FSM SUPREME COURT TRIAL DIVISION
Cite as Edgar v. Truk Trading Corp.
13 FSM Intrm. 112 (Chk. 2005)

[13 FSM Intrm. 112]

ANASTASIO EDGAR, ASTIN YSAM, and ATANAITA
JUDA, individually, and as duly appointed
representatives of Wito Clan of Nepukos, Weno,
 
Plaintiffs,
 
vs.
 
TRUK TRADING CORPORATION (T.T.C.),
 
Defendant.
 
CIVIL ACTION NO. 2003-1021
 
FINDINGS OF FACT AND CONCLUSIONS OF LAW
 
Dennis K. Yamase
Associate Justice
 
Trial:  December 2-3, 21-23, 2004
Decided:  January 18, 2005

[13 FSM Intrm. 113]

APPEARANCES:

For the Plaintiffs:                  Johnny Meippen, Esq.
(Edgar, Ysam, & Juda)        P.O. Box 705
                                           Weno, Chuuk FM 96942
 
For the Defendant:              Wesley Simina, Esq.
                                           P.O. Box 94
                                          Weno, Chuuk FM 96942

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HEADNOTES

Civil Procedure ) Joinder, Misjoinder, and Severance
     When a suit is being brought by three of the representative committee members within the clan and is not a suit being brought by the clan as a whole and thus did not require authorization by the clan; when the interest of the plaintiffs who represent part of the clan may be adverse to the interests of the other clan committee members, who may not be proper plaintiffs based on the causes of actions alleged in the suit; and when complete relief can be accorded among those already parties without the joinder of the other committee members, a motion to join those other committee members as indispensable parties will be denied. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 115 (Chk. 2005).
 
Constitutional Law ) Case or Dispute ) Standing
     A party has standing to sue where that party has a sufficient stake or interest in an otherwise justiciable controversy to obtain a judicial resolution of that controversy. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 115 (Chk. 2005).
 
Constitutional Law ) Case or Dispute ) Standing
     The plaintiffs have a sufficient stake or interest to maintain a case when they allege that they were not paid a portion of the funds they were specifically entitled to under the terms of the agreement to sell land to the defendant, but that someone else wrongfully received those funds and when they claim as damages only those funds that they are entitled to, but were not paid. The court is thus in a position to resolve the matter by awarding appropriate damages. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 115 (Chk. 2005).
 
Contracts; Torts ) Negligence
     When the plaintiffs allege two separate claims for the same damages in this suit and one sounds in contract and alleges a breach of a purchase agreement since part of the plaintiffs’ agreed share of the purchase price was not paid to them and the other claim sounds in tort and alleges that the defendant was negligent in wrongfully releasing the remaining balance to someone else without taking such precautionary measures that a reasonably prudent person would be expected to take as a holder of funds that plaintiffs were entitled to, the court will analyze the contract claim first and finding a breach of the purchase agreement, need not address the plaintiffs’ negligence tort claims. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 117 (Chk. 2005).
 
Contracts ) Third Party Beneficiary
     When there was a binding purchase agreement between a land buyer and a clan land seller and the plaintiffs were intended beneficiaries of that contract and when that contract could only be modified by a consensus decision by the seller’s clan members evidenced by the agreement of five or more of

[13 FSM Intrm. 114]

the six designated clan members but the purported modification did not contain five genuine signatures of the designated committee representatives, there was a breach of the purchase agreement entitling plaintiffs to damages. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 117-18 (Chk. 2005).
 
Contracts ) Damages
     When there has been a breach of a purchase agreement entitling the plaintiffs to damages, the plaintiffs are entitled to what they expected to receive if the purchase agreement had not been breached. Edgar v. Truk Trading Corp., 13 FSM Intrm. 112, 118 (Chk. 2005).

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COURT’S OPINION

DENNIS YAMASE, Associate Justice:

     This matter went to trial on December 2 to 3, 2004 and on December 21 to 22, 2004. Closing arguments were made on December 23, 2004. Plaintiffs were represented by Johnny Meippen, Esq. and defendant was represented by Wesley Simina, Esq. The General Manager of T.T.C., Fidel Irons, was present at the trial as representative of defendant T.T.C. Anastasio Edgar, one of the plaintiffs was present at the trial. The following persons testified at trial: plaintiffs Anastasio Edgar and Atanaita Juda, and the General Manager of T.T.C. Fidel Irons and the Internal Auditor for T.T.C. Frankalino Johnson.

Preliminary Matters

     Prior to the commencement of trial, defendant T.T.C. moved to add indispensable parties and, if that was not feasible, to dismiss. Defendant also made a request to continue the trial until after the decision on its motions were rendered.

