FSM SUPREME COURT TRIAL DIVISION

Cite as Amayo v. MJ Co., 14 FSM Intrm. 355 (Pon. 2006)

[14 FSM Intrm. 355]

ALFREDO AMAYO, and ELSA AMAYO, individually,

and as next friends of ALFIE AMAYO, APRIL

AMAYO, and JILLEEN AMAYO,

Plaintiffs,

vs.

MJ COMPANY, RON PANGELINAN, and IOANIS

PANUELO d/b/a IP ENTERPRISES,

Defendants.

CIVIL ACTION NO. 1999-091

MEMORANDUM AND ORDER DISPOSING OF PENDING MOTIONS

Martin Yinug

Associate Justice

Decided: August 17, 2006

APPEARANCES:

For the Plaintiffs:   Daniel J. Berman, Esq.

                                P.O. Box 2069

                                Kolonia, Pohnpei   FM   96941

For the Defendant:   Ron Moroni, Esq.

       (Panuelo)           134 West Soledad Avenue, Suite 402

                                   Hagatna, Guam   96910

Former Counsel:   Craig D. Reffner, Esq.

                                Law Office of Fredrick L. Ramp

                                P.O. Box 1480

                                Kolonia, Pohnpei   FM   96941

* * * *

HEADNOTES

Civil Procedure ) Sanctions; Constitutional Law ) Notice and Hearing

    Rule 11 sanctions may be imposed on a party or his attorney or both. Since the constitutional guarantee of due process requires that the person, upon whom a sanction might be imposed, must be

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given notice of that possibility and the opportunity to be heard before any sanction can be imposed, before the court could consider the sanctions motion as a whole, the party’s former counsel, who had withdrawn before the sanctions motions were filed, had to be given notice that Rule 11 sanctions might be imposed and an opportunity to be heard on the issue as it might relate to him. The court therefore ordered that the motion be served on former counsel, and that the clerk serve a copy of the court order on him. Amayo v. MJ Co., 14 FSM Intrm. 355, 359 (Pon. 2006).

Civil Procedure ) Sanctions

    When the court ordered that during the pendency of appellate proceedings, a defendant would make payments of $500 a month to the plaintiffs’ counsel as part of the conditions the parties agreed to in order for the court to stay trial proceedings while appellate review was pending, but no appellate proceedings were ever pending and when on November 1, 2005, at the plaintiffs’ request, the court vacated the stay order, the defendant was not under any court-ordered obligation to pay $500 a month for any month after October 2005 and will not be sanctioned for his failure to do so. Amayo v. MJ Co., 14 FSM Intrm. 355, 360 (Pon. 2006).

Contempt

    The court will not issue an order to show cause why a defendant should not be held in contempt for his failure to appear at the start of trial on February 5, 2001 since civil contempt is inapplicable because the civil contempt is a remedial measure to coerce compliance, and the court can not now coerce the defendant to appear on time on February 5, 2001. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 (Pon. 2006).

Civil Procedure ) Parties

    No law requires a civil litigant to be physically present in the courtroom during trial if that party is present through counsel. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 n.1 (Pon. 2006).

Evidence ) Witnesses

    A witness must obey the subpoena that summoned him or her or get that subpoena quashed. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 n.1 (Pon. 2006).

Contempt; Statutes of Limitation ) Criminal Offenses

    Any request in 2005 for an order to show cause why a defendant should not be held in criminal contempt for failure to appear at the start of the February 5, 2001 trial as required by the witness subpoena served on him, comes much too late since anyone charged with criminal contempt must be charged within three months of the contempt. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 (Pon. 2006).

Civil Procedure ) Sanctions

    The court will not impose a sanction for the failure to pay a $722.23 sanction when the order imposing the sanction did not set a deadline for its payment and the party has stated his willingness to pay any court-ordered sums. Instead, the court will set a deadline and if the defendant has not made that court-ordered payment by that date, the court will entertain a motion to strike his pleadings and enter a default. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 (Pon. 2006).

