FSM SUPREME COURT TRIAL DIVISION

Cite as Ehsa v. Pohnpei Port Auth.,14 FSM Intrm. 481 (Pon. 2006)

[14 FSM Intrm. 481]

TIMAKIO EHSA d/b/a POHNPEI MARINE SERVICES,

and ALL FOREIGN FISHING VESSELS (dba) FSM

ACCESS AGREEMENT,

Plaintiffs,

vs.

POHNPEI PORT AUTHORITY,

Defendant.

CIVIL ACTION NO. 2006-027

ORDER OF DISMISSAL

Andon L. Amaraich

Chief Justice

Hearing: October 25, 2006

Decided: November 16, 2006

APPEARANCES:

For the Plaintiff:  Joseph S. Phillip, Esq.

                               P.O. Box 464

                               Kolonia, Pohnpei FM 96941

For the Defendant:   Michael J. Sipos, Esq.

                                     Sipos & Berman

                                     P.O. Box 2069

                                     Kolonia, Pohnpei   FM   96941

HEADNOTES

Constitutional Law ) Case or Dispute ) Standing

     Generally, a party has standing to sue when that party has a sufficient stake or interest in an otherwise justiciable controversy to obtain a judicial resolution of that controversy. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 484 (Pon. 2006).

Constitutional Law ) Case or Dispute ) Standing

     When the amended complaint names as plaintiffs Timakio Ehsa, PMS, and "all foreign fishing vessels (dba) FSM Access Agreement," and when PMS, whose financial viability depends on the services it provides the commercial vessels and the fees it collects from those vessels, has more than an incidental interest in the action’s outcome, the court will decline to dismiss the complaint on the basis of lack of standing. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 484 (Pon. 2006).

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Civil Procedure ) Dismissal; Civil Procedure ) Summary Judgment

     In evaluating a Rule 12(b)(6) motion, the court must accept the complaint’s allegations as true and the motion may be granted only if it appears to a certainty that no relief could be granted under any state of facts that could be proven in support of the claim. But when matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 484 (Pon. 2006).

Civil Procedure ) Summary Judgment

     In ruling on a summary judgment motion, a court must view all facts and inferences in the light most favorable to the nonmoving party. Summary judgment may be granted only if the court finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. It is the moving party's burden to prove the absence of triable issues. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 484 (Pon. 2006).

Civil Procedure ) Dismissal; Civil Procedure ) Summary Judgment

     When the single legal issue presented is whether the defendant's regulations require it to make a demand for payment prior to denying port entry; when resolution of this issue will necessarily lead to a factual question: whether the defendant in fact made a demand for payment prior to threatening denial of, or denying, port entry; when the court cannot reach this factual question if it treats the motion as one to dismiss; and when both the dispositive questions may be resolved based on the pleadings and submissions already attached to the pleadings, the court will exercise its discretion to convert the Rule 12(b)(6) motion to one for summary judgment under Rule 56. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 484 (Pon. 2006).

Administrative Law

     When a regulation is clear and unambiguous that all port fees and charges are due and owing must be paid within thirty days of the port authority’s demand and the word "demand," which the court will construe in accordance with common usage, means to claim as one's due, to require, to request for payment of debt or amount due, to ask with authority, claim or challenge as due, or to ask as by right, the port authority could satisfy the demand requirement by simply making a written request for payment, which could take the form of an invoice or letter. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 485 (Pon. 2006).

Civil Procedure ) Summary Judgment

     When there is no reasonable dispute of fact that the port authority satisfied its obligations to make a demand for payment and allow the plaintiffs thirty days to pay before denial of port entry and denial of port entry is the only action that the plaintiffs challenge, the port authority is entitled to summary judgment. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 486 (Pon. 2006).

Civil Procedure ) Sanctions

     The purpose of Rule 11 sanctions is to deter baseless or frivolous filings. The decision to impose or not impose Rule 11 sanctions is addressed to the trial court’s discretion. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 486 (Pon. 2006).