     Defendant’s motion to add indispensable parties contended that the three other members of the committee created to represent the Wito Clan should be indispensable parties to this action since this is an action on behalf of the Wito Clan requiring the agreement of five or more of the Wito Clan committee members and since the rights of these three missing committee members would also be affected by the decision in this matter. The other three committee members include Simion Ewar, Risten Rueney, and Aitea Ewar. Defendant also asserted that Simion Ewar was an indispensable party because the funds in dispute were paid to him. Defendant could have filed a third party complaint against Simion Ewar but chose not to do so. Ewar resides on Saipan and therefore might be difficult to join.

     Plaintiffs contend that they are suing only for their own share of the funds due to them as representatives of their respective parts of the Wito Clan and therefore no other parties are indispensable to this action. They contend that the actions of the defendant T.T.C. were in breach of the purchase agreement for the sale of the land Nekou, brought about damages to them that are redressible by the court, and that T.T.C. can bring a claim against Simion Ewar later if it sees fit.

     After considering defendant’s written submissions and hearing oral arguments from both parties on the motions, the court ruled that the parties that defendant seeks to add are not indispensable to this action and that the motion to dismiss cannot prevail, as on the face of the complaint, plaintiffs have standing. The court stated that it would provide written reasons for its ruling on the motions at a later time. The following are its reasons.

[13 FSM Intrm. 115]

     The court’s ruling on the defendant’s motions was based on the determination that this suit is being brought by three of the representative members within the Wito Clan and is not a suit being brought by the Wito Clan as a whole. Therefore, this suit did not require authorization by five or more of the Wito Clan committee members. In fact, the interest of the plaintiffs who represent part of the Wito Clan may be adverse to the interests of the other Wito Clan committee members Simion Ewar and Risten Rueney, and they may not be proper plaintiffs based on the causes of actions alleged in this suit. The court also determined that complete relief can be accorded among those already parties without the joinder of Simion Ewar or the other two Wito Clan committee members.

     The plaintiffs in this suit are alleging that the defendant has breached the purchase agreement for the sale of the land Nekou by not paying certain sums owed to them. They further allege that the defendant owed them a duty of care to make payments to the proper persons and that defendant breached its duty by making payment to a person not entitled to it.

     A party has standing to sue where that party has a sufficient stake or interest in an otherwise justiciable controversy to obtain a judicial resolution of that controversy. In re Parcel No. 046-A-01, 6 FSM Intrm. 149, 153 (Pon. 1993). The plaintiffs allege that they were not paid a portion of the funds they were specifically entitled to under the terms of the agreement for the sale of the land Nekou to T.T.C., but that Simion Ewar wrongfully received those funds. They claim as damages the funds that they are entitled to, but were not paid to them. The plaintiffs have a sufficient stake or interest in this controversy and the court is in a position to resolve this matter by awarding appropriate damages.

     The defendant’s motions were therefore denied and trial commenced on December 2, 2004. Following the trial, this matter was taken under advisement. This opinion now sets forth the court’s findings of fact and conclusions of law based upon the evidence presented at trial.

Findings of Fact

     1.  On April 9, 2003, the Wito Clan of Nepukos, represented by its appointed representatives ("committee"), and Truk Trading Corporation entered into a real property purchase agreement ("Purchase Agreement") for the fee simple purchase of Nekou, Lot No. 040-A-23. Plaintiffs’ Ex. 2 ) Purchase Agreement.

     2.  The committee of six appointed representatives of the Wito Clan ("Wito Clan committee") is composed of Simion Ewar, Risten Rueney, Atanaita Juda, Aitea Ewar, Astin Ysam, and Anastasio Edgar. Plaintiffs’ Ex. 7 ) Appointment of Clan Representatives.

     3.  The Wito Clan committee was designated to represent the Wito Clan in negotiations or dealings with T.T.C. in connection with its sale of the land Nekou to T.T.C. It was agreed by the Wito Clan that five or more of these representatives shall indicate a consensus decision by the Wito Clan. Plaintiffs’ Ex. 7 ) Appointment of Clan Representatives.

     4.  In the matters pertaining to T.T.C.’s purchase of the land Nekou, the attorney representing the Wito Clan of Nepukos was Johnny Meippen, Esq. and the attorney representing T.T.C. was Wesley Simina, Esq.

     5.  The Purchase Agreement called for a purchase price for Nekou of $800,000. From the $800,000, previous advances were to be deducted, which included, but were not limited to, sums of $15,000 and $10,000 made previously, as well certain amounts for attorneys fees, and purchase orders.