Attorneys’ Fees; Civil Procedure ) Sanctions

    The court will not award attorney’s fees of $200 an hour, counsel’s usual hourly rate on Guam because FSM court awards of reasonable attorney’s fees are based on the customary fee in the locality in which the case is tried. One hundred ten to one hundred twenty dollars an hour would be in the range reasonable for a case tried on Pohnpei. Amayo v. MJ Co., 14 FSM Intrm. 355, 361 (Pon. 2006).

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Civil Procedure ) Sanctions

    Trial preparation is time that counsel would need to do prepare before any eventual retrial in the case, and so should not be part of any sanction award relating to a stay. Amayo v. MJ Co., 14 FSM Intrm. 355, 361-62 (Pon. 2006).

Civil Procedure ) Sanctions

    No sanctions will be awarded under Rule 16(f) because the FSM Supreme Court Rules of Civil Procedure do not contain a Rule 16(f) or an equivalent of Rule 16(f) of the U.S. Federal Rules of Civil Procedure. The rule does not exist. Amayo v. MJ Co., 14 FSM Intrm. 355, 362 (Pon. 2006).

Civil Procedure ) Sanctions

    Under Rule 11, a party’s or an attorney’s signature on a paper is the signer’s certification that, among other things, it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. When a paper is signed in violation of Rule 11, the court must impose upon the person who signed it, a represented party, or both, an appropriate sanction. Amayo v. MJ Co., 14 FSM Intrm. 355, 362 (Pon. 2006).

Attorney and Client ) Attorney Discipline and Sanctions; Civil Procedure ) Sanctions

    Under Rule 11, the court’s discretion includes the power to impose sanctions on the client alone, solely on counsel, or on both. This is desirable because there are circumstances in which one of these actions is more appropriate than the other two. For example, when the offending conduct relates to work that lies within the counsel’s supposed competence, especially when it is beyond the client’s understanding, it is the former who should be sanctioned, not the latter. Amayo v. MJ Co., 14 FSM Intrm. 355, 362 (Pon. 2006).

Civil Procedure

    Although the court must first look to FSM sources of law, when an FSM court has not previously construed aspects of an FSM civil procedure rule which is identical or similar to a U.S. counterpart, the court may look to U.S. sources for guidance in interpreting those aspects. Amayo v. MJ Co., 14 FSM Intrm. 355, 362 n.2 (Pon. 2006).

Civil Procedure ) Sanctions

    Since seeking appellate review and a stay may be characterized as work that lies within the counsel’s supposed competence and could be beyond the client’s understanding, if Rule 11 sanctions were imposed, counsel rather than client may be the appropriate person to sanction. Amayo v. MJ Co., 14 FSM Intrm. 355, 362 (Pon. 2006).

Civil Procedure ) Sanctions

    Although bad faith is not a necessary element for Rule 11 sanctions, bad faith will, of course, subject a party, the party’s attorney, or both to Rule 11 sanctions. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 n.3 (Pon. 2006).

Civil Procedure ) Sanctions

    When the defendant fulfilled the portion of the bargained-for stay that the stay required him to do personally (by making the $500 monthly payments) and when he cannot be expected to grasp that while review of the recusal issue could be sought through an original action in the appellate division by way of a petition for an extraordinary writ (of prohibition), appellate review of the other issues was dependent on the trial court’s Appellate Rule 5(a) certification and then on the appellate court’s exercise of its discretion to permit an appeal, it appears that if Rule 11 sanctions are to be imposed, they must be imposed on the defendant’s former counsel. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 (Pon. 2006).

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Attorney and Client ) Withdrawal of Counsel; Civil Procedure ) Sanctions

    Withdrawal does not immunize counsel from Rule 11 sanctions. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 n.4 (Pon. 2006).

Mandamus and Prohibition

    A petition for a preemptory writ, such as prohibition or mandamus, is an expedited procedure that does not usually require the certification of a trial court record, or extended briefing, or even a transcript, or oral argument. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 (Pon. 2006).

Civil Procedure ) Sanctions

    For Rule 11 purposes, counsel’s conduct should be appraised at the time the signed paper was filed. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 (Pon. 2006).

Civil Procedure ) Sanctions

    Counsel cannot be sanctioned for merely being wrong about the law or having an exaggerated sense of the probability of success on the line he was pursuing. But counsel cannot avoid the sting of Rule 11 sanctions under the guise of a pure heart and empty head. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 (Pon. 2006).

