FSM SUPREME COURT TRIAL DIVISION
Cite as FSM v. Hung Yao Chang, 24 FSM R. 475 (Yap 2024)
LARRY INADA, STEVE INADA, EVELYNN INADA,
MAYLEEN INADA, and MELODY INADA,
Plaintiffs,
vs.
SALOMON SAIMON, ESQ., SALOMON SAIMON,
P.C., INC., GLORIA I. HADLEY, DWAYNE HADLEY,
FSM DEVELOPMENT BANK, and ROQUE
CONSTRUCTION CO.,
Defendants.
CIVIL ACTION NO. 2023-017
ORDER ON PENDING MOTIONS
Dennis L. Belcourt
Associate Justice
Hearing: February 23, 2024
Decided: May 1, 2024
APPEARANCES:
For the Plaintiff:
Joseph S. Phillip, Esq.
P.O. Box 464
Kolonia, Pohnpei FM 96941
For the Defendant:
Salomon M. Saimon, Esq.
(Saimon & Hadleys)
P.O. Box 911
Kolonia, Pohnpei FM 96941
For the Defendant:
Nora Sigrah, Esq.
(Development Bank);
P.O. Box M
Kolonia, Pohnpei FM 96941
For the Defendant:
Erick Divinagracia, Esq.
(Roque Construction)
Ramp & Mida Law Firm
P.O. Box 1480
Kolonia, Pohnpei FM 96941
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Fraud, cheating, or deception are substantially one in the same, and they are thus all subject to Rule 9(b). Inada v. Saimon, 24 FSM R. 465, 470 & n.4 (Pon. 2024).
In all averments of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity, and, with respect to fraudulent misrepresentation, the particularity requirement means that the pleader must state the false misrepresentation's time, place, and content, the fact misrepresented, and what was obtained as a consequence of the fraud. Inada v. Saimon, 24 FSM R. 465, 470 (Pon. 2024).
When alleging the circumstances constituting fraud with the required particularity, a plaintiff must identify particular statements and actions and specify why they are fraudulent. Conclusory allegations do not satisfy these requirements, and they subject the pleader to dismissal. Inada v. Saimon, 24 FSM R. 465, 470 (Pon. 2024).
On a Rule 12(b)(6) motion to dismiss, only the well-pled facts are to be accepted as true, and, no matter how artfully the allegations may be crafted, the court does not assume the truth of legal conclusions merely because they are cast in the form of factual allegations since conclusory allegations or legal allegations masquerading as factual conclusions will not suffice to prevent a motion to dismiss. Inada v. Saimon, 24 FSM R. 465, 470 (Pon. 2024).
On a Rule 12(b)(6) motion to dismiss, the court need not accept as true allegations that contradict facts which may be judicially noticed; for example, the court may consider matters of public record including pleadings, orders and other papers filed with the court, and the court does not have to credit invective, bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like. Inada v. Saimon, 24 FSM R. 465, 470 (Pon. 2024).
If, on a Rule 12(b)(6) motion to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion will be treated as one for summary judgment, with all parties being given reasonable opportunity to present all material made pertinent to such a motion, but the court has complete discretion in deciding whether to accept materials outside of the pleadings which are submitted in conjunction with a 12(b)(6) motion. Inada v. Saimon, 24 FSM R. 465, 470-71 (Pon. 2024).
If, on a Rule 12(b)(6) motion to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to the court, the court has two options. It may either accept those outside matters and treat the motion as a Rule 56 summary judgment motion or exclude those matters and continue to treat the motion as one for dismissal for failure to state a claim upon which relief can be granted. Inada v. Saimon, 24 FSM R. 465, 471 (Pon. 2024).
When, on a Rule 12(b)(6) motion, the court finds the allegations fall short of alleging the specifics of any misrepresentation, nondisclosure, or concealment that would meet Rule 9(b)'s requirements, and are of a conclusory nature, failing to identify particular statements or actions, not alleging any reliance, and not specifying why they are fraudulent or how certain defendants gained from any fraud, they fail to sufficiently allege fraud, and the fraud claim will be dismissed. Inada v. Saimon, 24 FSM R. 465, 471 (Pon. 2024).
The court will decline to dismiss complaints when the proper legal theory for the claim was misconceived, but the complaint shows that the plaintiff is entitled to relief which the court can grant. Inada v. Saimon, 24 FSM R. 465, 471 (Pon. 2024).
