Cite as In the matter of the Receivership of YFC, (Yap 1996)
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     On May 22,1996, at 2:00 p.m., the court held a hearing on the Receiver's Application for Order to Show Cause and Restraining Order in Contempt Proceedings dated january 29, 1996. For the reasons set forth in the accompanying memorandum, the court makes the following conclusions of law:

1.   Gemini Capital Group, Inc.; Industria de Pesca, N.A., Inc. Robert A. Grant, John Gois, and Joseph Gois were in contempt of this court when they filed the arbitration petition (bearing Civil No. 95-01042 in Hawaii District Court) and appealed the dismissal of the Hawaii litigation to the Ninth Circuit Court of Appeals (Hawaii District Court docket number CV 95 00549; Ninth Circuit docket number 96-15261).

2.   Gemini Capital Group, Inc.; Industria de Pesca, N.A., Inc.; Robert
A. Grant, John Gois, and Joseph Gois purged the contempt when they notified '' the Hawaii District Court by counsel that they did not intend to go forward with the arbitration petition in Hawaii District Court with respect to YFC, and when they notified ,the Ninth Circuit Court of Appeals that they did not intend to proceed with the appeal as to YFC.

3.   David.R White and Alcantara & Frame are not a contempt citation for acts undertaken on behalf of their clients. In light of the foregoing, and for the reasons set forth in the accompanying  memorandum,

IT IS HEREBY.ORDERED denying the Receiver's second request, dated January 29,1996; for an order finding Gemini Capital Group, Inc ;industria de

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Pesca, N.A., Inc.; Robert A. Grant, John Gois, and Joseph Gois in contempt of this court.

IT IS FURTHER ORDERED enjoining John Gois and Joseph Gois from prosecuting the arbitration petition bearing Civil No. 95-01042 in Hawaii District Court; and enjoining the prosecution of the appeal of the Hawaii litigation, Hawaii District Court docket number CV 95-00549, to the Ninth Circuit Court of Appeals, Ninth Circuit docket number 96-15261.

IT IS FURTHER ORDERED that no later than July 31, 1996, the Receiver is directed to contact the trustee in the Chapter 7 bankruptcy cases In re Industria de Pesca, N.A., Inc., 96-04048-jh, and In re Gemini Capital Group, Inc., 9604049-pb, both of which were filed on March 26, 1996, in the United States Bankruptcy Court, Southern District of CalifoiYala, and to advise the court whether the trustee intends to go forward with or abandon the claims filed in the receivership against YFC by the foregoing two Chapter 7 debtors. Also no later than July, 31, 1996, the Receiver shall also apprise the court of the status of any counterclaims by Industria de Pesca, N.A., Inc., and Gemini Capital, Group, Inc., in the FSM Supreme Court litigation

     As to the Receiver's Application for Order to Show Cause and Restraining Order in Contempt Proceedings dated October 9, 1995, and the subsequent Order entered thereupon on October 25, 1995, the, court, for the reasons set forth in the accompanying memorandum, makes the following findings of fact:

1.   A total of 184 days elapsed from October 25, 1995, until April 26, 1996, the date upon which the contemptuous conduct at issue ceased.

2.   As to John Gois and Joseph Gois, the total amount of the contempt sanction imposed by the October 25,1995,order, which provides for a $50 a day sanction for each day that the contempt is on going, is $9200 (184 X 50).

3.   As to Gemini Capital Group Inc., and Industria de Pesca, NA., Inc., the amount of the contempt sanction liquidated as of one day prior to the date of their bankruptcy filings is $7,600 (152 X 50).

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4.   As to Robert A. Grant, the amount of the contempt sanction liquidated as of one day prior to his bankruptcy filing is $7,650 (153 X 50).

SO ORDERED THIS 25th   DAY OF     June        1996.
                                         Constarntine Yinug,Chief Justice
Received and filed:Date:   06-25-96    
BY        /s/           
Clerk of Yap State Court


I. Background
     The court held a hearing on May 22, 1996, at 2:00 p.m. on the Application for Order to Show Cause and Restraining Order in Contempt Proceedings tiled by the Receiver and dated January 29,1996. The Application seeks a contempt order holding the following persons and entities in contempt: Gemini Capital Group, Inc. (hereafter "GCG"); Industria de Pesca, N.A., Inc. (hereafter "IDP"); Robert A. Grant, John Gois, Joseph Gois, David White, and the Honolulu law firm of Alcantara & Frame. At the time of hearing, the court was in receipt of and has considered the following: the Receiver's Application; the Response to Application for Order to Show Cause and Restraining Order in Contempt proceedings, dated May 7th, 1996, and filed on behalf of David White, Alcantara & Frame, Joseph Gois, John Gois, Paul Finnerty, Bonnie Einspahr, and Robert Cohrs; and the Reply filed by the Receiver's attorney, Beauleen Carl Worsvvick, and dated May 16, 1996.