Civil Procedure ) Sanctions

    A court may decline to impose Rule 11 sanctions where the mistake is inadvertent, although many cases hold that sanctions are mandatory when a Rule 11 violation is found. Amayo v. MJ Co., 14 FSM Intrm. 355, 363 (Pon. 2006).

Civil Procedure ) Sanctions

    When the court has not found that either the defendant or his counsel acted in bad faith when they initially requested the stay for appellate review, the court cannot use its inherent powers to impose sanctions because a finding of bad-faith conduct is necessary before a court can use its inherent powers to sanction. Amayo v. MJ Co., 14 FSM Intrm. 355, 363-64 (Pon. 2006).

Civil Procedure ) Sanctions

    Rule 37(b) sanctions may be imposed on a party only if the party fails to obey an order to provide or permit discovery and cannot be imposed for conduct that did not involve the party’s failure to obey an order to provide or permit discovery. Amayo v. MJ Co., 14 FSM Intrm. 355, 364 (Pon. 2006).

Attorneys’ Fees; Civil Procedure ) Sanctions

    The court’s power to award attorney’s fees for vexatious conduct, will usually be exercised to include an attorney’s fees award as a part of damages in a final judgment, not to impose sanctions at a pretrial stage. Amayo v. MJ Co., 14 FSM Intrm. 355, 364 (Pon. 2006).

Civil Procedure ) Summary Judgment

    When the movants seek summary judgment on the issue of a defendant’s liability and rely, in most part, on evidence presented during a trial for a factual basis to support their motion and their motion ignores the appellate court’s clear instruction that that trial was a nullity and the judgment had to be vacated and a new trial conducted, the appellate division clearly expects the trial court to resolve all liability and damages issues through the course of a new trial, not by reliance on the original trial. The court will not attempt to take shortcuts contrary to the appellate court’s direction and will deny the summary judgment motion. Amayo v. MJ Co., 14 FSM Intrm. 355, 364 (Pon. 2006).

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COURT’S OPINION

MARTIN G. YINUG, Associate Justice:

    This order sets out the next step to be taken in this case and disposes of pending motions. First, a brief summary of the case’s posture is in order. This case was tried on February 5, 2001. Defendant Ioanis Panuelo did not appear at the start of trial that morning, but he and his then counsel appeared that afternoon. Amayo v. MJ Co., 10 FSM Intrm. 371, 377 (Pon. 2001). After judgment was entered, Panuelo, represented by new counsel, moved for a new trial and for relief from judgment and when that was denied, id. at 373, appealed. The appellate court concluded that Panuelo had not been given adequate and proper notice of the trial, vacated the judgment, and ordered a new trial. Panuelo v. Amayo, 12 FSM Intrm. 365, 372 (App. 2004).

    Shortly before the new trial was to start (late April 2005), Panuelo moved to recuse the trial judge. This was denied from the bench and a written memorandum of law later entered. Amayo v. MJ Co., 13 FSM Intrm. 242, 247-49 (Pon. 2005). Panuelo then moved for a stay while he sought appellate review of the recusal denial and some discovery issues. The parties agreed to the terms of a stay pending appellate review, and the court entered the stay. Amayo v. MJ Co., 13 FSM Intrm. 259, 261-62 (Pon. 2005). The court later denied Panuelo’s request for Appellate Rule 5(a) certification of the discovery issues since those issues were not certifiable under that rule or appealable interlocutory orders. Amayo, 13 FSM Intrm. at 262-63.

    Panuelo did not file any papers in the appellate division. Panuelo’s counsel was permitted to withdraw from representing him in October 2005. On October 8, 2005, the Amayos moved to lift the stay, and on November 1, 2005, the court vacated the stay order.

I.   Present Posture

    On November 1, 2005, the plaintiffs (Amayos) filed their Motion for Order to Show Cause Why Defendant Should Not Be Held in Contempt, and on November 29, 2005, the Amayos filed their Motions to Strike Answer; Entry of Default; Sanctions for Failure to Pay $722.23; Sanctions of $6,850.00; Order to Show Cause for Failure to Pay $500.00 per Month; and Partial Summary Judgment on Liability. These motions ask for, among other things, that monetary and other sanctions, such as the striking of Ioanis Panuelo’s answer and a determination of liability, be imposed for Panuelo’s alleged recent misconduct in this litigation. The Amayos base their request for sanctions on the court’s inherent power and on Civil Procedure Rules 11, 16(f), and 37.