Civil Procedure ) Frivolous Actions

     When the plaintiffs’ amended complaint sets forth a serious claim that the defendant was violating its own regulations, it cannot easily be dismissed as frivolous even though the court granted the defendant summary judgment since the fact that the court agrees with the defendant on the factual issue does not necessarily make the plaintiffs' claim frivolous. Ehsa v. Pohnpei Port Auth., 14 FSM Intrm. 481, 486 (Pon. 2006).

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COURT’S OPINION

ANDON L. AMARAICH, Chief Justice:

I.  Introduction

     Plaintiffs, Timakio Ehsa, d/b/a Pohnpei Marine Services (PMS) and various fishing vessels for which PMS acts as agent, seek a preliminary injunction against Defendant, Pohnpei Port Authority. Defendant moves to dismiss the case in its entirety. Additionally, the parties have filed competing motions for Rule 11 sanctions. The Court heard oral argument on October 25, 2006, after which it took the motions under advisement. The Court hereby grants Defendant's motion to dismiss and denies the motions for Rule 11 sanctions.

II.   Facts and Procedural History

     This case is the fourth in a series of cases ) all having similar facts and issues ) filed by Plaintiffs against Defendant in less than two years. Plaintiff PMS is the agent for approximately eighty commercial fishing vessels that enter Pohnpei's port. Pursuant to an "FSM Access Arrangement," PMS provides all necessary services to the fishing vessels that call on Pohnpei's port. These services include, but are not limited to, the processing of payment for port fees and charges incurred by the owners of the vessels and the provision of supplies and cash advances. Defendant is a statutorily created entity with sole authority over the Pohnpei port.

     PMS maintains an open account with Defendant for port fees and charges. Defendant routinely sends invoices to PMS for each vessel for which PMS is agent. PMS's custom has been to forward the invoices to the owners of the vessels, who, in turn, remit payment to PMS. PMS then submits payment to Defendant. According to PMS, it can take up to several months for the vessels to remit payment.

     On August 10, 2006, Plaintiffs filed a complaint against Defendant, alleging that, in June 2006, Defendant began threatening to refuse entry into the Pohnpei port to any fishing vessel having PMS as its agent and having unpaid port charges more than thirty days past due. The original complaint, which sought a temporary restraining order as well as preliminary and permanent injunctive relief: alleged no specific violation of the law or cause of action.

     On August 16, 2006, Defendant filed a motion to dismiss, which included a request for Rule 11 fee sanctions. On August 21, 2006, the Court issued an order denying the request for a temporary restraining order and scheduling a hearing on the motions for preliminary injunction and to dismiss.

     On September 12, 2006, Plaintiffs filed an amended complaint, asserting that Defendant had violated its own regulations by failing to make a demand for payment prior to refusing port entry. Plaintiffs also claimed that Defendant had deviated from its past practice of allowing vessels with overdue accounts to enter the port. Additionally, Plaintiffs alleged that Defendant's action was retaliatory. On October 16, 2006, Plaintiffs filed a cross-motion for sanctions.

     Defendant moved to dismiss the amended complaint on October 9,2006.

[14 FSM Intrm. 484]

III.  Discussion

A.   Defendant's Motion to Dismiss

     As a preliminary matter, Defendant challenges PMS's standing to pursue this lawsuit. Defendant argues that only the owners of the vessels and the masters and crews have standing to challenge orders that Defendant issues against them. PMS, according to Defendant, has only an incidental interest in this action.

     Generally, a party has standing to sue when 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). It is true that the challenged action in this case directly impacts the vessels, not PMS. Defendant seems to overlook the fact that the amended complaint names as plaintiffs Timakio Ehsa, PMS, and "all foreign fishing vessels (dba) FSM Access Agreement." Moreover, it seems axiomatic to this Court that PMS, whose financial viability depends on the services it provides the commercial vessels and the fees it collects from those vessels, has more than an incidental interest in the outcome of this action. Thus, the Court will decline to dismiss the complaint on the basis of lack of standing.

     Defendant styled its motion a Rule 12(b)(6) motion to dismiss for failure to state a claim. In evaluating such a motion, the court must accept as true the allegations in the complaint. A Rule 12(b)(6) motion may be granted only if it appears to a certainty that no relief could be granted under any state of facts that could be proven in support of the claim. Rubin v. Fefan Election Comm'n, 11 FSM Intrm. 573, 577-78 (Chk. S. Ct. Tr. 2003). Where matters outside the pleadings are presented to and not excluded by the court, the motion shall be treated as one for summary judgment. Rudolph v. Louis Family, Inc., 13 FSM Intrm. 118, 125 (Chk. 2005); FSM Civ. R. 12(b).