     The Receiver had not sought a contempt sanction as to Paul Finnerty,Bonnie Einspahr, and Robert Cohrsualthough the Response was also filed on their behalf, and these people-Are not considered for the purposes herein No response was filed on behalf of the. Contemnors Robert. A. Grant, GCG, and

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IDP. Counsel for the responding Contemnors has advised the court in the Response that Robert A. Grant, GCG, and TDP have filed, respectively, Chapter 11, Chapter 7, and Chapter 7 bankruptcy petitions on, respectively, March 27, 1996; March 26, 1996; and March 26, 1996. The Receiver, in her Reply, has requested that on the basis of comity this court stay all contempt proceedings as to Contemnors who have filed bankruptcy petitions.

     Present at the March 22nd hearing were Barbara Bluemel, the Receiver, who had filed the- OSC in her official capacity as Receiver; Beauleen Carl Worswick, attorney of record for the Receiver and who had filed the Reply on behalf of the Receiver; John Hollinrake, who appeared for the Contemnors David H. White, Alcantara & Frame, Joseph Gois, and John Gois; and Kathleen Burch, who appeared on behalf of the State of Yap and Yap Economic Development Authority, creditors of Yap Fishing Corporation. David H. White and Alcantara & Frame are an individual attorney and a law firm who represent GCG, IDP, Robert Grant, Joseph Gois, and John Gois in the Hawaii District Court and Ninth Circuit as set forth below. The court heard oral argument at the hearing; no party presented any evidence.

      The instant OSC is the second contempt proceeding that the Receiver has filed. The first was filed on October 9, 1995 and sought a , contempt sanction against GCG, IDP, Robert A. Grant, John Gois, and Joseph F Gois (hereafter "the Gemini plaintiffs") based on their filing of a lawsuit against Yap Fishing Corporation in Federal District Court in Hawaii on July 6, 1995, Civil Case No. 95-00549 (hereafter "the Hawaii litigation").
      This court's orderdated February 25, 1995, which imposed the receivership; enjoined thecommencement of any actions against Yap Fishing Corporation. The court set a hearing date for October 25, 1995, and a copy of the order setting the hearing date and OSC were served on the Gemini plaintiffs, who, in lieu of response, sent a letter to this court by their counsel, David H. White, of the Honolulu firm of Alcantara & Frame, in which he urged that "a contempt finding would be inappropriate and unjustified" and  requested that the Receiver's request for a contempt order be denied. None of the Gemini plaintiffs appeared personally or by counsel at the hearing on October 25th,1995. The court found the Gemini plaintiffs to be in contempt of his court by virtue of their having filed the Hawaii litigation . and entered an order imposing a civil coercive fine of $50 a day prospectively from October-25th,1995, arid also enjoined prosecution of the Hawaii litigation. The order provided that the Gemini plaintiffs could purge the conteiinpf by "conformingtheir conduct to this court's prior orders" or alternatively by filing a Rule12(b) motion. The Gemini plaintiffs filed no motion under Rule 12(b), and continued to prosecute the Hawaii litigation In addition, after the October 25th order, they by counsel David H. White of the firm of Alcantara & Frame filed a Petition for an Order Compelling Arbitration on December 15, 1995, in Federal District Court in Hawaii, Civil Case 95-01142 (hereafter "the arbitration proceeding"). On January 12, 1996, the Federal District Court dismissed the Hawaii litigation on forum non conveiiiens grounds. Thereafter, the Gemini plaintiffs appealed the dismissal; again by counsel, to the U.S. Ninth Circuit Court of Appeals, and this bears the Ninth Circuit docket number 96-15261 (hereafter "the appeal"). The Gemini plaintiffs neither sought leave of this court to file the arbitration petition,' nor to pursue the appeal. It is the acts subsequent to the October 25, 1995, ruling that are the basis for the second OSC.
     While the Gemini plaintiffs have undertak'rn these proceedings in Federal District Court in Hawaii, and in the Ninth Circuit, they have yet to directly challenge the imposition of the receivership on any basis in this court. The receivership was imposed over fifteen months ago.

II. Does the post-October 25, 1995, conduct of the Gemini plaintiffs, undertaken by their counsel David H. White of Alcantara & Frame, constitute contempt of this court's February 25, 1995, and October 25, 1995, orders?
     David H. White, Alcantara & Frame, Joseph Gois and John Gois ("the Contemnors") in their response to the January 29th application for OSC seem to draw no distinction between the pre-October 25th, 1995, conduct - i.e., the filing of the Hawaii litigation which was the subject of the OSC hearing held on October 25th, 1995, and the post-October 25th conduct - i.e., the filing of the arbitration petition and the filing of the Ninth Circuit appeal when the Federal District Court dismissed the Hawaii litigation Much of the argumentis directed only at the filing of the Hawaii litigation and not the subsequent actions which are the subject of the instant OSC. Neither  the Contemnors nor the Gemini plaintiffs have asked for reconsideration of the October 25th order; arid the court does not reconsider that order herein. The focus here is on whether the subsequent, post October 25th -conduct  is contemptuous, and the arguments, by inference where required, are considered in that context.

