FSM SUPREME COURT TRIAL DIVISION
Cite as FSM Dev. Bank v. Weilbacher, 24 FSM R. 520 (Kos. 2024)
FSM DEVELOPMENT BANK,
Plaintiff,
vs.
JOSEPHA WEILBACHER and ESTATE OF ROBERT
WEILBACHER, by Josepha Weilbacher, administratrix,
Defendants.
CIVIL ACTION NO. 2019-2001
ORDER ON PENDING MOTIONS
Dennis L. Belcourt
Associate JusticeHearing: March 21, May 9, 2024
Decided: June 20, 2024
Corrected: June 27, 2024
APPEARANCES:
For the Plaintiff:
Nora E. Sigrah, Esq.
P.O. Box M
Kolonia, Pohnpei FM 96941
For the Defendant:
Yoslyn G. Sigrah, Esq.
P.O. Box 3018
Kolonia, Pohnpei FM 96941
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Even if Disciplinary Rule 3(g), which authorizes limitation of the nature or extent of the attorney's future practice, authorizes precluding an attorney from representing a client, the Disciplinary Rules make that remedy available only by order of a justice assigned by the Chief Justice to consider the disciplinary complaints. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 523 (Kos. 2024).
When the Disciplinary Rules do not confer authority on the court to grant the requested relief, the court is limited to its inherent authority to sanction lawyers appearing before it. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 523 (Kos. 2024).
A trial court justice may decline to grant a motion to discipline an opposing counsel by denying her the right to represent her client in the proceeding, in favor of acting pursuant to Disciplinary Rule 4. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 523 (Kos. 2024).
Although structured somewhat differently from ordinary mortgages, deeds of trust are functionally the same. A deed of trust is a type of mortgage involving three parties: the borrower-grantor, the creditor beneficiary, and the trustee. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 524 n.2 (Kos. 2024).
In interpreting a constitutional provision, a court must initially analyze the constitution's actual words. If those words are clear and permit only one possible result, then the court should go no further, but, if a constitutional provision is not clear and does not permit only one possible result, a court should next consult the constitutional convention journal to ascertain the framers' intent in drafting the language. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 525-26 (Kos. 2024).
A proceeding involving a mortgage foreclosure action has an interest in land at issue when filed with the court, because the proceeding may result in a judgment of land transfer. Thus, proceedings to foreclose mortgages of land involve an interest in land being at issue, invoking the exclusive jurisdiction in state courts. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 526-27 (Kos. 2024).
Laws are retroactive or retrospective if they take away or impair vested rights acquired under existing laws, create new obligations, impose a new duty, or attach a new disability in respect to the transactions or considerations already past. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 527 (Kos. 2024).
Courts observe a strict rule of construction against a retrospective operation, and indulge in the presumption that the legislature intended statutes, or amendments thereof, enacted by it, to operate prospectively only, and not retroactively. The rule of interpretation disfavoring retroactivity also applies to Constitutional provisions. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 527-28 (Kos. 2024).
Under the rule of interpretation disfavoring retroactive interpretations, the FSM Supreme Court's subject matter jurisdiction under section 6 of Article XI, as it read before the amendment was ratified by the voters, remains intact for a case that was pending before the amendment was ratified. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 528 (Kos. 2024).
A fee request of $125 an hour is reasonable and compliant with the law. FSM Dev. Bank v. Weilbacher, 24 FSM R. 520, 528 (Kos. 2024).
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DENNIS L. BELCOURT, Associate Justice:
Pending in this matter are the following: (A) Plaintiff's (FSMDB's) motion to strike the notice of re-appearance of counsel (motion to strike), dated February 14, 2024, which is denied; (B) Defendants' motion to dismiss the complaint on subject matter jurisdiction grounds, dated March 21, 2024, which is denied because this Court finds that the recent amendment to the Constitution applies prospectively; (C) FSMDB's submission of attorney's fees and costs pursuant to this Court's order entered on February 5, 2024, which is ordered as set forth below; and (D) FSMDB's motion to enlarge deadline for filing of pretrial motions, which is granted.