     Here, the parties have presented matters outside the pleadings. Thus, unless the Court excludes those matters, it must treat the motion as one for summary judgment. In ruling on a motion for summary judgment, a court must view all facts and inferences in the light most favorable to the nonmoving party. Summary judgment may be granted only if the court finds there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. FSM Civ. R. 56(c). It is the moving party's burden to prove the absence of triable issues. Lee v. Lee, 13 FSM Intrm. 68, 70 (Chk. 2004).

     The single legal issue presented by Plaintiffs in their amended complaint and at oral argument is whether Defendant's regulations require it to make a demand for payment prior to denying port entry. Resolution of this issue will necessarily lead to a factual question: whether Defendant in fact made a demand for payment prior to threatening denial of, or denying, port entry. The Court cannot reach this factual question if it treats the motion as one to dismiss. Because both the dispositive questions may be resolved based on the pleadings and submissions already attached to the pleadings, the Court will exercise its discretion to convert the Rule 12(b)(6) motion to one for summary judgment under Rule 56.

     The apposite regulation provides:

All fees and charges payable under these regulations shall be paid within 30 days of demand therefor. In the event that such fees and charges are not paid within 30 days of demand, such fees and charges shall bear interest at the rate of 12% per annum from the date that the demand was made; and in addition, the person or persons liable therefor shall additionally be liable for a penalty of $1,000.00 by virtue of the failure to pay such fees and charges within such 30 day period. No vessel which has failed to pay any fees

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and charges payable under these regulations within 30 days of demand therefor, and no vessel owned by owners of such vessel, shall be permitted to enter any port of Pohnpei State for so long as such fees and charges, together with interest and penalty as provided for herein, remain unpaid

Seaport Rules and Regulations, ch. 10, § 1001 (emphasis added).

     This regulation is clear and unambiguous. All port fees and charges due and owing must be paid within thirty days of the demand by PPA. PPA shall not provide entry to any vessel that fails to pay its fees within that timeframe. In sum, Plaintiffs are correct as to the legal issue ) the regulation implicitly requires a demand by PPA and explicitly provides vessels a grace period of thirty days.

     The regulation, however, does not define the word "demand," and the parties seem to have divergent views as to what is required of Defendant. Plaintiffs claim that Defendant violated section 1001's demand requirement, whereas Defendant asserts that multiple demands for payment have been made. This Court will construe the word in accordance with common usage. Cf. FSM v. Wainit, 12 FSM Intrm. 201, 205 (Chk. 2003) ("Words and phrases as used in [the FSM Code] shall be construed according to the common and approved usage of the English language."). The common meanings of the word "demand" include: "To claim as one's due," Black's Law Dictionary 429 (6th ed. 1990); "to require," id.; "request for payment of debt or amount due," id.; and "an asking with authority, claiming or challenging as due." Id. One FSM court has interpreted the word "demand" to mean to "ask as by right." Kosrae v. Sigrah, 11 FSM Intrm. 263, 264 (Kos. S. Ct. Tr. 2002) (citing Webster's New Dictionary and interpreting the word "demand" in the context of a police officer's request for a defendant's driver's license).

     Based on these common meanings, this Court concludes that Defendant could satisfy the demand requirement by simply making a written request for payment, which could take the form of an invoice or letter. The Court must now decide the factual question of whether Defendant made a request for payment and gave Plaintiff's the requisite 30 days to pay.

     Attached to Plaintiff's amended complaint is a letter from Defendant's General Manager, leske lehsi, to PMS's General Manager, Plaintiff Timakio Ehsa. The letter, dated June 23, 2004, warned: "This is a follow-up and further inform you that PMS has violated the Sea Port Regulation, section 10.1001, ‘payment of port fees and charges.' All fees and charges payable under these regulations shall be paid within 30 days of demand thereof." The letter further warned, "No vessel owned by owners/agents of such vessel shall be permitted to enter any Port of State of Pohnpei for as long as such fees and charges, together with interest and penalty fees as provided herewith, remains unpaid." lehsi concluded: "PMS outstanding balance as of the date of this writing is still too high at $201,300.68. The above mentioned requirement shall be in effect after 30 days from the date of this writing should you fail[] to [remedy] the existing problem."

