[24 FSM R. 509]

CIVIL ACTION NO. 2024-005

Hearing: May 13, 2024
Decided: June 17, 2024

APPEARANCES:

For the Plaintiff:                             Marstella E. Jack, Esq.
                                                      P.O. Box 2210
                                                      Kolonia, Pohnpei FM 96941

For the Defendant:                        Salomon M. Saimon, Esq.
                                                      P.O. Box 911
                                                      Kolonia, Pohnpei FM 96941

For the Third-Party Defendants:   Walberg Hadley, Esq.
                                                      Assistant Attorney General
                                                      Pohnpei Department of Justice
                                                      P.O. Box 1555
                                                      Kolonia, Pohnpei FM 96941

HEADNOTES

Jurisdiction – Removal

Any action brought in a state court of which the FSM Supreme Court trial division has jurisdiction may be removed by any party to the FSM Supreme Court trial division, and if, at any time before final judgment, it appears that the case was removed improvidently and without jurisdiction, or that the removing party had previously waived its right to remain, the Supreme Court trial division shall remand the case. Black Sand Corp. v. Cantero, 24 FSM R. 509, 511 (Pon. 2024).

Jurisdiction – Removal

The national Constitution does not prohibit state courts from hearing the kinds of cases described in article XI, section 6(b) if all parties accept state court jurisdiction, but parties to a dispute within the scope of article XI, section 6(b) have a constitutional right to invoke the FSM Supreme Court's jurisdiction. Black Sand Corp. v. Cantero, 24 FSM R. 509, 511 (Pon. 2024).

Jurisdiction – Removal

A case that is improvidently removed from a state court must be remanded to that state court. A case is improvidently removed when it has been removed to the FSM Supreme Court and either the FSM Supreme Court did not have subject-matter jurisdiction over the case at the time of its removal, or the party removing the case has waived its right to proceed in the FSM Supreme Court. Black Sand Corp. v. Cantero, 24 FSM R. 509, 511 (Pon. 2024).

Jurisdiction – Arising Under; Jurisdiction – Removal

Under the well-pled complaint rule, to determine whether a dispute "arises under" national law, the court will apply the following: 1) the issue of national law must be an essential element of one or more of the plaintiff's causes of action; 2) the national law issue must be disclosed upon the face of the complaint, unaided by the answer, the petition for removal or any subsequent pleadings; 3) the national law issue may not be inferred from a defense asserted or one expected to be made; and 4) the national law issue raised must be a substantial one. Black Sand Corp. v. Cantero, 24 FSM R. 509, 511 (Pon. 2024).

Jurisdiction – Arising Under

A cross-claim, or counterclaim cannot form a basis for the FSM Supreme Court's jurisdiction because determination of whether a case arises under the Constitution, national law, or a treaty is based on the plaintiff's statement of his cause of action, not on whatever defenses that are or that might be raised. Black Sand Corp. v. Cantero, 24 FSM R. 509, 512 (Pon. 2024).

Jurisdiction – Arising Under

When the complaint raises six causes of action, all of which are common law causes of action especially appropriate for state court adjudication, the complaint does not state a cause of action arising under the Constitution, national law, or treaty. Black Sand Corp. v. Cantero, 24 FSM R. 509, 512 (Pon. 2024).

Jurisdiction – Arising Under

Common law causes of action do not arise under the national laws of the FSM and accordingly do not confer original jurisdiction on the FSM Supreme Court. Black Sand Corp. v. Cantero, 24 FSM R. 509, 512 n.4 (Pon. 2024).

Jurisdiction – Removal

A defense or counterclaim cannot be the basis for removal jurisdiction. Black Sand Corp. v. Cantero, 24 FSM R. 509, 512 (Pon. 2024).

COURT'S OPINION

BEAULEEN CARL-WORSWICK, Associate Justice:

On May 13, 2024, this court held an emergency hearing on this matter, Associate Justice Carl-Worswick presiding. Attorney Marstella Jack ("Jack") appeared on behalf of plaintiff Black Sand Corporation ("Black Sand"). Attorney Salomon Saimon ("Saimon") appeared on behalf of defendant Realino Cantero ("Cantero"). Assistant Attorney General Walberg Hadley (Hadley") appeared on behalf of third-party defendants Department of Land and Natural Resources and the Board of Trustees of the Pohnpei Public Land Trust ("Pohnpei State"). As a preliminary matter the court heard arguments from all parties regarding whether the case was properly removed to the FSM Supreme Court.

Pursuant to FSM GCO 1992-2, section I, the Transfer of Cases Between State and National Courts, in relevant part, states, "Any action brought in a state court of which the trial division of the FSM Supreme Court has jurisdiction may be removed by any party to the trial division of the FSM Supreme Court." (emphasis added). Pursuant to FSM GCO 1992-2, § III(C),

If at any time before final judgment it appears that the case was removed improvidently and without jurisdiction, or that the removing party had previously waived its right to remain as determined by the previous decisions of this Court, the trial division of the Supreme Court shall remand the case, and may order the payment of just costs. A certified copy of the order of remand shall be mailed by its clerk to the clerk of the state court. The state court may thereupon proceed with the case.