FSMDB moved to have this Court strike Defendants' attorney's notice of reappearance as attorney of record after she was reinstated from a disciplinary suspension. The basis for the motion is the attorney's failure to comply with certain requirements of this Court's Disciplinary Rules and Procedures (Disciplinary Rules) and the order of suspension. The Weilbachers' opposed the motion to strike, requesting an enlargement of time, contending that the motion "lacks legal and factual basis."
1. Background
Attorney Yoslyn G. Sigrah appeared as counsel of record for the defendants ("the Weilbachers") when she filed an answer on their behalf on January 28, 2019. On April 20, 2022, the FSM Supreme Court, in DPA 003-2018, issued an order suspending her from the practice of law for two (2) months, starting May 21, 2022. [In re Sigrah, 23 FSM R. 537 (Pon. 2022).]
On May 8, 2023, Ms. Sigrah petitioned for reinstatement of her right to practice law, pursuant to FSM Disciplinary Rule 13, which states, in part, that "[n]o suspended or disbarred attorney may resume practice until reinstated by order of the Supreme Court." The reinstatement petition was designated PRA No. 001-2023 and assigned to the undersigned. After a hearing, a subsequent order imposing certain conditions, including that Ms. Sigrah pass the ethics portion of the FSM Bar Examination administered in August 2023, and after compliance with those conditions, the court in PRA No. 001-2023 issued an Order Reinstating Petitioner. Issued on December 13, 2023, the Order stated that Ms. Sigrah was reinstated as a member in good standing eligible to practice law before the FSM Supreme Court.
On January 3, 2024, although she had not filed a motion to withdraw from representation of the Weilbachers during her suspension, Ms. Sigrah filed a notice of re-appearance as counsel for the Weilbachers, and FSMDB subsequently filed the subject motion to strike. The Court held a hearing on the motion to strike on March 21, 2024, which it concluded without ruling on the motion, instead ordering the parties to brief the Court on the possible applicability of Rule 4(d) to this matter. The parties did so.
2. Analysis
The basis for the motion to strike is Ms. Sigrah's failure to comply with the notices of suspension that led to her discipline in DPA 003-2018 and with Disciplinary Rule 12(a) and (b). The alleged violations consisted of violations of Disciplinary Rules 12(a), (b), (d) and (g), specifically (1) failure to give notice to counsel for adverse parties of the address of her clients, (2) failure to withdraw from cases in which the client has not obtained substitute counsel, (3) attestation to the Chief Clerk of the Supreme Court of compliance with Rules 12(a) and (b); and, (4) as a condition precedent to a petition for reinstatement proving compliance with the rules.
This Court interprets the motion to strike as FSMDB requesting that Ms. Sigrah be denied the right to represent the Weilbachers in this proceeding based on Ms. Sigrah's violation of disciplinary rules.1 However, even were precluding an attorney from the representation of a client authorized in Disciplinary Rule 3(g), which authorizes limitation of the nature or extent of the attorney's future practice, the Disciplinary Rules make that remedy available only by order of a justice assigned by the Chief Justice to consider the disciplinary matter under the procedures set forth in the Disciplinary Rules.
Not conferred authority by the Disciplinary Rules to grant FSMDB's requested relief in this proceeding, this Court is limited to its inherent authority to sanction lawyers appearing before it, recognized in In re Sanction of Woodruff, 10 FSM R. 79 (App. 2001). Woodruff recognized the FSM Supreme Court's inherent authority to sanction attorneys and parties for conduct abusive of the judicial process. Id. at 86. Such a sanction may only issue on finding of bad faith proven by clear and convincing evidence, most likely determined after an evidentiary hearing. Id. at 88-89. While exercising its inherent authority to discipline may be available for violations of the Disciplinary Rules, such as those alleged by FSMDB, as those alleged violations are for past conduct not likely to repeat and do not concern keeping immediate order in the court, I find that complaints about the Disciplinary Rule violations should be more properly handled through the processes set forth in Disciplinary Rules. As such, this Court will exercise its discretion whether to initiate a complaint by motion pursuant to Rule 4:
"Rule 4 . . . (a) Charges of professional misconduct may be initiated by any justice of the Supreme Court upon motion by that justice . . . . (b) All complaints concerning violations of these rules shall be referred to the Chief Justice. . . ."
