KOSRAE STATE
TRIAL DIVISION
Cite as Nena v. Kosrae,
3 FSM Intrm. 502 (Kos. S. Ct. Tr. 1988)

[3 FSM Intrm. 502]
 
EZRA NENA,
Plaintiff,

vs.

KOSRAE STATE,
Defendant.

CIVIL ACTION NO. 18-85

OPINION AND ORDER DENYING A
PROTECTIVE ORDER

Before the Honorable Harry H. Skilling
Chief Justice
Argued October 14, 1988
Decided October 26, 1988

[3 FSM Intrm. 503]

APPEARANCES:
       For the Plaintiff:         Delson Ehmes
                                           MLSC
                                           Lelu, Kosrae State  96944

       For the Defendants:  Richard Kaminski
                                           Asst. Attorney General
                                           Kosrae State, FSM  96944

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HEADNOTES
Evidence
       Kos. Evid. R. 408, which renders evidence of settlement negotiations inadmissible in the trial, is based upon the Court's commitment to encourage out of court settlements and includes offers made in the early stages of a dispute. Nena v. Kosrae, 3 FSM Intrm. 502, 505-06 (Kos. S. Ct. Tr. 1988).
 
Evidence
       In adopting the rules of evidence used by the United States federal courts, the Kosrae State Court also adopted the reasons for those rules and the case law which interprets them, in so far as those are appropriate for Kosrae.  Nena v. Kosrae, 3 FSM Intrm. 502, 506 (Kos. S. Ct. Tr. 1988).

Evidence
       Pursuant to Kos. Evid. R. 408, all statements, including factual assertions, made during the settlement process are protected and inadmissible in court to prove liability or invalidity of a claim.  Nena v. Kosrae, 3 FSM Intrm. 502, 506 (Kos. S. Ct. Tr. 1988).

Evidence
       Although Kos. Evid. R. 408 does not require the exclusion of factual evidence "otherwise discoverable" simply because it was presented during compromise negotiations, a statement made in a letter seeking to settle a dispute, which statement is clearly connected to and part of the settlement offer, is not otherwise discoverable.  Nena v. Kosrae, 3 FSM Intrm. 502, 507 (Kos. S. Ct. Tr. 1988).

Evidence; Civil Procedure
       A request for admission as to the genuineness of a letter, excludable as evidence under Kos. Evid. R. 408 because it relates to settlement negotiations, is reasonably calculated to lead to evidence which could be admissible, and an objecting party may not obtain a protective order pursuant to Kos. Civ. R. 26 to avoid responding to the request.  Nena v. Kosrae, 3 FSM Intrm. 502, 507 (Kos. S. Ct. Tr. 1988).

[3 FSM Intrm. 504]

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COURT'S OPINION

HARRY H. SKILLING, Chief Justice:
      A hearing was held on the plaintiff's (Nena's) motion for a protective order on October 14, 1988.  Delson Ehmes of Micronesian Legal Services Corporation (MLSC) represented Nena.  Richard Kaminski, Assistant Attorney General, represented the defendant, Kosrae State (Kosrae).  At the hearing, I took the motion under advisement and I am now denying that motion.              
 
FACTS
      In 1983, Kosrae built the circumferential road across Nena's property at Wan Taf.  Prior to filing the complaint in this lawsuit, Nena, through the then MLSC staff attorney Leroy Miller (Miller), wrote a letter dated March 29, 1985 (Miller's letter) to the then Attorney General Robert Ciandella (Ciandella) seeking compensation for damages which Kosrae allegedly caused when it built the road.  In the letter, Miller said that Nena granted an easement to KTA (Kosrae Transportation Authority) to cross his land in order to build the road.
 
PROCEDURAL HISTORY
      In the process of conducting discovery, the State filed a request for admission, asking Nena to admit that the copy of Miller's letter attached to Kosrae's request was a true, correct and genuine duplicate of the original letter.1 Nena brought this motion for a protective order, arguing that the letter is inadmissible at trial and that he should not have to respond to the State's request.

ISSUES
     1.     Is Miller's letter inadmissible at trial because it is a settlement offer pursuant to Evidence Rule 408?

     2.     Is the statement in the letter that :" [h]e [Nena] granted an easement to KTA to cross his land to build the circumferential road," covered by Evidence Rule 408?

     3.     Is the statement in the letter: "[h]e granted an easement to KTA to cross his land to build the circumferential road" otherwise discoverable and therefore admissible pursuant to Evidence Rule 408?

     4.     If the letter and the statement are inadmissible at trial, are they discoverable pursuant to Civil Procedure Rules 26 and 36?

[3 FSM Intrm. 505]
 
ANALYSIS
     Since the parties have raised issues which will need to be answered during the trial of this case, the Court makes its opinion as if Kosrae requested to Nena to admit to the contents of the letter.

Is Miller's letter inadmissible at trial because it is a
settlement offer?

       Nena argues for a protective order on the theory that Miller's letter will be inadmissible at trial and therefore he should not have to admit or deny whether the letter is true or genuine.  The first issue, therefore, is whether Miller's letter will be inadmissible at trial.  Both parties agree that Evidence Rule 408 is the determining rule on this matter.  Rule 408 provides:

Evidence of (l) furnishing or offering or promising to furnish, or (2) accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as toeither validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount.  Evidence of conduct or statements made in compromise negotiations...is likewise not admissible.

