformation of the Temporary Restraining Order into a Preliminary Injunction upon the expiration of the Temporary Restraining Order on June 18, 2004. Accordingly, a Preliminary Injunction shall take effect upon the expiration of the Temporary Restraining Order on June 18, 2004 at 5 pm. The Preliminary Injunction shall apply only to Plaintiff Tulensa's parcel 090-K-11, and shall apply as follows:
1. Defendants shall not take any action, cause, instruct or consent to any action to be taken to trespass, access, bulldoze, clear, landscape, or grade land, or to damage or destroy crops, or otherwise interfere with Plaintiff Tulensa's parcel 090-K-11
2. This Preliminary Injunction applies to Defendant State, their officers, agents, servants, employees, attorneys and upon those persons in active concert or participation with them who receive actual notice of the order by personal service or otherwise. This Preliminary Injunction does not apply to individual persons who have previously utilized the right of way through parcel 090-K-11.
3. This Preliminary Injunction shall remain in effect until final disposition of this matter, either through trial, motion or settlement.
4. Any violation of the terms of this Preliminary Injunction may result in a proceeding for contempt of court, and subject the offender to penalties, including fines and imprisonment.
III. Disputed Boundaries
The State raised the issue of a disputed area of ownership on parcel 090-K-11, which is owned by Plaintiff Tulensa Sigrah and the Heirs of Nena Sigrah, pursuant to the Certificate of Title registered on April 6, 1992. The ownership and boundaries of parcel 090-K-11 are defined by the Certificate of Title and the corresponding maps and cadastral plats. Certificates of Title are prima facie evidence of ownership as therein stated against the world. Therefore this Court must attach a presumption of correctness to them. Sigrah v. Kosrae State Land Commín, 9 FSM Intrm. 89 (Kos. S. Ct. Tr. 1999); Etscheit v. Nahnken of Nett, 7 FSM Intrm.390 (Pon. 1996).
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The Determination of Ownership for parcel 090-K-11 was issued on December 30, 1988. There was no appeal taken on the Determination of Ownership issued for parcel 090-K-11. Consequently, the ownership and boundaries established by the Determination of Ownership for parcel 090-K-11, became final 120 days after service, pursuant to former Kosrae State Code, Title 11, Chapter 6 (Determination and Registration of Interests in Land - Land Commission Procedure, repealed October 1, 2001). Accordingly, pursuant to established precedent, and in accordance with our State's Torrens system land registration process, this Court attaches a presumption of correctness to the Certificate of Title issued for parcel 090-K-11, including its ownership and its boundaries. The State's argument regarding disputed boundaries of parcel 090-K-11 are rejected as without merit.
IV. Lease Agreement
The State argued that it tried to secure a supply of gravel for the public interest, considering cost effectiveness and quality of the rock. The State argued that it was most cost effective to develop the Puk site than to use the existing Tenwak quarry or another existing quarry to extract and crush rock. For the purpose of evaluating the State's arguments and ensuring that the lease agreements for development of the Puk quarry were made in the public interest, for quality of rock at the least cost, the State is ordered to file a report which compares the cost of developing Puk to the cost of continuing the crush rock at Tenwak. The cost of developing Puk shall include, but not be limited to the following factors: lease rent and crop damage payment for all parcels which have a lease agreement executed with the State for the purpose of development of Puk quarry; the value of Public Works PSS and contract labor, equipment usage and fuel to develop access through, grade and landscape all parcels necessary for the development of the Puk quarry; costs of relocation of the crusher and other necessary equipment. The State shall submit its report by July 9, 2004.
V. Compliance with Financial Management Regulations.
The State argued that no bidding was required for this type of contract because it was not a construction contract, as no building was being constructed. The State agrees that the lease agreement for parcels 090-K-06 and 090-K-10 is for the purchase of personal property, that being crushed rock and aggregate. The Financial Management Regulations, Section 4.2(b) requires free, open and competitive bidding for purchases more than $25,000. It is undisputed that open and competitive bidding was not conducted for selection of a new quarry site, nor for the purchase of rock and aggregate before the lease agreement for parcels 090-K-06 and 090-K-10 was executed. The lease agreement for parcels 090-K-06 and 090-K-10 provides payment for unprocessed rock, processed aggregates and armor rock. These payments are described as "royalties."