         The Contemnors urge that they acted mi faith by disobeying this  court's order of February 25,1995, in filing suit in Federal District Court in

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Hawaii on July 7, 1995, and inferentially by continuing to prosecute the suit in the face of the October 25th order enjoining prosecution. They contend at page 2 of their Response that the Gemini Plaintiffs and their attorneys in good faith were seeking to contest the validity of this Court's issuance of the Receivership Order, based on the unilateral, non-noticed, non YFC board sanctioned petition filed by Yap Economic Development Autliority ("YEDA").Such filing did not constitute contempt of this court but was simply an effort by Gemini Plaintiffs to exercise their cue process rights in the U.S. judicial system.

     There appears to be no FSM precedent on point with respect to this issue of a good faith defense to a contempt citation., In such instances this court looks to other common law jurisdictions, including the United States, and the Contemnors need have looked no further than U.S. authority to discern that their actions in disobeying this court's order were contemptuous. Considering these authorities leads to the conclusion that the Contemnors are in error when they suggest at page 2 of their Response that "[s]uch filing [of the Hawaii litigation] did not constitute contempt of this Court, but was simply an effort by Gemini Plaintiffs to exercise their due process rights in the U.S. judicial system."1

     The United States Supreme Court held in United States v. United Mine Workers, 330 US 258, 91 IrEd 884; 67 S Ct 677 (1947), that regardless of the good faith belief of the person doing the contemptuous act, it is contempt to disobey an order made by a court with subject matter and personal jurisdiction, where the issue of jurisdiction is substantial and not frivolous. A party subject to a court order must abide by its terms or face criminal contempt; and even if the order is later declared unconstitutional, it must be followed until vacated or modified. In United Mine Workers, which deals principally with criminal- contempt 'but in which a civil contempt sanction  was imposed based on the same conduct; the district court (the court appealed from) issued without notice on ,November 15th, 1946, a temporary restrainingw order prohibiting a strike, and set a hearing on the preliminary injunction

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for November 27th, 1946. The defendants, the United Mine Workers and John L. Lewis personally, ignored the restraining order, and allowed the strike to begin on November 21st. A rule to show cause issued, and the district court found the defendants guilty of criminal contempt, and also imposed a civil contempt sanction. The defendants took the position that the district court was without jurisdiction over the case in the first instance. The court said:
In the case before us, the District Court had the power to preservg existing conditions while it was determining its own authority to grant injunctive relief. The defendants, in making their private determination of the law, acted at their peril. Their disobedience is punishable as criminal contempt.

Proceeding further, we find impressive aythority for the proposition that an order issued by a court with jurisdiction over the subject matter and person must be obeyed by the parties until it is reversed by orderly and proper proceedings. This is true without regard even for the constitutionality of the Act under which the order is issued.

91 L ed at 912.

     The court went on to discuss the issue of a good faith belief by the contemnors that the court lacked jurisdiction, and' made the following observation:

We are aware that the defendants may have sincerely believed -that ;the restraining order was ineffective and would finally be vacated..... The restraining order sought to preserve conditions until the cause could be determined; and obedience by the defendants would have secured thisresult. They had full opportunity to comply with the order of the District Court, but they deliberately refused obedience and determined for themselves the validity of the order . . . . Their conduct showed a total lack of respect for the judicial process.

91 L ed at 919-920.

     A result similar to that reached in United Mine Workers was reached in a case cited by the Contemnors, United States v. Dickinson, 465 F.2d 496 (Fifth Cir. 1972), which is a criminal contempt case, but which outlines principles that apply equally well in the civil contempt setting of this case. Dickinson is of particular interest because it involved competing concerns generated by two of the most cherished rights conferred by the Bill of Rights of the United States Constitution, freedom of the press, "encased in the Armorof the First Amendment" (465 F.2d at 499) and the right of the accused to a fair

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trial, "shielded by the Sixth Amendment"( ibid.). Dickinson involved a situation where Frank Stewart, a political activist on behalf of the African American community of Baton Rouge, Louisiana, was charged in Louisiana state court with conspiring to murder the mayor of Baton Rouge. Steward filed a suit for injunctive relief in Federal District Court in the Louisiana, alleging that the state had filed the criminal prosecution of him in an attempt to suppress his exercise of First Amendment rights. At a hearing on the issue of whether the state had a legitimate prosecutorial motive, the District Court judge entered an order which prevented any report 'of the testimony taken at the hearing. The intent of the order was to prevent the preservation of an impartial jury venire in the event the state prosecution might reach trial. Two newspaper reporters ignored the court's order, reported the testimony, and were subsequently cited for criminal contempt by way of a fine of $300 each. They subsequently appealed those convictions, and the Fifth Circuit found that the District Court's order violated the First Amendment. The Appeals Court then went on to address the issue of the contempt citations.

      The conclusion that the District Court's order was constitutionally invalid does not necessarily end the matter of the validity of the contempt convictions. There remains the very formidable question of whether .a person may with impunity knowingly violate an order which turns out to be invalid. We hold that in the circumstances of this case he may not.