       It is important to remember the public policy which the Kosrae State Court adopted when Rule 408 was enacted.  In 1985, in order to promote out of court settlements, the Court decided that offers to settle claims would not be admissible in court to prove liability or invalidity of a claim even though such evidence would be highly relevant.  The Court recognized that in the process of settling disputes, parties may conduct themselves or make statements which could hurt their claims and the Court wanted to provide the parties with a guarantee that anything that was said or done in the negotiating process would not be admitted against them in court to proveliability or invalidity of a claim. Rule 408 gives the parties this guarantee.

       Kosrae argues that Miller's letter was not a settlement offer because, at the time the letter was written, Ciandella had not  conveyed Kosrae's opinion on the damage to Nena's property.

       I find that Miller's letter was a settlement offer.  While it is possible that the "dispute" had not crystallized when the letter was written, the letter was a good faith attempt to resolve a problem by setting the foundation for settlement negotiations.

       Further, if I decide that Evidence Rule 408 only applies to offers which are made after a claim is clearly disputed then the protections guaranteed by the rule may be defeated.  It can be difficult to know the precise point at which a claim is disputed and the focus of the parties' concerns should be on the settlement itself and not on whether their

[3 FSM Intrm. 506]

discussion will be protected.  If the parties are unsure if a claim is disputed, they may be reluctant to enter into settlement negotiations at all.

       In order to avoid this result and to re-affirm this Court's commitment to encouraging out of court settlements, I find that Rule 408 applies to offers which are made in the early stages of a dispute and that it applies to Miller's letter.

       2.  Is the statement that Nena granted an easement to KTA to cross his land and build the circumferential road covered by rule 408?

       Kosrae asserts that Rule 408 only applies to opinions (not facts) which are discussed during the settlement negotiations.

       It is important to realize that the Kosrae State Court adopted the rules of evidence used by the United States federal courts.  In so doing, we also (where appropriate) adopted the reasons for those rules and the caselaw which interprets them.

       In the United States, the recognized  common law rule is that only actual offers to settle are inadmissible.  When the United States Supreme Court Advisory Committee (Advisory Committee) proposed Rule 408 to the Congress, it recommended a change -- that facts asserted during compromise negotiations also be inadmissible.  The United States Congress agreed and passed the version of Rule 408 which this Court ultimately adopted.

       In our jurisdiction, this means that all statements, including factual assertions, made during the settlement process are protected and inadmissible in court to prove liability or invalidity of a claim.

       3.  Is the statement in the letter:  "[h]e granted an easement to KTA to cross his land to build the circumferential road" otherwise discoverable pursuant to Evidence Rule 408?

       Kosrae argues that, even if the letter is inadmissible, the statement that Nena granted an easement is still admissible because it is "otherwise discoverable." To support its claim, Kosrae points to the third sentence of Rule 408 which provides:  "This rule does not require the exclusion of any factual evidence otherwise discoverable merely because it is presented or discussed in the course of compromise negotiations..."

       In order to understand what "otherwise discoverable" means, it is important to consider the rule's legislative history.  As explained above, the Advisory Committee recommended that Rule 408 prohibit the admission of factual assertions which are made during the process of settling a claim.  When the House of Representatives first considered this recommendation, they objected to making factual assertions inadmissible and they drafted a new bill that restated the common law.  28 USCS Appendix for Rules of Evidence Appendix 1 House Report at 8.  When the Senate considered the Advisory Committee's recommendation and the House bill, they agreed with the Advisory Committee and they deleted the House amendment thus restoring the rule to the Advisory

[3 FSM Intrm. 507]

Committee's version.  In addition, the Senate amended the rule by adding the "otherwise discoverable" sentence.  Id. Appendix 2, Senate Report at 10  At the Conference, the House agreed to the Senate's version with the understanding that the "otherwise discoverable" language prevented parties from immunizing facts by presenting them at the negotiating table.

The House bill was drafted to meet the objection of executive agencies that under the rule as proposed by the Supreme Court, a party could present a fact duringcompromise negotiations and thereby prevent an opposing party from offering evidence of that fact at trial even though such evidence was obtained from independent sources.  The Senate amendment expressly precludes this result.

       Id. App. 3, Conf. Report 6.  This is a long way of saying that "otherwise discoverable" evidence is evidence which is not tainted by an offer to settle.
 
       In this case, the statement in the Miller's letter is clearly connected to and a part of the settlement offer.  For this reason, the statement is not otherwise discoverable and it is not admissible.

       4.  If the letter and statement are inadmissible, are they still subject to the request to admit pursuant to Civil Procedure Rule 36?

       Under Kos. Civ. R. 26, almost all that is relevant is discoverable.  Even inadmissible evidence is discoverable if it is reasonably calculated to lead to evidence which could be admissible.  Pursuant to Kos. Civ. R. 36, a party can request that another party admit any document within the scope of Rule 26.  The question, therefore, is whether Kosrae's request is reasonably calculated to lead to other evidence which could be admissible.

       I find that it is.  Depending on how Nena answers the request for admission, Kosrae will know whether it has to look for other evidence with which to prove the existence of an easement.  In this sense, the request is reasonably calculated to lead to other admissible evidence.  For this reason, I find that letter is discoverable even though it will not be admissible.

CONCLUSION
       The motion for a protective order is denied.  Nena must respond to Kosrae's request for admission by admitting or denying that the letter attached to Kosrae's request is a genuine, true and correct copy of Miller's letter and by admitting or denying that Miller wrote that Nena granted Kosrae an easement to cross his property in order to build the road.  These responses are due before November 1, 1988.

       So Ordered.

Footnote:

1. In the motion papers and at the hearing, both parties assumed that Kosrae requested Nena to admit to the truthfulness and genuineness of the contents of the letter.