3. Conclusion
I decline to grant the FSMDB's motion to discipline Ms. Sigrah by denying her the right to represent her client in the proceeding, in favor of acting pursuant to Disciplinary Rule 4.
On May 9, 2024, this Court held a hearing on the Weilbachers' motion to dismiss on the basis that this Court no longer has subject-matter jurisdiction. The basis for the motion was that an amendment to Article XI, section 6(b) passed by the Fourth FSM Constitutional Convention ("the Fourth Convention") and approved by FSM voters on July 4, 2023.
The proposal, Committee Proposal No. 4-07, CCD2 (hereinafter "CP 4-07"), reads as follows:
A Proposal relating to providing exclusive jurisdiction of cases where an interest of land is at issue in the State Courts.
Article XI, Section 6 of the Constitution of the Federated States of Micronesia shall read as follows:
Section 6.
(a) The trial division of the Supreme Court has original and exclusive jurisdiction in cases affecting officials of foreign governments, disputes between states, admiralty or maritime cases, and in cases in which the national government is a party except where an interest in land is at issue.
(b) 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, between a state or a citizen thereof, and a foreign state, citizen, or subject; except that the competent state courts shall have exclusive jurisdiction in cases where an interest in land is at issue.
(c) When jurisdiction is concurrent, the proper court may be prescribed by statute.
The italicized clause ("the new exception clause") is the new language proposed by CP 4-07.
1. Weilbachers' Contentions
The Weilbachers contend that when the voters approved CP 4-07 adding the new exception clause to section 6(b) their intent was "that state courts shall have exclusive jurisdiction in any cases where interest in land is involved."
As background, FSMDB is suing the Weilbachers for the balance due on the debt the Weilbachers owe on the loan they took out to fund their bakery (the breach of contract action); it is also seeking as relief, in the event that the debt is established by this Court, in the form of sale of the late Robert Weilbacher's parcel of land, lot no. 035-K-19 (formerly 035-K-18), proceeds to be applied to the balance owed. The Weilbachers' contend that this Court no longer has jurisdiction, because under the amendment in CP 4-07, the state courts now have exclusive jurisdiction over all cases where the judgment may result in the transfer of ownership of land.
That exclusive jurisdiction, the Weilbachers' contend, applies to actions to foreclose on mortgages or deeds of trust.2 For their support, they cite the Fourth Convention's committee report:
Your Committee unanimously agreed that all cases where the judgment may result in the transfer of ownership of land is the exclusive jurisdiction of the State Court where the land is located.
Your Committee is in unanimous agreement that cases where an "interest in land is at issue," defined as where ownership of land, transfer of title to land, and registration of land is at issue, the State courts where the land is located have exclusive jurisdiction. The national courts do not have jurisdiction over these cases.
CC-SCR-04-08, at 2-3.
2. FSMDB's Contentions
FSMDB contends that an interest in land is not at issue given that no one contests that Robert owned the land (and consequently his estate now owns the land). FSMDB cites to caselaw stating that a mortgage is merely a lien to secure payment on the loan, e.g., Bank of Guam v. Semes, 3 FSM R. 370, 381 (1988) and Helgenberger v. FSM Dev. Bank, 18 FSM R. 498, 500 (App. 2013), implying that the mortgage does not constitute an interest in land. FSMDB also cites to decisions in which it has been held that a mortgage foreclosure does not involve an "interest in land at issue": "A mortgage foreclosure generally does not constitute an interest in land being at issue because in a mortgage foreclosure the interests in land are not in dispute – the parties all agree who owns the land and who holds the mortgage." Sam v. FSM Dev. Bank, 20 FSM R. 409, 416 (App. 2016).