(emphasis added). "This Court has recognized that the national Constitution does not prohibit state courts from hearing the kinds of cases described in article XI, section 6(b) if all parties accept state court jurisdiction. However, parties to a dispute within the scope of article XI, section 6(b) have a constitutional right to invoke the jurisdiction of this Court." U Corp. v. Salik, 3 FSM R. 389, 392 (Pon. 1988) (citation omitted).¹ "If national court jurisdiction exists the Court should promptly grant the petition to remove. Thereafter the Court can entertain a motion to abstain or to certify specific issues to the state court." Etscheit v. Adams, 5 FSM R. 243, 246 (Pon. 1991). However, "[a] case that is improvidently removed from a state court must be remanded to that state court." Enlet v. Bruton, 10 FSM R. 36, 39 (Chk. 2001).

A case is improvidently removed when it has been removed to the FSM Supreme Court and either the FSM Supreme Court did not have subject-matter jurisdiction over the case at the time of its removal, or the party removing the case has waived its right to proceed in the FSM Supreme Court.

Id. (emphasis added).² Furthermore, under the well-pled complaint rule,

To determine whether a controversy "arises under" national law, this Court will apply the following rules. First, the issue of national law must be an essential element of one or more of the plaintiff's causes of action. Second, the issue of national law must be disclosed upon the face of the complaint, unaided by the answer, the petition for removal or any pleadings subsequently filed in the case. Third, the issue of national law may not be inferred from a defense asserted or one expected to be made. Fourth, the issue of national law raised must be a substantial one.

David v. San Nicolas, 8 FSM R. 597, 598 (Pon. 1998).³ A cross-claim, or counterclaim, "therefore cannot form a basis for the FSM Supreme Court's jurisdiction because ‘determination of whether a case arises under the Constitution, national law, or a treaty is based on the plaintiff's statement of his cause of action, not on whatever defenses that are or that might be raised.'" Mailo v. Chuuk, 12 FSM R. 597, 600 (Chk. 2004) (citation omitted).

The complaint raises six causes of action, 1) breach of contract, 2) unjust enrichment, 3) conversion, 4) fraud, 5) tortious interference with contract, and 6) tortious interference with prospective economic gain. All of these are all common law causes of action, especially appropriate for state adjudication.⁴ Under the well-pled complaint rule, this complaint does not state a cause of action "arising under" the Constitution, national law, or treaty." FSM Const. art. XI, § 6(b).⁵ Nor is diversity present.⁶ A defense or counterclaim cannot be the basis for removal jurisdiction. Thus, none of the four prerequisites are met here. Accordingly, the case was removed improvidently and without jurisdiction.

IT IS HEREBY ORDERED that this case be REMANDED to the Pohnpei Supreme Court for adjudication. The FSM Supreme Court Clerk of Court shall mail a certified copy of the Order of Remand to the Pohnpei State Clerk of Court.

Footnotes:

¹ See Bank of Guam v. Semes, 3 FSM R. 370, 379 (Pon. 1988).

² Panuelo v. Sigrah, 22 FSM R. 341, 350 (Pon. 2019); Etscheit v. McVey, 13 FSM R. 477, 479 (Pon. 2005); Mailo v. Chuuk, 12 FSM R. 597, 600 (Chk. 2004).

³ See Neimes v. Maeda Constr. Co., 1 FSM R. 47, 48 (Truk 1981) ("only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution"); FSM Dev. Bank v. Ifraim, 10 FSM R. 1, 4 (Chk. 2001) ("is based on the plaintiff's statement of his cause of action, not on whatever defenses that are or that might be raised"); Saimon v. Nena, 19 FSM R. 608, 611 (Kos. 2014) ("disclosed upon the face of the complaint, unaided by the answer, the petition for removal or any pleadings subsequently filed in the case, and it may not be inferred from a defense asserted or one expected to be made").

⁴ Common law causes of action do not arise under the national laws of the FSM and accordingly do not confer original jurisdiction on this Court. See David v. San Nicolas, 8 FSM R. 597, 598 (Pon. 1998).

⁵ "The national courts, including the trial division of the Supreme Court, have concurrent original jurisdiction in cases arising under this Constitution; national law or treaties; and in disputes between a state and a citizen of another state, between citizens of different states, and between a state or a citizen thereof, and a foreign state, citizen, or subject." FSM Const. art. XI, § 6(b).

⁶ Plaintiff is a Pohnpeian corporation, formed under the Pohnpei state law, and defendant is Pohnpeian citizen. Third-party defendant is Pohnpei State itself.