On a Rule 12(b)(6) motion, the well-pled facts are accepted as true, with all inferences to be made in favor of the party opposing the motion to dismiss because the court must view facts and inferences drawn from the complaint in the light most favorable to party opposing the motion to dismiss. The motion may be granted only if it appears to a certainty that no relief could be granted under any state of facts which could be proven in support. Inada v. Saimon, 24 FSM R. 465, 471 (Pon. 2024).
Allegations that the defendants failed to fulfill a duty of review is at least indicative of a negligence claim. Inada v. Saimon, 24 FSM R. 465, 472 (Pon. 2024).
Pohnpei law recognizes negligence claims. To properly state a negligence claim, a plaintiff must show that the defendant owed the plaintiff a duty of reasonable care, that the defendant breached that duty, that damage resulted, and that that breach of duty was the proximate cause of the damage. Inada v. Saimon, 24 FSM R. 465, 472 (Pon. 2024).
A court cannot find negligence on a defendant's part when it cannot find duty when the plaintiffs pled no basis in fact giving rise to a duty. Inada v. Saimon, 24 FSM R. 465, 472 (Pon. 2024).
Generally, an attorney owes a duty of care only to his or her own client; not to third parties who claim to have suffered from the attorney's negligence. The rationale for this limitation on duty is to free the attorney to advise the client without fear of personal liability to third persons and non-clients if the advice later proves to be incorrect, so as not to introduce a potential interference with the ethical obligations an attorney owes to his or her client. Inada v. Saimon, 24 FSM R. 465, 472 (Pon. 2024).
Courts do not infer duties on attorneys to non-clients where to do so would create an ethical conflict between attorney and client. Inada v. Inada v. Saimon24 FSM R. 465, 472 (Pon. 2024).
If the court takes judicial notice of a certificate of title and other exhibits as matters of public record, those exhibits can only be considered in the context of a converted summary judgment motion, not as part of a motion to dismiss. Inada v. Saimon, 24 FSM R. 465, 473 (Pon. 2024).
In the absence of written law applicable to Pohnpei, or local customary law, the Pohnpei State Code directs the courts in applicable cases to, among other things, look to United States common law as expressed in the restatements of law. Inada v. Saimon, 24 FSM R. 465, 473 (Pon. 2024).
Except as otherwise provided by the terms of the trust, the trustee can properly lease trust property for such periods and with such provisions as are reasonable. Without a provision of the trust requiring that the beneficiaries consent, a trustee is thus free to enter into leases without such consent for such periods and with such provisions as are reasonable. Inada v. Saimon, 24 FSM R. 465, 474 (Pon. 2024).
An otherwise unreasonable trust provision might be cured of that fault by the beneficiaries' consent. Inada v. Saimon, 24 FSM R. 465, 474 (Pon. 2024).
When, viewing the complaint in the light most favorable to the plaintiffs, their contention is that the lease period or provisions are not reasonable absent the plaintiffs' consent, which was not obtained; when the bank took assignment of the lease as security for its loan and thus implicitly contends that the fifty-year lease was reasonable; and when the court does not intend to exclude some or all of those matters, the Rule 12(b)(6) motions to dismiss for which matters outside the pleadings will be considered, are converted to summary judgment motions and all parties will be given reasonable opportunity to present all material Rule 56 makes pertinent to such a motion within time frames set by the court. Inada v. Saimon, 24 FSM R. 465, 474 (Pon. 2024).
When a defendant moves to dismiss the complaint against it because it was never served the summons and complaint and it has been more than 120 days since the complaint was filed, the complaint against that defendant will be dismissed without prejudice. Inada v. Saimon, 24 FSM R. 465, 474 (Pon. 2024).
When the plaintiffs' delays have been at times lengthy, but the court does not find them to be willful, a Rule 41(b) motion to dismiss for failure to prosecute will be denied. Inada v. Saimon, 24 FSM R. 465, 474-75 (Pon. 2024).