    Rule 11 sanctions may be imposed on a party or his attorney or both. The constitutional guarantee of due process requires that the person, upon whom a sanction might be imposed, must be given notice of that possibility and the opportunity to be heard before any sanction can be imposed. In re Sanction of Woodruff, 10 FSM Intrm. 79, 84 (App. 2001); In re Sanction of Michelsen, 8 FSM Intrm. 108, 110 (App. 1997). Thus, before the court could consider the sanctions motion as a whole, Panuelo’s counsel, who had withdrawn before the motions were filed, had to be given notice that Rule 11 sanctions might be imposed and an opportunity to be heard on the issue as it might relate to him. The court therefore ordered the Amayos to serve their motion on Panuelo’s former counsel, Craig D. Reffner (Law Office of Frederick L. Ramp), and that the clerk serve a copy of the court order on him.

    On January 17, 2006, Reffner filed his response and noted that even though the court had ordered the Amayos to serve their motion on him, they had not, but that he had obtained a copy from the court clerk after he had been served with the court order. On February 8, 2006, the Amayos filed their response to Reffner’s filing. Substitute counsel entered an appearance for Panuelo, and, on March

[14 FSM Intrm. 360]

3, 2006, filed Panuelo’s opposition to the Amayos’ November 29, 2005 motions. On April 20, 2006, the Amayos filed a reply memorandum in support of their November 29, 2005 motions, and, on May 2, 2006, filed the same reply memorandum again with additional supporting exhibits. The reply also included a motion to strike portions of Panuelo’s affidavit attached to his opposition. Panuelo moved to strike the new material, or, in the alternative, for leave to file a surreply. The court granted leave to file a surreply, which the court received by fax on August 11, 2006.

II.   Relief Requested

    The Amayos’ motions seek various relief. The November 1, 2005 motion appears to seek prosecution of Panuelo for criminal contempt but then asks for an entry of an order for Panuelo to show cause why he should not be held in civil contempt for 1) his failure to maintain the $500 monthly payments as ordered by the court on May 25, 2005 and 2) his failure to appear at trial on February 5, 2001.

    The November 29, 2006 motions seek sanctions, including striking Panuelo’s answer and entering his default,

1)   for Panuelo’s continued failure to timely make the $500 monthly payments (July 2005 payment made in August, October 2005 payment made in November and by May 2006, in the Amayos’ view, missed payments totaled $3,000); and

2)   for Panuelo’s failure to pay the $722.23 sanction award set by the court in a November 1, 2005 order; and

3)   sanctions of $6,850 in attorney’s fees to be imposed for preparation and motions related to the aborted April 2005 trial and subsequent stay; and further relief in the form of

4)   an order to show cause why Panuelo should not be held in contempt for failure to pay $500 per month; and

5)   an entry of partial summary judgment against Panuelo on the issue of Panuelo’s liability for Alfredo Amayo’s injuries with the amount of damages to be determined.

III.   Analysis

A.  Monthly Payments

    The Amayos contend that Panuelo should be sanctioned because he is in arrears on the $500 per month payments required by the court’s May 25, 2005 stay order. At that time, the court "ordered that during the pendency of appellate proceedings, Panuelo will make payments of $500 a month to the plaintiffs’ counsel." Amayo, 13 FSM Intrm. at 261. The $500 payments were part of the conditions the parties agreed to in order for the court to stay trial proceedings while appellate review was pending. No appellate proceedings were ever pending. At the Amayos’ request, the court, on November 1, 2005, vacated the stay order. Panuelo was therefore not under any court-ordered obligation to pay $500 a month for any month after October 2005.

    It thus appears that Panuelo has made all of the $500 payments required of him, although at least two were late. No sanction will, or can, issue on this ground. The November 1, 2005 motion for an order to show cause why Panuelo should not be held in contempt for his failure to make the required $500 monthly payment is thus denied because it lacks a factual basis. (The November 29, 2005

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motions stated on page 3 that the October $500 payment was paid late, on November 1, 2005.)