        We begin with the well-established principle in proceedings for criminal contempt that an injunction duly issuing out of a court having subject matter and personal jurisdiction must be obeyed, irrespective of the ultimate validity of the-order. 'Invalidity is no defense to criminal contempt. United States v. United Mine Workers, 1947, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884; [numerous additional citations omitted] * "

465 F.2d at 509-510, emphasis in the original.

     The Contemnors cite to In re Watts, 190 U.S. 1, 47 L.' Ed. 933, 23 S.Ct. 7181903), and point out that in that case attorney.udAeir clients were found not guilty of contemptuous conduct by contesting in good faith the effectiveness of a bankruptcy receivership. Watts is distinguishable in two important ways, though. Its focus is attorney conduct, which will be discussed in turn below, and not client conduct also, the acts allegedly contemptuous of a -federal court's order were done ultimately-;in accordance with a contradictory state court order no dueling couit`'orders are at issue here. The Contemnors also cite In re Green, 369 U.S. 6$9_82 S.Ct.1114, 8 L.Ed.2d 19.8 (1962):Ex Parte Fisk. 113 U.S. 713. 5 S.Ct: 724: 28::L:Ed. 1117 (1885): and

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Dickinson, supra, for the specific proposition that "[i]f the issuing court lacks subject matter jurisdiction over the parties to it, its order may be violated with impunity." The court cannot locate that proposition in either of those two cases, and this court's reading of them cases does not lead to this conclusion. The court has previously discussed Dickinson. Green and Fisk both involve writs of habeus corpus where the contemnors had been jailed: in Green as a conscious decision on the part of the contemnors to test the order at issue by going to jail; in Fisk because in 1885 no appeal lay from a contempt order, apart from asking the issuing court to reconsider it, and habeus corpus appears to have been the only effective means of testing the order. In both Green and Fisk, the United States Supreme Court agreed with the contemnors that the contempt orders were beyond the authority of the issuing courts. However, the fact that the contemnors in those cases successfully challenged the orders does not compel the conclusion that they were free to violate the orders with impunity in the first instance.
     In their Response, with the exception of Hawaii counsel, David H. White and Alcantara & Frame, the Contemnors do not raise the issue of personal jurisdiction over them, nor do they raise the issue of this court's subject matter jurisdiction over the receivership proceeding itself. It appears to the court on the strength of the record before it that it did have requisite subject matter and personal jurisdiction over the Contemnors other. than White and Alcantara & Frame and the other Gemini plaintiffs (GCG, IDP, and Robert Grant) at the time that both the February and October orders were entered. Given this prerequisite, : the Contemnors' option was not to continue to violate the February 25th order and the October 25th order by filing the arbitration petition and pursing the appeal, but to seek an orderly review of them. In the course of such an orderly review, the Contemnors could have, and should have, raised their objections with respect to those orders. This they did not do. Rather, they, made a private determination as to .the validity of the orders, and in doing so, acted at their peril. United Mine Workers, supra.

     The court finds that the post-October 25,1995, actions in filing the Hawaii arbitration petition and in .pusuing the appeal in the Ninth Circuit were in violation of the February 25th and October 25, 1995, orders, and as such constituted contempt of this court. The court will enjoin any further prosecution of these matters as to Joseph Gois and John Gois, since the remaining Gemini plaintiffs have fiIed for bankruptcy protection in the

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United States, and the Receiver has requested that out of concerns of comity, this court take no further action with respect to them.

III.      Should David H. White and Alcantara & Frame be subject to a contempt citation for their role in filing the arbitration, petition and the appeal to the Ninth Circuit on behalf of their clients, GC6, IDP, Robert A. Grant, John Gois, and Joseph Gois?
     The Receiver's first OSC petition sought sanctions against the Gemini plaintiffs; the second OSC petition sought sanctions against those parties plus their counsel, and this on the theory that it was the lawyers who continued the prosecution and appeal of the Hawaii litigation and filed the arbitration pleadings. Setting aside the issue of personal  jurisdiction over the lawyers, this is a plausible argument. However, upon the record before it, this court concludes that although the acts of filing the arbitration petition and the appeal were contemptuous, public policy considerations support holding only the clients, and not their lawyers, in contempt.