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DENNIS L. BELCOURT, Associate Justice:
On February 23, 2024, the Court heard the following pending motions: (1) the October 9, 2023 motion of Defendant FSM Development Bank ("FSMDB") to dismiss complaint with prejudice based upon failure to state a claim upon which relief can be granted; (2) the October 13, 2023 motion of Defendant RS Roque Inc. ("Roque") to dismiss complaint pursuant to Rule 12(b)(6)1; (3) the October 18, 2023 motion to dismiss with prejudice of Defendants Salomon Saimon ("Saimon"), Law Offices of Solomon M. Saimon, P.C. ("Law Firm," or, together with Saimon, as "Saimons"), Glory I. Hadley ("Glory"2) and Dwayne Hadley ("Dwayne") (together, "the Hadleys") for failure to state a claim upon which relief may be granted, and, in the case of the Hadleys, for failure to serve the summons and complaint; (4) the December 11, 2023 motion of the Saimons to dismiss of the Saimon's law firm for failure to prosecute; and (5) the December 12, 2023 motion of FSMDB for Rule 11 sanctions.3
At the hearing, ascertaining that the Hadleys had not been served with the summons and complaint, this Court ordered that the Complaint be dismissed as to them without prejudice. FSM Civ. R. 4(j); 12(b)(5). This Court took the remaining motions under submission at the close of hearing.
On April 10, 2024, Roque filed a motion to dismiss based on Rules 4(j) and 41(b) based on the failure to serve the summons and complaint. Plaintiffs have not responded to this latter motion to dismiss.
Briefly summarized, Plaintiffs Steve Inada, Mayleen I. Thing, Evelynn Inada, Larry Inada and Melody Inada are suing their sister Glory and her son Dwayne over land that belonged to Plaintiffs' and Glory's father, Minoru Inada ("Minoru"). Minoru passed away leaving behind two wills—a 2007 will, which had Glory named as trustee of land, and a 2011 will, which did not. Minoru's parcel of land in Nett, lot no. 023-A-91, was subdivided after Minoru's death into two parcels, 023-A-142 and 023-A-143. According to the Complaint, Glory was assisted by the Saimons in having the parcel subdivided. The Complaint alleges that the Saimons represented both Gloria and Dwayne.
Allegedly, the Saimons caused lot no. 023-A-142 to be leased to Dwayne in a 50-year "development lease" in violation of Minoru's "Last Will" and without the consent of the "lawful beneficiary" of Minoru's will. FSMDB loaned Dwayne $1.5 million based on the lease. A part of the loan was used to pay Roque to demolish a three-story apartment building on lot no. 023-A-142. The Complaint alleges that FSMDB committed fraud, cheating and deception by granting the loan to Dwayne without the consent of the Plaintiffs, and that the Saimons "counseled and collaborated with" defendants Glory and Dwayne, "defrauded plaintiffs of their inheritance in land parcel no. 023-A-91" and "fraudulently prepared a 50 years development lease of parcel No. 023-A-142 between Gloria I. Hadley and Dwayne Hadley to obtain a 1.5 million dollars [sic] loan from defendant the FSM Development Bank." The Complaint also alleges that FSMDB and the Saimons "thrashed the diligent duty of review and fraudulently, deceitfully granted the loan to Dwayne Hadley, to the detriment of the plaintiffs, based on a development lease which is unlawful as it is based on" Minoru's 2007 will, "which had been superceded [sic] by his 2011 will."
A part of the loan was allegedly used to pay Defendant Roque Construction to demolish a three-story apartment building on the lot.
A. Motions to Dismiss for Failure to State a Claim for Relief
1. Fraud
With respect to the pending Rule 12(b)(6) motions, Plaintiffs allege as a theory for recovery that defendants FSMDB and the Saimons are liable to Plaintiffs for fraud, cheating or deception, which are substantially one in the same.4 However, the Complaint fails to state a claim for relief for fraud under the heightened pleading standard in Rule 9(b).
a. Pleading Fraud
Rule 9(b) states that "In all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity. Malice, intent, knowledge, and other condition of mind of a person may be averred generally." (emphasis added).
With respect to fraudulent misrepresentation, this Court has interpreted the particularity requirement to mean that "the pleader must state the time, place, and content of the false misrepresentation, the fact misrepresented and what was obtained as a consequence of the fraud." Pacific Agri-Products, Inc. v. Kolonia Consumer Coop. Ass'n, 7 FSM R. 291, 293 (Pon. 1995). When alleging the circumstances constituting fraud with the required particularity, a plaintiff must identify particular statements and actions and specify why they are fraudulent. Arthur v. Pohnpei, 16 FSM R. 581, 597 (Pon. 2009) (citation omitted) (quotations omitted). Conclusory allegations do not satisfy the requirements of Rule 9(b), and they subject the pleader to dismissal." Id.