B.   Failure to Appear at Trial

    Nor will the court issue an order to show cause why Panuelo should not be held in contempt for his failure to appear at the start of trial on February 5, 2001. Civil contempt is inapplicable because the civil contempt is a remedial measure to coerce compliance, Rodriguez v. Bank of the FSM, 11 FSM Intrm. 367, 382 (App. 2003), and the court can not now coerce Panuelo to appear on time on February 5, 2001. Furthermore, the appellate court concluded that Panuelo had not received adequate or proper notice of when the trial would start. Panuelo, 12 FSM Intrm. at 372. In view of that court’s conclusion, this court will not impose sanctions for Panuelo’s failure to appear at the trial’s start. Panuelo did not appear at the trial’s scheduled starting time although, a month and a half before trial, a witness subpoena had been served on Panuelo requiring him to appear (as a witness) at the scheduled starting time. Panuelo, 12 FSM Intrm. at 371. When "witness" Panuelo did not appear at the appointed time, Amayos’ counsel did not stop the proceedings to ask the court for a bench warrant for the non-appearing Panuelo. Panuelo, and his then attorney, eventually appeared that afternoon at the time set for other witnesses to appear in the witness subpoenas served on Panuelo a few days before trial.

    And any request for an order to show cause why Panuelo should not be held in criminal contempt for failure to appear at the start of the February 5, 2001 trial as required by the witness subpoena served on him, comes much too late. Anyone charged with criminal contempt must "be charged within three months of the contempt." 4 F.S.M.C. 119(2)(b).

C.  $722.23 Sanction

    Imposition of a $722.23 sanction on Panuelo had also been "held in abeyance pending the conclusion of appellate proceedings," Amayo, 13 FSM Intrm. at 261, by the May 25, 2005 order. The November 1, 2005 order vacating the May 25, 2005 order also imposed the $722.23 sanction but did not set a deadline for its payment. Taking Panuelo at his word on his willingness to pay any court-ordered sums, the $722.23 sanction award, if it has not already been paid, must be paid no later than September 15, 2006. If Panuelo has not made that court-ordered payment by that date, the court will entertain a motion to strike Panuelo’s pleadings and enter a default.

D.   Request for Attorney’s Fees Sanction and Default

    The Amayos seek $6,850 for attorney fees incurred as a result of preparation for the aborted April 2005 trial and work on the subsequent stay and related motions. Amayos’ counsel’s detailed November 4, 2005 affidavit shows 34¼ hours of attorney work (calculated in quarter-hour increments) at $200 an hour, his usual hourly rate on Guam. FSM court awards of reasonable attorney’s fees are based on the customary fee in the locality in which the case is tried. Tolenoa v. Kosrae, 3 FSM Intrm. 167, 173 (App. 1987); Bank of Guam v. O’Sonis, 9 FSM Intrm. 106, 110 (Chk. 1999). The court therefore cannot award $200 per hour. One hundred ten to one hundred twenty dollars an hour would be in the range reasonable for a case tried on Pohnpei. A review of counsel’s affidavit indicates that a substantial (12-16+ hours), but not the major portion of the claimed 34¼ hours relates to trial preparation. That is preparation time that counsel would need to do anyway before any eventual retrial

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in this case, and so should not be part of a sanction award relating to the stay.

    The Amayos contend that the court can award these attorney fees (and impose a sanction of striking Panuelo’s answer and entering a default) under Rules 16(f), 11, and 37(b), and under the court’s inherent powers and its power to award attorney’s fees when the opposing party has engaged in vexatious conduct.

    There is, however, no Rule 16(f) in the FSM Supreme Court Rules of Civil Procedure. Nor do the civil procedure rules contain an equivalent of Rule 16(f) of the U.S. Federal Rules of Civil Procedure. No relief can be granted the Amayos under Rule "16(f)" because that rule does not exist.