     First, it bears noting what the instant acts of contempt are not. They are not direct acts of contempt, but indirect acts, which by definition took place outside the presence of the court. In a direct contempt situation where counsel in the courtroom makes a statement or does an. act that offends the dignity of the court, or disobeys a court order or ruling either intentionally or unintentionally in the occasionally charged atmosphere of a courtroom, it may be appropriate to hold counsel in contempt. Case law upholding contempt citations in this situation are legion. In those cases, it is the act of the attorney itself that constitutes contempt, apart from the fact of his representation of his client.
     The situation at hand is of a different sort and is bound up with the attorney client relationship. The role of the attorney includes fully, fairly, and completely advising her or his client of what the pertinent law is and of consequences of any given course taken. White and Alcantala and Frame in all good fault could have advised their clients that risking contempt  was an option with respect to asserting what they perceived to be their due process rights. Maness v. Meyers, 95 S.Ct. 584 (1975), deals with a situation where- the attorney was cited for contempt for advising his client to assert his right against self-incrimination. Observations of Chief  Justice Warren Burger, which include a reference to Watts, supra, are apposite to the case at bar:

     There is a crucial distinction between citing a recalcitrant witness for, contempt [citation omitted] and citing the witness' lawyer for contempt based only on advise given in good faith to assert the privilege against self-incrimination. The witness, once advised of the right, can choose for himself whether to risk contempt in order to test the privilege before evidence is produced. That decision is, and should be, for the witness. But, if his lawyer may be punished for advice so given there is a genuine risk that a witness exposed to possible selfincrimination will not be advised of his right. Then the witness may be deprived of the opportunity to decide whether or not to assert the privilege.

      An early example of this situation is found in re Watts, 190 U.S. 1, 23 S.Ct. 718, 47 L.Ed. 933 (1903). There lawyers advised their clients in good faith that state, not federal, courts had bankruptcy jurisdiction over a certain property in the hands of a state receiver. This advice led to a collision between the state and federal courts, and contempt citations for the lawyers. Although tlys Court held that the lawyers' advice was substantively incorrect, it refused to allow the federal contempt convictions to stand because there was no evidence the advice was given in bad faith. Id., at 32, 23 S.Ct., at 726. Mr. Chief Justice Fuller, speaking for the Court, said:

"In the ordinary case of advice to clients, if an attorney acts in good faith and in the honest belief that his advice is well founded and in the just interest of his client, he cannot be held liable for error in judgment. The preservation of the independence of the bar is too vital to the due administration of justice to allow of the application of any other general rule." Id., at 29, 23 S.Ct., at 725.

95 S.Ct. at 595-96.

         The conclusion that flows from Maness and Watts is that once an attorney in good faith gives advice to a client, it is the client who should make the final decision, and it is the client who should take responsibility for the course charted under the advice of the lawyer: the client ultimately is at the helm of the ship of litigation, not the lawyer. To take a different position on this issue, at least in so far as it is presented in the case at bar and absent clear and convincing evidence of an improper motive on  the part of an attorney, could work to chill the giving of advice from the attorney to the client. The attorney may be inclined to pre-evaluate the advice that she or he gives the client out of concerns that the client may decide upon a course that, in the attorney's mind, could put him or her at possible risk for a contempt citation: Taking this view by no means gives attorneys license to flaunt court order. A well advised, fully informed client; after hearing from the attorney

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that the action considered may lead to a contempt sanction, monetary or otherwise, is going to direct the attorney to proceed on his or her behalf only after careful consideration, because the client is taking the risk, not the attorney.

     For these reasons, White and Alcantara & Frame are not to be held incontempt of this court for their actions in filing the arbitration petition andfor pursuing the appeal on behalf of their clients, the Gemini plaintiffs.

IV. Were the unilateral stipulations to stay the arbitration proceeding and the appeal sufficient- to purge the contempt?
     Having determined that the post-October 25, 1995, actions were contemptuous, and having determined that counsel for the Gemini plaintiffs should not be held in contempt for policy reasons, the court turns to whether the steps taken by the Gemini plaintiffs in the arbitration and appeal proceedings were sufficient to purge the contempt. Those steps are the filing of a "Notice of Stay Order as to Respondent Yap Fishing Corporation" in both matters. That notice, together with the exhibits attached to it, apprise the district and appeals courts of this court's February 25th and October 25th, 1995, orders. The last sentence of the notice provides that the Gemini plaintiffs are "stipulating to stay any request for affirmative relief as against YFC in this action until further notice." Hence, the Gemini plaintiffs purport to have filed a unilateral stipulation to stay further proceedings.

     In the usual case, a stipulation works in tandem with an order: the parties agree; the court enters an order thereupon. In the instant case, again based upon the materials provided, there was no agreement between or among opposing parties, and neither an order in the Hawaii court nor the Ninth Circuit staying anything  clearly, no order of this court could stay theproceedings in the court of another country. The Gemini plaintiffs stipulated presumably among themselves, to no the Hawaii District Court and the Ninth Circuit of this court's prior, orders, and by inference to recognize the orders themselves, at least until hey decide differently. It remains an open issue whether the Hawaii litigation And the appeal are stayed in their respective fora, and the most  that can be aid is that the stipulation to stay proceedings, in the sense,used by the Gemini plaintiffs, reflects their  unilateral decision not to proceed with;the arbitration or the appeal for the present. This unilateral decision is of a piece with the Gemini plaiitiffs' prior

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private determination (see United Mine Workers, supra) of the validity of this court's orders.
     The fair implication of the unilateral stay, as opposed to a dismissal of the appeal as to YFC and, at a minimum, the dismissal without prejudice of the arbitration proceeding as to YFC, is that the Gemini plaintiffs wish to keep their options open, so that if it suits their subjective purposes, they may at some future point pick up their cudgels, which they have laid aside for now,but kept close at hand, and resume combat as to the arbitration or the appeal  in the event that this court's ruling on the instant OSC is not to their liking. Their Response appears to bear this out at page 6 where it reads that "[t]hey  have voluntarily decided to stay all proceedings in U.S. District Court [and in the Ninth Circuit, based on the representations made in the Response] pending the outcome of this contempt proceeding." To argue that these actions constitute substantial compliance is to make a case for compliance that is at best self-serving. These actions certainly do not constitute compliance within the spirit of either this court's order of February 25, 1995, or its orderof October 25,1995.