FSMDB points out that the Fourth Convention committee report (CC-SCR-04-08) does not mention foreclosures, and it argues that if the delegates intended to apply the amendment to foreclosures, the report would have mentioned them.
Further, FSMDB points to press releases put out by the Convention analyzing CP 4-07. The public service announcement states that "interest in land" "includes land ownership, lease or other use rights, and easement [sic], with other rights including permission to farm, access to water, right to collect fruit or other living things, etc." https://gov.fm/index.php/component/content/article/35-pio-articles/news-and-updates/715-all-nine-proposed-amendments-to-the-fsm-consituton-for-the-july-2023-referendum#
Although this definition adds to the classes of interests that may trigger jurisdiction, absent from the definition is any mention of mortgages or deeds of trust as interests in land.
Foreseeing the possibility that the Weilbachers might prevail in their contention that merely filing a foreclosure proceeding now, in the amended Constitution, puts an "interest in land at issue," FSMDB next argues that the amendment in CP 4-07 must be given prospective effect, and thereby rendering it inapplicable to this case.
FSMDB first contends that unlike the dual citizenship amendment contemporaneously approved by voters, CP 4-07 has no language giving it retroactive effect; instead it requires that "competent State Courts shall have exclusive jurisdiction." "Shall" means in the future. Second, to apply the amendment in CP 4-07 to cases such as the Weilbachers' matter would mean a dismissal in this Court for lack of jurisdiction followed by a dismissal in state court because the statute of limitations has run out. The effect, according to FSMDB, is to violate its rights or authority given to it by statute.
3. Analysis
a. Interpreting Constitutional Text
The analysis of when an "interest in land is at issue" as stated in the FSM Constitution is an exercise in constitutional interpretation, as follows: "In interpreting a constitutional provision, a court must initially analyze the constitution's actual words. If those words are clear and permit only one possible result, then the court should go no further." Rodriguez v. Bank of the FSM, 11 FSM R. 367, 380-81 (App. 2003).
If a constitutional provision "is not clear and does not permit only one possible result," a court "should next consult the constitutional convention journal to ascertain the framers' intent in drafting the language." Id. at 381.
In regard to the constitutional convention, there have been two relevant conventions—the 1975 Convention, which considered the phrase "interest in land is at issue" as it appears in section 6(a) of Article XI, and the Fourth Convention, which recently, by vote of the people, added that phrase as part of its amendment to section 6(b) of Article XI.
Neither version of section 6 of Article XI of the FSM Constitution, original or amended, defines or interprets "interest in land is at issue." The does not have an obvious single--it is subject to various interpretations.
Turning to the Journal of the 1975 Constitutional Convention, it too does not provide a definition of "interest in land is at issue." In the absence of a clear, single meaning, this Court has in the past construed whether there an "interest in land is at issue" by looking to what, if anything, was at issue. In the first reported case, FSM Dev. Bank v. Mori, 2 FSM R. 242 (Truk 1986), ruling on a motion to dismiss in a foreclosure action, the trial division noted that, as there was no answer on file putting at issue an interest in land, the exception in section 6(a) (the exception clause) to exclusive jurisdiction over disputes involving a national government instrumentality (i.e., FSMDB), had not been invoked. Id. at 244.
In FSM Development Bank v. Ifraim, 10 FSM R. 1 (Chk. 2001), an action on a promissory note that also sought to foreclose on a mortgage, the defendants disputed ownership of at least one of the mortgagors in the land purportedly subjected to the mortgage. The trial division concluded that because the pleadings put in issue ownership of the land, the exception clause in 6(a) had been invoked, but nevertheless found the court had pendant jurisdiction over the foreclosure claim, based on its claim on the note. Id. at 5.