    The actions that the Amayos contend warrant Rule 11 sanctions involve Panuelo’s alleged bad faith representation in seeking, for the improper purpose of delay, a stay of the new trial. Panuelo’s then counsel of record signed the papers seeking the stay. Under Rule 11, a party’s or an attorney’s signature on a paper is the signer’s certification that, among other things, "it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation." FSM Civ. R. 11. When a paper is signed in violation of Rule 11, the court must "impose upon the person who signed it, a represented party, or both, an appropriate sanction." Id. Under Rule 11,

[t]he court’s discretion includes the power to impose sanctions on the client alone, solely on counsel, or on both. This is desirable because there are circumstances in which one of these actions is more appropriate than the other two. For example, when the offending conduct relates to work that lies within the supposed competence of counsel, especially when it is beyond the understanding of the client . . . it is the former who should be sanctioned, not the latter.

5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1336, at 102-04 (2d ed. 1990) (footnotes omitted). Since seeking appellate review and a stay may be characterized as "work that lies within the supposed competence of counsel," and could be "beyond the understanding of the client," if Rule 11 sanctions were imposed, counsel rather than Panuelo may be the appropriate person to sanction.

    The Amayos contend that later events make it obvious that the reason Panuelo sought a stay was for the improper purpose of delay and that they are therefore entitled to sanctions since the stay request was made in bad faith. Reffner contends that the decision to appeal was entirely Panuelo’s, not his; that the stay request was made in good faith; and that the reason no appellate proceedings were initiated was that the trial court thwarted all appellate review by denying his Appellate Rule 5(a) certification request for the issue of the quashing of a subpoena, issued at the Panuelo’s request, to cause Alfredo Amayo to appear at trial and of the issue of admission of Alfredo Amayo’s deposition.

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    The court cannot conclude that Panuelo personally made the stay request in bad faith. He fulfilled the portion of the bargained-for stay that the stay required him to do personally (by making the $500 monthly payments). Furthermore, Panuelo cannot be expected to grasp that while review of the recusal issue could be sought through an original action in the appellate division by way of a petition for an extraordinary writ (of prohibition), appellate review of the other issues was dependent on the trial court’s Appellate Rule 5(a) certification and then on the appellate court’s exercise of its discretion to permit an appeal. Thus, it appears that if Rule 11 sanctions are to be imposed, they must be imposed on Panuelo’s former counsel.

    That counsel’s actions are mystifying and inexplicable. Concerning the court’s denial of his Rule 5(a) certification request, experienced counsel should have been aware that parties cannot confer jurisdiction on a court by stipulation or by assumption, see Luzama v. Ponape Enterprises Co., 7 FSM Intrm. 40, 45 (App. 1995), and that Appellate Rule 5(a)’s requirements would have to be met and were not a mere formality. Even if the issues concerning Alfredo Amayo’s deposition and subpoena could not be brought before the appellate division for interlocutory review, counsel could have (and he had indicated his intention to do so promptly) petitioned the appellate division for a writ of prohibition to bar the trial judge from hearing the case. He did not. If he had been successful in obtaining the writ, counsel might then have sought reconsideration of the other issues from the new trial judge who may have viewed those issues differently. A petition for a preemptory writ, such as prohibition or mandamus, is an expedited procedure that does not usually require the certification of a trial court record, or extended briefing, or even a transcript, or oral argument. See FSM App. R. 21(b). But counsel did nothing (while Panuelo continued to make his payments).

    Appraising counsel’s conduct at the time the signed stay request was filed, Calloway v. Marvel Entm’t Group, 854 F.2d 1452, 1470 (2d Cir. 1988) ("signer’s conduct should be judged at the time the paper is signed"), the court, however, cannot conclude that counsel’s initial request for a stay pending appellate review was made in bad faith (apparently a transcript of the April 26, 2005 hearing was ordered) although he should have been able to advise Panuelo beforehand that the likelihood of obtaining pretrial appellate review for any issue other than the trial judge’s recusal was uncertain and that it may be that only the recusal issue would be subject to appellate review. Counsel cannot be sanctioned for merely being wrong about the law or having an exaggerated sense of the probability of success on the line he was pursuing. See Golden Eagle Distrib. Corp. v. Burroughs Corp., 801 F.2d 1531, 1542 (9th Cir. 1986) ("Rule 11 should not impose risk of sanctions in the event that the court later decides the lawyer was wrong."). But counsel cannot "`avoid the sting of Rule 11 sanctions under the guise of a pure heart and empty head.’" Smith v. Ricks, 31 F.3d 1478, 1488 (9th Cir. 1994) (quoting Zuniga v. United Can Co., 812 F.2d 443, 452 (9th Cir. 1987)). A court may also decline to impose Rule 11 sanctions where the mistake is inadvertent, Baranski v. Serhant, 106 F.R.D. 247, 250 (N.D. Ill. 1985), although many cases hold that sanctions are mandatory when a Rule 11 violation is found.