     Attached to Defendant's reply brief is a document entitled "Notice of Seaport Regulation Enforcement," dated March 15, 2006. lehsi issued the notice to all vessel owners, captains, managers, and agents of shipping companies. The notice began: "At present there are numerous vessels calling on Pohnpei's port with past due accounts from prior visits. In many instances the arrearages are excessive and have reached a point where intervention has become unavoidable." The notice set forth the portion of the above-mentioned regulation that prohibits Defendant from permitting entry to any vessel having an account more than thirty days past due. Next, the notice warned that Defendant intended to enforce the regulation. The notice concluded:

If you are sitting on past due accounts and have questions regarding the vessel's they

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apply to please contact us without delay . . . .

PPA is in the process of compiling a list of vessels with past due accounts and will distribute it once complete. All vessels on the list (and vessels owned by owners of such vessels) will then be subject to strict enforcement of the terms of this notice within 60 days from the date the list is signed.

Plaintiff Timakio Ehsa, PMS's General Manager, acknowledged receipt of the notice on March 16, 2006.

     It is clear from the June 23, 2004 letter and the March 15, 2006 notice that Defendant made a demand for payment. Defendant was not required to literally knock on PMS's door. This Court considers it a logical conclusion that the March 15, 2006 notice succeeded a prior request for payment. Moreover, the notice was, in itself, a demand for payment. It notified the vessels, their agents, and other relevant parties that there were accounts that were past due and that Defendant intended to enforce the regulation if the accounts were not made current.

     According to Plaintiffs, Defendant did not begin threatening to deny port entry until sometime in June 2006. Plaintiff Ehsa received the March 15, 2006, notice more than sixty days before the threats began. This Court concludes that there is no reasonable dispute of fact on the question of whether Defendant satisfied its obligations to make a demand for payment and allow Plaintiffs thirty days to pay. Because denial of port entry is the only action that Plaintiffs challenge, Defendant is entitled to summary judgment.

B.  Plaintiff's Motion for Preliminary Injunction

     The Court's ruling on Defendant's motion to dismiss obviates the need for ) and forecloses the possibility of ) a ruling on Plaintiffs' motion for preliminary injunction.

C.  The Parties' Cross-Motions for Sanctions

     The parties have filed competing motions for sanctions under Rule 11 of this Court's Rules of Civil Procedure. Defendant argues that Plaintiffs should be sanctioned for filing this fourth case in a series of vexatious and harassing cases. Plaintiffs assert that Defendant's motivation for enforcing its regulations is to harass Plaintiffs.

      The purpose of Rule 11 sanctions is to deter baseless or frivolous filings. Berman v. Kolonia Town, 6 FSM Intrm. 433, 436 (App. 1994). The decision to impose or not impose Rule 11 sanctions is addressed to the discretion of the trial court. Id. The Court hereby denies both requests for sanctions: There is no evidence in the record ) other than bald accusations ) to support Plaintiffs' charge of harassment by Defendant. Nor can Plaintiff's amended complaint easily be dismissed as frivolous, since it set forth a serious claim: that Defendant was violating its own regulations. The fact that this Court agrees with Defendant on the factual issue does not necessarily make Plaintiffs' claim frivolous.

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     Although the Court denies the motions at this time, Plaintiffs are hereby put on notice that the filing of future cases having the same facts and issues and seeking the same relief may be deemed frivolous (and sanctionable) by this Court.

     CASE DISMISSED.

__________________________________

Footnotes:

1.  It is not clear whether Defendant has already begun denying port entry to vessels having overdue accounts. In some of their pleadings, Plaintiffs accuse Defendant of threatening to deny port entry; in others, they claim Defendant denied port entry. In the March 15, 2006 notice, lehsi stated that, in order to safeguard against the undue disruption of shipping activities, Defendant would require an advance deposit from any vessel with overdue accounts as a condition of port entry.

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