On a Rule 12(b)(6) motion to dismiss, only the well-pled facts are to be accepted as true, and, no matter how artfully the allegations may be crafted, the court does not assume the truth of legal conclusions merely because they are cast in the form of factual allegations since conclusory allegations or legal allegations masquerading as factual conclusions will not suffice to prevent a motion to dismiss. Arthur, 16 FSM R. at 593 (citation omitted). Furthermore, the court need not accept as true allegations that contradict facts which may be judicially noticed; for example, the court may consider matters of public record including pleadings, orders and other papers filed with the court. Id. (citation omitted). And the court does not have to credit invective, bald assertions, unsupportable conclusions, periphrastic circumlocutions, and the like. Id. (citation omitted).
b. Allegations of Fraud Insufficient as to Saimons
The Complaint alleges that the Saimons were counsel for co-defendants Glory and Dwayne Hadley, in the course of which they "committed fraud and deceptions" in the subdivision and leasing of one of the two subdivided parcels to Dwayne without the consent of the Plaintiffs. What appears to be clear from the Complaint is that Plaintiffs contend that their rights were detrimentally affected by subdivision of the parcel, the execution of a fifty-year lease, and the demolition of the apartment building.
Saimons' argument in the motion to dismiss raised matters outside the pleadings, including affidavits and documents, to show their lack of awareness of the second will and lack of involvement in the subdivision of the parcel, the upshot of which, Saimons contends, is that they did not commit a fraud. Saimons also contend that the Complaint is deficient under Rule 9(b) in failing to allege fraud with particularity.
It is within this Court's discretion whether to grant Saimons' request of this Court to accept matters outside the pleadings and thus treat their motion to dismiss as a motion for summary judgment. Rule 12(b) states in pertinent part
If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state a claim upon which relief can be granted, matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.
(emphasis added).
"The Court has complete discretion in deciding whether to accept materials outside of the pleadings which are submitted in conjunction with a 12(b)(6) motion)." Latte Motors, Inc. v. Hainrick, 7 FSM R. 190, 192 (Pon. 1995) (citation omitted).5 "The Court has two options. The Court either may accept those outside matters and treat the motion as one for summary judgment pursuant to FSM Civil Rule 56 or exclude those matters and continue to treat the motion as one for dismissal for failure to state a claim upon which relief can be granted." Id.
The court need not consider the materials outside of the pleadings to determine the insufficiency of the pleadings. This Court finds the allegations as to Saimons fall short of alleging the specifics of any misrepresentation, nondisclosure, or concealment that would meet the requirements of Rule 9(b), as explained above. They are of a conclusory nature, fail to identify particular statements or actions, do not allege any reliance, and do not specify why they are fraudulent or how Saimons gained from any fraud. The Complaint therefore fails to sufficiently allege fraud as to the Saimons. Dismissal is granted as to the claim of fraud.
c. Allegations of Fraud Insufficient as to FSMDB
As with the Saimons, the Complaint fails to allege the elements of fraud on the part of FSMDB with the particularity required by FSM Rule of Civil Procedure 9(b). The pleadings do not demonstrate the specifics of any misrepresentation, nondisclosure, or concealment that would meet the requirements of Rule 9(b). They are of a conclusory nature, fail to identify particular statements or actions, do not allege any reliance, and do not specify why they are fraudulent or how FSMDB gained from the fraud. Thus, the fraud, deception and cheating basis for recovery against FSMDB fails as well.