     At the same time, however, the court considers the conduct within the context of an observation by Judge Brown in Dickinson, supra: "Contempt, of course, is a sui generis proceeding, and 'there is no doubt that a contempt proceeding has play in the joints."' Dickinson, supra at 513, citing United States v. Barnett, 346 F.2d 99 at 107, (5th Cir., 1965, en banc). So long as the Gemini plaintiffs take no further action, and so long as the Receiver is required to take no further action of any kind with respect to the arbitrationand the appeal, the mere fact of .the pendency of them would seem to be of limited practical consequence. Both matters will likely be dismissed for want of prosecution in due course as to YFC. Although it appears true that Gemini plaintiffs could re-commence those proceedings at any time, that is a contingency the court will visit if and when it happens: The contingent status does not change the present status of those matters.

     In light of these considerations, the court emphasizes its finding the actions of the Gemini plaintiffs in unilaterally placing the arbitation petition and the appeal on hold is not substantial compliance with the spirit of this court's orders. In the exercise of its discretion, though; and "allowing for some play in the joints", the court deems it minimally, sufficient, at this stage of this receivership proceeding, to purge the contempt. Therefore, the contempt stemming from the filing of the arbitration petition and the nohee:

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of appeal was purged as April 26th, 1996, the date of the unilateral stipulations filed by the Gemini plaintiffs in those matters.

V.  Does 4 YSC 156 place a limit on the amount of a daily, coercive fine?
     The last.issue raised by the Contemnors in their-Response has to do with the $50 a day, civil coercive fine which this court imposed upon GCG; IDP, Robert A. Grant, John Gois, and Joseph Gois by this court's order of October .25, 1995. Since this has to do with the sanction imposed in the October 25th order, the court will treat this argument as made on behalf of the Gemini plaintiffs, although the Response. was filed only on behalf of Gemini plaintiffs John Gois and Joseph Gois. Contemnors urge that 4 YSC 156 (b)(3), which reads that "[a] person found to be in co'~tempt of court shall be fined not more than $1,000.00 or imprisoned for not more than six months," places a cap on the $50 a day fine, which would cease to accrue, in the case of the October 25th order imposing a fine of $50 a day, after twenty days (20 days X $50 = $1000). The court finds that the fine of the sort at issue here does not fall within the statute, and that the limit of $1,000 does not apply. In reaching this conclusion, the court looks to the language and construction of the statute, which provides in pertinent part as follows:

156. Contempt.

(a)      Any Justice shall have the power to punish contempt of . court. Contempt of court is:

                        (1)      Any intentional obstruction of the administration of justice by any person, including any officer of the court acting in his official capacity; or
(2)      Any intentional disobedience-or resistance to the court's lawful writ, process, order,ruled decree or,  command.

(b)       All adjudications of contempt shall be pursuant to the following practices and procedures:

(1)      Any person accused, of committing any civil contempt shall have a right to notice of the charges and an opportunity to present a defense and mitigation. A person found in civil contempt may  be imprisoned until such time as he complies with the order or pads an ambunt necessary to compensate the injured party, or both;
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(2)      Any person accused of committing a criminal contempt shall have a right to notice of the charges and an opportunity to present a defense and mitigation; provided, that no punishment of a fine of more than $100.00. or imprisonment shall be imposed unless the accused is given d right to notice of the charges, to a speedy public trial, to confront the witnesses against him, to compel the attendance of witnesses in his behalf, . to have the assistance of counsel, and to be released on bail pending adjudication of the charges. He shall bade a right to be charged within three months of the contempt and a right not to be charged twice for the same contempt; and

(3)       A person found to be in contempt of court shall be fined not more than $1,000 or imprisoned for not more than six months.  