[13 FSM Intrm. 116]

     6.  In a letter dated April 11, 2003, Wito Clan attorney Johnny Meippen informed T.T.C. attorney Wesley Simina of the Wito Clan’s agreed to breakdown of the purchase price for the sale of the land Nekou. Plaintiffs’ Ex. 1 ) Letter from Meippen to Simina (Apr. 11, 2003).

     7.  The Purchase Agreement specifically set forth that the following sums were to be deposited into the respective bank accounts of Atanaita Juda ($99,500), Aitea Ewar ($85,000), Risten Rueney ($70,700), Astin Ysam ($99,500), and Anastasio Edgar ($79,000). Plaintiffs’ Ex. 2 ) Purchase Agreement at 2.

     8.  After the previous advances, attorneys fees, and purchase orders were deducted and the specific sums deposited into the respective bank accounts of the five aforementioned Wito Clan committee members, there was a balance on the purchase price for the land Nekou of $139,894.13. Defendant’s Ex. B ) Letter from Simina to Meippen Re: Status of balance of purchase price (Apr. 22, 2003).

     9.  In a letter dated April 22, 2003, T.T.C. attorney Wesley Simina informed Wito Clan attorney Johnny Meippen of the balance of the purchase price with a request that the Wito Clan inform T.T.C. on how they wanted this balance allocated. Defendant’s Ex. B ) Letter from Simina to Meippen Re: Status of balance of purchase price (Apr. 22, 2003).

     10.  In a letter marked as received by T.T.C. on April 30, 2003, Wito Clan attorney Johnny Meippen informed T.T.C. attorney Wesley Simina that the remaining balance of $300,000 less attorney’s fees and other advances should be deposited in equal divisions into the respective accounts as per the terms of the Purchase Agreement. Defendant’s Ex. C ) Letter from Meippen to Simina.

     11.  On May 2, 2003 Simion Ewar met with T.T.C. General Manager Fidel Irons and requested that the remaining balance be released to him. At that meeting Ewar was informed that he would need the consent of at least five of the Wito Clan committee members for T.T.C. to release the remaining balance to him. Ewar requested that a document be drafted for him to obtain the necessary consent of the Wito Clan committee members. Wito Clan attorney Johnny Meippen was not present at this meeting.

     12.  On May 2, 2003 after the first meeting with T.T.C. General Manager Fidel Irons, Simion Ewar met again with Irons and provided him with a Verification Letter with the purported signatures of himself, Risten Rueney, Aitea Ewar, Atanaita Juda, and Anastasio Edgar. Plaintiffs’ Ex. 8 ) Verification Letter. None of the signatures were signed in Irons’ presence or were notarized. At this meeting T.T.C. attorney Wesley Simina and T.T.C. treasurer Irene Braxton were present. Wito Clan committee member Risten Rueney was with Simion Ewar at this meeting. Wito Clan attorney Johnny Meippen was not present at this meeting. Irons, Simina, and Braxton all inspected the Verification Letter. After the inspection, T.T.C. attorney Simina advised T.T.C. General Manager Irons that payment could be authorized based on the Verification Letter.

     13.  Following the inspection of the Verification Letter by Fidel Irons, Wesley Simina, and Irene Braxton, T.T.C. General Manager Irons authorized the release of a check by T.T.C. in the amount of $139,894.13 to Simion Ewar. Plaintiffs’ Ex. 5 ) T.T.C. Request for Check Payment (No. 16895). Based upon the Request for Check Payment (No. 16895) authorization, a check numbered 27516, dated May 2, 2003 was issued by T.T.C. in the name of Simion Ewar. Plaintiffs’ Ex. 4 ) Copy of Check 27516.

     14.  On May 3, 2003, Simion Ewar, T.T.C. General Manager Fidel Irons, and T.T.C. attorney Wesley Simina signed a Receipt of Final Payment in which all signatories acknowledged the receipt of

[13 FSM Intrm. 117]

the final payment under the Purchase Agreement in the amount of $139,894.13 by T.T.C. check number 27516. Plaintiffs’ Ex. 6 ) Receipt of Final Payment. Plaintiffs Anastasio Edgar, Astin Ysam, and Atanaita Juda did not receive any portion of the $139,894.13 remaining balance paid out by T.T.C.

     15.  In a letter dated May 3, 2003, T.T.C. attorney Wesley Simina informed Wito Clan attorney Johnny Meippen of the circumstances leading to the final payment of the balance being made to Simion Ewar instead of being divided equally among the five Wito Clan committee members set forth on page 2 of the Purchase Agreement. Plaintiffs’ Ex. 3 ) Letter from Simina to Meippen Re: Notice of Final Payment on Balance (May 3, 2003).