2. Other Theory of Recovery – Negligence
Nevertheless, this Court has declined to dismiss complaints where the proper legal theory for the claim was misconceived, but the complaint "shows that the plaintiff is entitled to any relief which the court can grant." Ambros & Co. v. Board of Trustees, 11 FSM R. 333, 336 (Pon. 2003). On a Rule 12(b)(6) motion, the well-pled facts are accepted as true, with all inferences to be made in favor of the party opposing the motion to dismiss. FSM v. Koshin 31, 16 FSM R. 15, 18 (Pon. 2008). "Facts and inferences drawn from the complaint must be viewed by the Court in the light most favorable to party opposing the motion to dismiss." Union Industry Co. v. Santos, 7 FSM R. 242, 244 (Pon. 1995) (emphasis added). A motion under FSM Civil Rule 12(b) to dismiss for failure to state a claim may be granted only if it appears to a certainty that no relief could be granted under any state of facts which could be proven in support. Faw v. FSM, 6 FSM R. 33, 37 (Yap 1993).
a. Saimon's "Thrashed Diligent Duty of Review"
The Complaint alleges that the Saimon "thrashed the diligent duty of review . . . based on a development lease which is unlawful as it is based on" the 2007 will, which has been superseded by the 2011 will. A liberal reading of this allegation is that it contends that Mr. Saimon breached a duty by drafting the development lease, without Plaintiffs' consent, based on the 2007 will, having failed to discover the 2011 will.
b. FSMDB's "Thrashed Diligent Duty of Review"
Likewise, the Complaint states that FSMDB "thrashed the diligent duty of review" in granting a loan to Dwayne Hadley, to the detriment of the plaintiffs, "based on a development lease which is unlawful" because it was "based on a superseded will." The alleged detriment to Plaintiffs is that FSMDB's loan partly funded demolition of their apartment building without their consent.
c. Negligence Theory
In the absence of sufficient allegations of a fraud basis for recovery, Plaintiffs' allegations that Saimons and FSMDB failed to fulfill a duty of review is at least indicative of a negligence claim. Pohnpei law recognizes negligence claims. FSM Dev. Bank v. Gilmete, 21 FSM R. 159, 170 (Pon. 2017). To properly state a negligence claim, a plaintiff must show that the defendant owed the plaintiff a duty of reasonable care, that the defendant breached that duty, that damage resulted, and that that breach of duty was the proximate cause of the damage. Id. at 170 (Pon. 2017).
i. Saimons
The Court cannot find negligence on the part of Saimons because it cannot find duty. Plaintiffs plead no basis in fact giving rise to a duty of Saimon or his firm to Plaintiffs, who are not clients. Instead the Complaint alleges Saimon and his firm represented Glory and Dwayne.6
"Generally, an attorney owes a duty of care only to his or her own client; not to third parties who claim to have suffered from the attorney's negligence." Strong v. Fitzpatrick, 169 A.3d 783, 786 (Vt. 2017).7 The rationale for this limitation on duty is to free the attorney to advise the client "without fear of personal liability to third persons and nonclients if the advice later proves to be incorrect," so as not to "introduce a potential interference with the ethical obligations an attorney owes to his or her client." Id. at 786-87. In other words, courts do not infer duties on attorneys to nonclients where to do so would create an ethical conflict between attorney and client.
As alleged in the Complaint, Plaintiffs' and the Hadleys' positions as to who has what authority over parcel no. 023-A-142 are in irreconcilable conflict. There being no basis on the facts alleged in the Compliant for finding that the Saimons and Plaintiffs intended an attorney-client relationship, this Court finds that the Saimons owed no duty to Plaintiffs.
ii. FSMDB
This Court has on one previous occasion applied negligence principles to lending. In FSM Development Bank v. Gilmete, 21 FSM R. 159 (Pon. 2017), the Gilmetes counterclaimed against FSMDB, alleging that it was negligent in extending credit to them in an amount that they were unable to repay. Id. at 170. On summary judgment motion, FSMDB offered into evidence of the due diligence FSMDB took in determining whether to extend the loan. Based on that evidence, the Court determined that if FSMDB had a duty to investigate the Gilmete's ability to repay the loan, it did not breach the duty. Id. at 171-72.
In this matter, Plaintiffs assert that FSMDB breached a duty to Plaintiffs in lending money to Dwayne for a construction project on lot no. 023-A-142, which Dwayne had illegally leased for fifty years from Glory for that purpose. Plaintiffs contend that the lease was illegal because Glory lacked authority, as she was not trustee of the land, by virtue of the 2011 will of Minoru superseding the 2007 will. Plaintiffs further contend that, even if Glory was the trustee, she needed to obtain Plaintiffs' consent to the lease under the trust.