Paragraph (a) defines contempt, and the conduct of the Gemini plaintiffs falls within subparagraph (2). Paragraph (b) sets forth certain penalties with respect to civil contempt in subparagraph (1), and with respect to criminal contempt in subparagraph (2). Subparagraph (3) provides that a person "found to be in contempt of court shall be fined not more than $1,000". The October 25th order imposed a joint and several, civil, daily coercive fine of $50 against GCG, IDP, Robert A. Grant, John Gois, and Joseph Gois, and in applying this statute to the facts at hand, it is immediately apparent that the sanction imposed by this court in its October 25, 1995, order is not provided for therein. Subparagraph (1), which deals. with civil contempt, specifies imprisonment until such time as compliance is tendered; "an amount necessary to compensate the injured party", which would obviously be paid to the injured party and not the clerk of the court in the way a fine would; or a combination of the two. It does not deal with a civil coercive fine. Hence, the very real question arises whether or not this court exceeded its authority in imposing the sanction contained in the October 25, 1995, order. The inquiry necessary--to `rive that question leads to two others: 1) was a daily coercive contempt sanction of the sort imposed in this case part of the common law of the FSM, and hence of Yap, prior to the Yap State Legislature's passing of the law codified as 4 YSC 156 such that in-the absence of 4 YSC 156, a daily coercive civil fine was a sanction available to this court? and 2) if such a sanction was part of the Yap common law of

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contempt, did 4 YSC 156 work to abrogate the common law of Yap such that 4 YSC 156 excludes all sanctions other than those specified therein?

a. What is the common law of Yap with respect to contempt?

     What constitutes the common law of the FSM, and hence for Yap, is addressed in Rauzi v. FSM, 2 FSM Intrm. 8 (Pon. 1985), which construes the meaning of "common law" as used in 54 F.S.M.C. 112(3). In Rauzi, Judge King found that "this Court can and should consider the Restatement and reasoning of courts in the United States and other jurisdictions in arriving at it own decisions," while at the same time heeding the directive of the court in Alaphonso v. FSM,1 FSM Intrm. 209:

What is clear from the Constitution, however, is that we are not to consider ourselves bound by those decisions and must not fall into the error of adopting the reasoning of those decisions, without independently, considering suitability of that reasoning for the Federated States of Micronesia.

Rauzi supra at 15, quoting Alaphonso, supra at 213. Judge King went on to conclude that

the common law for the Federated States of Micronesia referred to at 54 F.S.M.C.112(3) is not based upon the law of England at the time of the American 'Revolution but upon the law of the United States, the Trust Territory aridother nations in the common law tradition up to the initiation of constitutional self-government in 1979.

Rauzi at 17.
     Judge King's observations with respect to the common law in the context of a tax issue translates to other contexts, too, so long as the court makes an independent determination of suitability for Micronesia; and in his case, for Yap That said, the next question is whether the daily coercive fine imposed in this case was recognized under the common law tradition as of 1979. Two United States Supreme Court cases settle this in the affirmative. In UnitedStates v. United Mine Workers, supra at 918, a 1946case, the court discusses the concept of a civil coercive fine, and in a footnotecites Doyle v. London Guarantee & Accident Co., 204 U.S. 599, 51 L.Ed...441, 27S4,Q. 313, a 1907 case which also deals with a coercive fine. In that case, the contemnor was ordered to, produce certain books and papers by a date certain

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or face a fine of $250. Neither of these cases looks to statutory authority as the basis for the imposition of the coercive fine, and it is clear that a coercive contempt fine was part of the U.S. common law well before 1979.

     As to whether or not utilizing such a contempt sanction is suitable for Yap, the court believes that such a coercive measure was, and is, an appropriate means by which the Yap State Court can compel compliance with its orders. A court sitting in Yap, hearing and deciding cases, regardless of the extent to which issues of Yapese custom and tradition are to a greater or lesser degree implicated, needs to have available reasonable means by which to control the actions of persons and entities subject to its orders. A daily coercive fine is such a reasonable measure. The court concludes then that a fine of this nature was part of the common law of Yap in 1979, as well in May of 1981, when the legislature passed the law subsequently codified as 4 YSC

b. Did 4 YSC 156 abrogate the common law of Yap such that the civil sanctions provided therein are the exclusive civil sanctions that a Yap state court can impose?

     By adopting the common law with respect to contempt, the FSM and Yap necessarily adopted the common law with respect statutory abrogation of the common law. As to the requisites of statutory abrogation, 15A Am Jur 2d 18 at page 619 offers this:

     Statutes are not, however, deemed to repeal the common law by implication unless the legislative intention to do so is obvious. An intention to abrogate or change the common law is not presumed; to effect a change or abrogation by statute of common-law fundamentals, he legislature's intention must be clearly apparent or unmistakable. The rules of the common law are not to be changed by doubtful implication.

The language and structure of the statute itself is critical to the determination whether 4 YSC 156 is intended to provide the exclusive sanctions for civil contempt, since this court can discover no meaningful legislative history. The first obvious point is that nowhere in the statute is there expressed the obvious intention of the legislature that the common law of Yap is abrogated to make the sanctions provided the exclusive ones. Hence the reader is left to examine the statute on its face to determine whether the language employed is sufficiently exclusive such that the reader, without presuming,

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can nevertheless conclude that the statute is  meant to provide an exclusive remedy.