FSM Development Bank v. Kansou, 17 FSM R. 605 (Chk. 2011), involved a collection matter, in which neither the title held by the borrower in the secured land nor the registered mortgage held by the lender was at issue. Thus, the trial division found that the exception clause in 6(a) was not invoked. Id. at 608.
In Sam v. FSM Development Bank, 20 FSM R. 409 (App. 2016).an appeal from trial division summary judgments granting real property mortgage foreclosures, the appellate division rejected appellant's contention that the trial division lacked subject matter jurisdiction, finding the exception clause inapplicable, because, as noted above, of the lack of dispute as to ownership of the land or who held the mortgage.
b. New Exceptions Clause
In contrast to the Journal of the 1975 Constitutional Convention, the Journal of the Fourth Convention states that an interest in law is at issue in a case "where ownership of land, transfer of title to land, and registration of land is at issue." II J. of the 4th FSM Con. Con. 813-14. The journal also states that "all cases where the judgment may result in the transfer of ownership of land [are] the exclusive jurisdiction of the State Court where the land is located." Id. at 813.
Thus, the Fourth Convention adopted an interpretation of "interest in land is at issue" that is a clear departure from this trial and appellate division holdings to date. Applying the meaning of "interest in land is at issue" as viewed by the Fourth Convention, I find under this new provision that a proceeding involving a mortgage foreclosure action has an interest in land at issue when filed with the Court, because the proceeding may result in a judgment of land transfer as contemplated by its delegates. The plain effect of the amendment in CP 4-07 so approved is that it places foreclosures exclusively in the jurisdiction of the competent court of the state in which the land is located. While under section 6(a), this Court continues to have exclusive jurisdiction over cases brought by FSM National Government instrumentalities to collect on debts unsecured by real property mortgages or deeds of trust, any case that seeks to combine collection of a debt with a land foreclosure proceeding falls within the jurisdiction of the competent state court.
Thus, proceedings to foreclose mortgages of land involve an interest in land being at issue, invoking the exclusive jurisdiction in state courts.
c. Retroactivity
FSMDB next argues that CP 4-07 should not be applicable to this case--that the motion to dismiss should not be granted--because dismissing this proceeding would preclude FSMDB's right to collect on the loan, as collection would be barred by the statute of limitations. Such would constitute a retroactive application of CP 4-07.
This is so because over six years has passed since the Weilbachers' last payment on the note (which was made in January 2018), and, upon dismissal of this action, if FSMDB were to file a complaint in Kosrae State Court, the complaint would face dismissal under the six-year statute of limitations.3
An interpretation of CP 4-07 that removes FSMDB's ability to enforce its debt against the Weilbachers renders that provision retroactive or retrospective. Laws are retroactive or retrospective if they "take away or impair vested rights acquired under existing laws, create new obligations, impose a new duty, or attach a new disability in respect to the transactions or considerations already past." BLACK'S LAW DICTIONARY 1317 (6th ed. 1990) (definition of "retroactive law").
Whether a measure is to be given prospective or retroactive effect is a matter of intent. Herman v. Municipality of Patta, 12 FSM R. 130, 136 (Chk. 2003). In this regard, FSMDB points to the use of the word "shall" as indicative that CP 4-07 is intended to be applied in the future.
Rather, I find more persuasive that there is insufficient evidence of intent to apply CP 4-07 retroactively.
[C]ourts observe a strict rule of construction against a retrospective operation, and indulge in the presumption that the legislature intended statutes, or amendments thereof, enacted by it, to operate prospectively only, and not retroactively. A contrary determination will be made only when the legislature's intention to make a statute retroactive is stated in express terms, or is clearly, explicitly, positively, unequivocally, unmistakably, and unambiguously shown.