     16.  Based upon the testimony of Atanaita Juda and Anastasio Edgar, along with comparisons of their signatures on the Verification Letter, Plaintiffs’ Ex. 8, with their signatures on the Purchase Agreement, Plaintiffs’ Ex. 2, and the Appointment of Clan Representative, Plaintiffs’ Ex. 7, Juda and Edgar did not sign the Verification Letter.

Conclusions of Law

     Plaintiffs allege two separate claims for damages in this suit. One sounds in contract and alleges a breach of the Purchase Agreement since plaintiffs’ share of the remaining $139,894.13 balance was not paid to them. The other claim sounds in tort and alleges that defendant T.T.C. was negligent in wrongfully releasing the remaining balance to Simion Ewar without taking such precautionary measures that a reasonably prudent person would be expected to take as a holder of funds that plaintiffs were entitled to. The court analyzes the contract claim first and finds a breach of the Purchase Agreement, I therefore need not address the plaintiffs’ negligence tort claims.

     Based on the court’s findings, there was a binding Purchase Agreement between the Wito Clan of Nepukos and Truk Trading Corporation for the sale of the land Nekou for the sum of $800,000. T.T.C. had deducted certain sums from the sale price of the land for advances, attorneys fees, and purchase orders and part of the sale price had been deposited into the bank accounts of Atanaita Juda, Aitea Ewar, Risten Rueney, Astin Ysam, and Anastasio Edgar leaving a balance on the purchase price of $139,894.13. Both parties were in substantial agreement on the remaining balance amount.

     Pursuant to the terms of the Purchase Agreement and further set forth in the undated letter from Wito Clan attorney Johnny Meippen to T.T.C. attorney Wesley Simina, the balance of $139,894.13 was to be divided equally and deposited into the bank accounts of Atanaita Juda, Aitea Ewar, Risten Rueney, Astin Ysam, and Anastasio Edgar. Each of these five Wito Clan committee members is an intended beneficiary of the contract between T.T.C. and the Wito Clan of Nepukos.

     The Purchase Agreement at page 2 specifically stated that: "TTC shall not be involved whatsoever in the subsequent allocations or divisions of such funds deposited into the respective Accounts nor shall it be liable or be blamed in any way for any disagreement or misuse or misappropriation of the funds after the deposits therein, as between the Clan members."

     The only way the arrangements for payment under the Purchase Agreement could possibly be modified was by consensus decision by the Wito Clan in the manner set forth in the Appointment of Clan Representatives. See Plaintiffs’ Ex. 7. That document appointed Simion Ewar, Risten Rueney, Aitea Ewar, Atanaita Juda, Anastasio Edgar, and Astin Ysam as those individuals who shall represent and act on behalf of the Wito Clan in negotiations or dealings with T.T.C. in connection with the purchase of the land Nekou. This document was verified and acknowledged in Subsection (7) of the Purchase Agreement at page 4. Subsection (1) of the Appointment of Clan Representatives specifically stated that: "To simplify matters within our clan, we hereby agree that what is decided by five (5)

[13 FSM Intrm. 118]

individuals, or more, shall indicate a consensus decision by our clan."

     Based on the court’s findings that the Verification Letter submitted by Simion Ewar to T.T.C. General Manager Fidel Irons was not signed by Atanaita Juda and Anastasio Edgar there was no consensus decision by the Wito Clan to authorize a modification to the terms of the Purchase Agreement and the agreed upon method of payment for the remaining balance of $139,894.13.

     This court, therefore, finds that there was a breach of the Purchase Agreement entitling plaintiffs to damages. The plaintiffs are entitled to what they expected to receive if the Purchase Agreement had not been breached.

Damages

     Plaintiffs in their complaint ask this court for a total award of $85,400, or severally in the amount of $27,800 for each plaintiff plus cost for bringing this suit. The remaining balance of $139,894.13 was proven. Each plaintiff’s share is therefore $27,978.83, for a total of $83,936.49. As prevailing parties, the plaintiffs shall submit their costs to the clerk within seven days of entry of this order. FSM Civ. R. 54(d). The clerk will then issue judgment accordingly.

Conclusion

     Defendant Truk Trading Corporation breached the Purchase Agreement by failing to pay the plaintiffs, intended beneficiaries of the contract, the full amount due to them under the Purchase Agreement. Judgment will therefore issue in the plaintiffs’ favor for the remaining amounts due the plaintiffs.

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