    Since the court does not find that either Panuelo or his counsel acted in bad faith when they initially requested the stay for appellate review, the court cannot use its inherent powers to impose sanctions because a finding of bad-faith conduct is necessary before a court can use its inherent

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powers to sanction. Sanction of Woodruff, 10 FSM Intrm. at 85-86. Nor can sanctions be imposed under Rule 37(b). Rule 37(b) sanctions may be imposed on a party only if the party "fails to obey an order to provide or permit discovery." FSM Civ. R. 37(b)(2). The stay’s issuance to permit appellate review, and Panuelo’s duties under it, did not involve Panuelo’s failure "to obey an order to provide or permit discovery." And the court’s power to award attorney’s fees for vexatious conduct, Semens v. Continental Air Lines, Inc. (II), 2 FSM Intrm. 200, 208 (Pon. 1986) (the normal rule that each party pays its own attorney’s fees may be modified when justice requires, and attorney’s fees when a party acts vexatiously or employs oppressive litigation practices), will usually be exercised to include an attorney’s fees award as a part of damages in a final judgment, not to impose sanctions at a pretrial stage. It is too soon for that. The rules provide adequate sanctions for pretrial misbehavior.

E.   Partial Summary Judgment Motion

    The Amayos seek summary judgment, in their favor, on the issue of Panuelo’s liability. They rely, in most part, on evidence presented during the February 5, 2001 trial for a factual basis to support their summary judgment motion. This ignores the appellate court’s clear instruction that the February 1, 2001 trial was a nullity and the judgment against Panuelo had to be vacated and a new trial conducted. Panuelo, 12 FSM Intrm. at 372. The appellate division clearly expects this court to resolve all liability and damages issues through the course of a new trial, not by reliance on the original trial. This court will not attempt to take shortcuts contrary to the appellate court’s direction. The motion for partial summary judgment is therefore denied. Because of this, the Amayos’ motion to strike parts of Panuelo’s affidavit is denied as moot.

F.   Summary

      The Amayos’ motions are accordingly denied. Panuelo must, if he has not already done so, pay the $722.23 sanction no later than September 15, 2006.

IV.   Next Step

     Any further pretrial motions must be filed no later than September 15, 2006. A telephonic status conference is set for September 26, 2006, at which time further proceedings will be set.

_______________________________

Footnotes:

1.   No law requires a civil litigant to be physically present in the courtroom during trial if that party is present through counsel. A witness must, of course, obey the subpoena that summoned him or her or get that subpoena quashed. Cf. AHPW, Inc. v. FSM, 10 FSM Intrm. 420 (Pon. 2001).

2.   Although the court must first look to FSM sources of law, FSM Const. art. XI, § 11, when an FSM court has not previously construed aspects of an FSM civil procedure rule which is identical or similar to a U.S. counterpart, the court may look to U.S. sources for guidance in interpreting those aspects, see, e.g., Primo v. Pohnpei Transp. Auth., 9 FSM Intrm. 407, 413 n.3 (App. 2000); Tom v. Pohnpei Utilities Corp., 9 FSM Intrm. 82, 87 n.2 (App. 1999); Senda v. Mid-Pacific Constr. Co., 6 FSM Intrm. 440, 444 (App. 1994).

3.   Although bad faith is not a necessary element for Rule 11 sanctions, Zuniga v. United Can Co., 812 F.2d 443, 452 (9th Cir. 1987), bad faith will, of course, subject a party, the party’s attorney, or both to Rule 11 sanctions.

4.   Withdrawal does not immunize counsel from Rule 11 sanctions. See St. Amant v. Bernard, 859 F.2d 379, 384 (5h Cir. 1988).

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