The State argued that there was an emergency situation which exempted the lease agreement from the bidding requirements. The State claims that the emergency situation is the extreme shortage of aggregate available for construction projects. While there may indeed be a shortage of aggregate available on Kosrae State currently, the shortage situation was created through the State's own procedures, through delay in either negotiating an extension with Tenwak or following the process required by law to select a new site for a quarry and purchase rock.
The Financial Management Regulations, Section 4.17 provides the requirements for an exemption from open bidding. Section 4.17(a) requires the Governor, in the event of an emergency affecting public health, safety, or convenience to so declare in writing, describing the nature of the emergency and danger, and that an exemption to open bidding will be made to the extent necessary to avoid the stated danger. It is undisputed that the Governor did not prepare a written statement declaring an emergency, in compliance with Section 4.17(a). Based upon the evidence presented at the hearings and the documents submitted by the parties, it appears that the execution of the Lease Agreement for
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parcels 090-K-06 and 090-K-10 did not comply with the Financial Management Regulations requiring open and competitive bidding, and for obtaining an exemption from open bidding. The Acting Attorney General is requested to investigate this matter further in the public interest and take all actions appropriate and necessary to ensure the State's compliance with State Law and regulations, pursuant to his statutory duty.
VI. Compliance with the State Government Ethics Act
The State argued that it did comply with the requirements of the State Government Ethics Act because it was the Lt. Governor Jackson, and not the Governor, who signed the Lease Agreement for parcels 090-K-06 and 090-K-10 on behalf of Kosrae State. The State further argues that it no longer relies upon Kosrae State Code, Section 11.103 as the authority for executing the lease agreement for parcels 090-K-06 and 090-K-10, which is jointly owned by Rensley, Burlin and Leonard Sigrah.
Kosrae State Code, Section 11.103 specifies the procedure for state acquisition of land. Section 11.103(1) states that "[t]he State acquires an interest in private land at the direction of the Governor." Interests in land include fee simple ownership, easements, rights of way and leases. See generally John G. Sprankling, Understanding Property Law (2000). Section 11.103(1) provides the procedure for State acquisition of an interest in private land, through negotiation, while Section 11.103(2) provides the procedure for State acquisition of an interest in private land through court proceedings.
State Law No. 5-39, which added the new Section 11.103 states as its title: "To amend the Kosrae State Code of Laws to establish the procedures to be followed by the State of Kosrae in the exercise of its power to acquire ownership and possession of property, including interests in private land . . . ." The title language of State Law No. 5-39 clearly establishes Section 11.103 as the mandatory procedure to be followed by the State of Kosrae in the exercise of its power to acquire interests in land. Accordingly, the State is required to follow Section 11.103 procedures in the exercise of its power to acquire interests in private land, including a lease interest.
Kosrae State Code, Section 11.103 provides that the State acquires an interest in private land at the direction of the Governor. Consequently, all interests in private land, including the lease interest in parcels 090-K-06 and 090-K-10 must be acquired at the direction of the Governor. If the lease interest in parcels 090-K-06 and 090-K-10 was acquired at the direction of the Lt. Governor, or at the direction of any person other than the Governor, then it appears that lease interest was acquired in violation of Kosrae State Code, Section 11.103(1). If however, the lease interest in parcels 090-K-06 and 090-K-10 was acquired at the direction of the Governor, in compliance with Section 11.103, then it appears that the lease interest was acquired in violation of the Kosrae State Ethics Act as Rensley A Sigrah as co-owner of the subject parcels.
The Acting Attorney General is requested to investigate this matter further in the public interest, pursuant to his statutory duty, and to take all actions appropriate and necessary to ensure the State's compliance with all State Laws and regulations, including if appropriate, actions under Section 10 of the State Government Ethics Act. [Kos. S.C. tit. 20.]
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