Glory as Trustee
In response to Plaintiff's allegations, FSMDB attached to its motion to dismiss exhibits consisting of a certificate of title for lot no. 023-A-142, which shows the names of Minoru's six children, with one of them, Glory, identified as trustee (Exhibit A); the development lease (Exhibit B); an assignment of lease and consent (Exhibit C); and a notice of security interest showing lot no. 023-A-142 as collateral for a loan from FSMDB to Dwayne Hadley and his wife Jasmine Mendiola (Exhibit D).
FSMDB contends in its motion to dismiss that, "as corrected by matters of public record," the Complaint fails to state any claim against FSMDB upon which relief can be granted. FSMDB contends that it reasonably relied upon those matters of public record, specifically the certificate of title, as prima facie evidence of Glory's authority to enter into the lease, as trustee. Anton v. Shrew, 12 FSM R. 274, 277 (App. 2003) (courts must attach a presumption of correctness to certificates of title).
Citing Setik v. Perman, 22 FSM R. 105 (App 2018), FSMDB requests that this Court take judicial notice of its exhibits as matters of public record, and it asserts that this Court can consider these records in deciding a Rule 12(b)(6) motion, not expressly addressing the issue whether consideration of such records requires converting FSMDB's motion to dismiss to a motion for summary judgment.
In Setik, the appellate division stated that "[a] court may take judicial notices of its own files in related cases." 22 FSM R. at 117. It also stated "[s]ince the trial court considered matter outside the pleadings (the FSM Supreme Court decisions in other cases) and did not exclude that matter, the trial court should have considered the Rule 12(b)(6) motion to dismiss to have been converted to a Rule 56 motion for summary judgment." Id. at 117 n.11.
Thus, the certificate of title and other exhibits offered by FSMDB can only be considered in the context of a converted summary judgment motion, not as part of a motion to dismiss.
Lack of Consent to Lease
Plaintiffs asserted at hearing, as an alternative basis for FSMDB's liability, that even if Glory is trustee, FSMDB is liable for failing to ensure that she obtained Plaintiffs' consent to the lease. In this regard, the Complaint, at paragraph 12, alleges that the lease is illegal as it is without consent of the Plaintiffs "who constituted majority heirs of the late Minoru Inada."
In the absence of written law applicable to Pohnpei, or local customary law, the Pohnpei State Code directs the courts to, among other things, look to United States common law as expressed in the restatements of law, as follows:
The rules of the common law, as expressed in the restatements of the law approved by the American Law Institute and, to the extent not so expressed, as generally understood and applied in the United States of America, shall be the rules of decision in the courts of the state of Pohnpei in applicable cases, in the absence of written law applicable to the state of Pohnpei or local customary law applicable under 1 PC 1-122 to the contrary and except as otherwise provided in 1 PC 1-124; PROVIDED, that no person shall be subject to criminal prosecution except under the written laws of the state of Pohnpei or recognized local customary law not inconsistent therewith.
1 Pon. C. § 1-123.
None of the parties have brought to this Court's attention local customary or written law applicable to Pohnpei governing trusts. Therefore Pohnpei law tells us to look at United States common law.
United States common law, as set forth in the RESTATEMENT (SECOND) OF TRUSTS, §189, (1959) states that "[e]xcept as otherwise provided by the terms of the trust, the trustee can properly lease trust property for such periods and with such provisions as are reasonable." Without a provision of the trust requiring that the beneficiaries consent, the trustee is thus free to enter into leases without such consent for such periods and with such provisions as are reasonable. On the other hand, an otherwise "unreasonable" trust provision might be cured of that fault by consent of the beneficiaries. RESTATEMENT (SECOND) OF TRUSTS § 216 (1959).
Neither Plaintiffs nor FSMDB allege or set forth the trust terms. It appears the terms of the trust, as set forth in the will, Exhibit G to Saimons' motion to dismiss, do not forbid a lease. Viewing the Complaint in the light most favorable to Plaintiffs, their contention is that the lease period or provisions are not reasonable absent consent of the Plaintiffs, which consent was not obtained. FSMDB, which took assignment of the lease as security for its loan to Dwayne, based on its exhibits, implicitly contends that the lease from Glory to son Dwayne of lot no. 023-A-142 for $333.34 per month for fifty years, was reasonable.