Esa v. Elimo, 15 FSM R. 198, 204-05 (Chk. 2007) (citation omitted). The rule of interpretation disfavoring retroactivity also applies to Constitutional provisions. Heirs of Henry v. Heirs of Akinaga, 19 FSM R. 296, 304 (App 2014); 16 C.J.S. Constitutional Law § 36 (1984) ("Constitutional provisions operate prospectively, and do not operate retrospectively, unless the language used or the purpose of the provision indicates that such operation was intended.")
Nothing has been brought to this Court's attention indicating that the Fourth Convention's delegates or the voters understood CP 4-07 to apply to FSMDB's foreclosure cases filed before the amendment took effect. Nor is it mentioned in the journal of the convention that the likely outcome of applying it to such cases would be to put an end to the loan obligations of the Weilbachers and similarly situated mortgagors, as opposed to merely changing the forum where such cases are litigated.
As FSMDB points out, the Fourth Convention clearly knew how to craft a clause making a proposal retroactive, as it did with the dual citizenship proposal. In the face of no evidence of intent that CP 4-07 should apply retroactively to pending cases such as this one, I find that CP 4-07 does not affect this Court's jurisdiction in this matter.
4. Conclusion
As application of CP 4-07 to this matter would be retroactive, and there is no indication of the drafters intending that it would so operate, I find that CP 4-07 does not apply to this case, under the rule of interpretation disfavoring retroactive interpretations. This Court's subject matter jurisdiction under section 6 of Article XI, as it read before CP 4-07 was ratified by the voters, remains intact. I deny the Weilbachers' motion to dismiss.
On February 5, 2024, this Court granted FSMDB's motion to compel Defendant Josepha Weilbacher to respond to discovery requests, finding it entitled to the reasonable expenses of bringing the motion, pursuant to FSM Rule of Civil Procedure 37(a)(4). On February 22, 2024, FSMDB submitted a request for attorneys' fees for 3.9 hours of work at $125 an hour, for a total of $487.50, requesting that Ms. Weilbacher be required to make payment to FSMDB within sixty (60) days. Ms. Weilbacher did not file a response. Finding the fee request reasonable and compliant with the law, I order that such payment be made within sixty days of this order, payable to FSMDB.
Noting the pendency of the Weilbachers' motion to dismiss, FSMDB's motion to strike, and other outstanding matters, on May 2, 2024 FSMDB filed a motion to enlarge the time in which the parties may file pretrial motions to sixty (60) days after this Court's ruling on pending motions. The prior deadline for pretrial motions was May 5, 2024. The Weilbachers' have not filed an opposition to this motion. Finding good cause, I grant this motion. The parties shall have sixty days from the date of this order to file any pretrial motions.
FSMDB's motion to strike the Weilbachers' counsel's notice of reappearance is denied. The Weilbachers' motion to dismiss the complaint on the basis of subject matter jurisdiction is denied because this Court finds that the basis for the motion, a recent amendment to the Constitution, applies prospectively. Ms. Weilbacher is ordered to pay the fee award as set forth hereinabove. FSMDB's motion to enlarge time on the filing of pretrial motions for sixty (60) days is granted.
_______________________________Footnotes:
1 Otherwise, the request is for a purely symbolic act, and this Court will assume that it is mot being requested to issue relief of a purely symbolic nature.
2 Although structured somewhat differently from ordinary mortgages, deeds of trust are functionally the same. "A 'deed of trust' is a type of mortgage involving three parties: the borrower-grantor, the creditor beneficiary, and the trustee." Merritt v. USAA Fed. Sav. Bank, 532 P.3d 1024, 1031 (Wash. 2023). The Weilbachers granted a deed of trust as security. This order's reference to mortgages is intended to include deeds of trust.
3 FSMDB cites to the FSM statutes of limitation, 6 F.S.M.C. 805 (six years) and 807 (running from last payment). The corresponding Kosrae statutes of limitations are of the same duration and otherwise substantially identical. Kos. S.C. §§ 6.2506 & 6.2508.
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