As set forth above, matters outside the pleadings, consisting of documents. The Court does not intend to exclude some or all of those matters. Therefore, pursuant to Rule 12(b), the motions to dismiss for which matters outside the pleadings will be considered, are hereby converted to motions for summary judgment, and "all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56." FSM Civ. R. 12(b). Hartmann v. Department of Justice, 20 FSM R. 619, 624 (Chk. 2016). Therefore,
Plaintiffs, no later than May 29, 2024, may supplement their submissions by filing with the Court and serving on all other parties all material made pertinent to FSMDB's motion by Rule 56.
No later than twenty-one days after receiving Plaintiffs' supplemental submission regarding its motion, FSMDB may supplement its own submissions with material made pertinent to FSMDB's motion by Rule 56.
iii. Roque
Roque also moves to dismiss the complaint as to it, for failure to state a claim for relief. The allegations as to Roque are that it demolished the building and that it did so with funding from FSMDB. The Complaint does not allege any facts suggesting negligence or lack of permission on the part of Roque.
Roque filed a Motion to Dismiss for Lack of Service pursuant to FSM Civ. R. 4(j) and FSM Civ. R. 41(b). Pursuant to FSM Civil Rule 4(j), "If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the action shall be dismissed as to that defendant without prejudice upon motion or upon the court's own initiative." (emphasis added). Plaintiffs' return of Service indicates that the Summons and Complaint were served (by mail) on Saimons and FSMDB, but not Roque. It has been more 120 days.
Accordingly, the complaint is dismissed with regard to Roque, and Roque's motion to dismiss for failure to state a claim for relief is granted. Dismissal is without prejudice.
B. Motions to Dismiss For Failure to Prosecute and For Sanctions
Defendants' motions to dismiss pursuant to Rule 41(b) and FSMDB's motions for Rule 11 sanctions are denied. While Plaintiffs' delays have been at times lengthy, I do not find them to be willful. Plaintiffs' fraud allegations were grossly deficient; on the other hand, the claims relate to contentions that raises issues of law not previously addressed in the FSM.
C. Motion to Strike Plaintiffs' Defamatory Language
The motion to strike certain defamatory language on page 2 and footnote one on page 3 in Plaintiffs' Motion for Enlargement dated January 23, 2024 was granted at hearing on February 23, 2024.
The Complaint is dismissed as to Defendants the Saimons, Hadleys and Roque, and the FSMDB's motion to dismiss is ordered converted to a motion for summary judgment pursuant to Rule 56, with supplementation as directed hereinabove.
_______________________________Footnotes:
1 References to "Rule" or "Rules," unless otherwise stated, is to the FSM Rules of Civil Procedure.
2 The Complaint refers to Ms. Hadley by "Gloria." Her name as it appears on the exhibits is "Glory."
3 At the hearing, Plaintiffs were represented by Joseph Phillip, Defendants Gloria and Dwayne were represented by Saimon. Defendant Roque was represented by Erick Divinagracia. FSMDB was represented by Norah Sigrah, appearing from Kosrae.
4 "Cheat," "deceive," and "defraud" are interchangeable terms. BLACK'S LAW DICTIONARY 237 (6th Ed. 1990) (defining "cheat" to mean deceive or defraud). They are thus all subject to Rule 9(b).
5 Cases discussing conversion of Rule 12(b)(6) motions to dismiss to Rule 56 motions for summary judgment include Setik v. Perman, 22 FSM R. 105, 120, n.11 (App. 2018); Gilmete v. Peckalibe, 20 FSM R. 444, 447 (Pon. 2016); Palasko v. Pohnpei, 20 FSM R. 90, 93 (Pon. 2015); Ehsa v. Pohnpei Port Auth., 14 FSM R. 481, 484 (Pon. 2006); Richmond Wholesale Meat Co. v. George, 11 FSM R. 86, 88 (Kos. 2002); Moses v. M.V. Sea Chase, 10 FSM R. 45, 50 (Chk. 2001); Berman v. Santos, 7 FSM R. 231, 235 (Pon. 1995); Etscheit v. Adams, 6 FSM R. 365, 386 (Pon. 1994).
6 According to Saimon, he and the Law Firm only represented Dwayne and his wife, Jasmine Mendiola, in working on the development lease.
7 See< National Sav. Bank of D.C. v. Ward, 100 U.S. (10 Otto) 195, 200, 25 L. Ed. 621, 623 (1879) ("Beyond all doubt, the general rule is that the obligation of the attorney is to his client and not to a third-party").
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