     The conclusion that the statute is not susceptible to such a reading begins from an examination of the first sentence of paragraph (b), which is as follows;"All adjudications of contempt shall be pursuant to the following practices and procedures," emphasis added. A conclusion which might follow from the use of the phrase "all adjudicatioris" is that;the sanctions of imprisonment or a compensatory payment to the party injured as a result of the contempt are exclusive; however, the sentence concludes with the phrase "practices and procedures" which focuses the point of the sentence on procedure, not the substantive law of contempt: The notice and opportunity to present a defense and mitigation process is meat of the sentence which immediately follows the semicolon after "practices and procedures". Likewise, subparagraph (1) ends with a semicolon, and  immediately following it is the notice and opportunity to present a defense and mitigation requirement relative to a criminal contempt proceeding. In the view of the court, this procedurally oriented language does-'not limit the substantive sanctions available to the sanctioning court, but rather is directed to underscoring the due process aspects of a contempt proceeding. Hence, the court finds that 4 YSC 156 does not abrogate the common law of Yap in this respect.

c. Does subparagraplt'fhree of paragraph (b) work to impose a limit on a civil contempt fine, even where a .civil. contempt fine is not addressed by the statute?

Subparagraph (3) is the last subparagraph in paragraph (b) and provides as follows:

          (3)  A person found to be in contempt of court shall be fined
not more than $1,000.00 or iniprisQned_for not more than six months.

     How this subparagraph is to be construed is of material importance in the case at bar because the Contemnors have urged in their Response that no fine could accrue after twenty days from:October 25,1995, since at a rate of $50  a day, on the twentieth day the $1000 provided for in subparagraph (3) would have been reached. The question arises, then,  whether the limit provided by subparagraph (3) applies independently to all civil contempt sanctions, or whether it applies only to the sanctions provided in 156 -The structure of.

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the statute points to the  latter, application The limits on imprisonment and fine are not set out in an independent paragraph of 156, but rather are contained in a subparagraph, subparagraph (3), of paragraph (b). Subparagraph (3) -is one of two subparagraphs which use the word "fine"; "imprisonment" appears in all three subparagraphs. The three subparagraphs share commonality of subject matter, and this subject matter is differentfrom paragraph (a), which defines contempt, and paragraph (c), which discusse's appeal procedure. Further; the three subparagraphs of paragraph.(b) do not stand on their own, but are joined in a conjunctive fashion: subparagraph (1)concludes with a semicolon, and subparagraph (2) concludes with a semicolon followed by an "and," uniting it to subparagraph (3), which contains the limiting language. The condusiori which follows is that the six month limit on imprisonment found in subparagraph (3) applies to the civil contempt imprisonment sanction mentioned in subparagraph .
(1) , and to the criminal contempt imprisonment sanction mentioned in subparagraph (2)Likewise, the $1,000 limitation on a fine mentioned in subparagraph (3) refers to the criminal contempt fine mentioned in subparagraph (2). Therefore, the $1,000 limit does not apply to a civil contempt fine, and does not limit the  amount of the daily coercive fine imposed in this case.  

VI. What is the effect of the bankruptcy filing in the United States of three of the Gemini plaintiffs on the instant proceeding?
GCG, IDP, and Robert A. Grant (hereafter "the bankruptcy confemnors") have filed bankruptcy petitions, and as a result the Receiver has requested that out of concerns of comity, this court take no further action with respect to them.. That request is, practically speaking, rendered moot, since the court has found that the Gemini plaintiffs purged their contempt.

     Another issue arises with respect to liquidating the total amount of the joint and several sanction imposed by the October 25, 1995, order. It is appropriate to put the total amount of the sanction of record, since it ceased accrue with the filing of the unilateral stipulations. The court will. determine the total amount of the sanction as to the bankruptcy-contemnors as of one day prior to the bankruptcies, and will leave for another time whethei the filing of the bankruptcies in the bankruptcy court of another country tolls the accrual of the contempt sanction with respect to them. With respect to GCG . and IDP, the date of filing of  the bankruptcy petitions is March 26,T1 996 for a total liquidated,as of March 25,1996,;of $7;600 (152 days X $50 per day) ;With.

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respect to Robert A. Grant,  the total is one day more, since the petition was filed one day later, forma total of $7650 '(153days-X $50 -a day). With respect to John John Gois, and Joseph Gois, the total `amount of the sanction from October 25, 1995, until pril~26th,1996, (184 days X $50 a day) is $9200

VII. The status of the claims of IDP and GCG against the receivership.
The Receiver  has requested that the court order the Gemini plaintiffs to assert a claims raised in the arbitration proceeding in the receivership. Two of th five Gemini plaintiffs, IDP, and GCG, have filed claims in this receivers p; they have also filed Chapter 7 bankruptcy petitions. The Receiver h s filed suit against the Gemini plaintiffs in the FSM Supreme Court, but the court is not aware if any countocl.aims have been asserted by GCG and P; if counterclaims Have beer< filed; then an order directing IDP and GCG o file their claims in the arbitration proceeding herein could be duplicativ . Also, the second application for OSC was filed before the bankrupt petitions, and the Receiver has not advised the court of the position at the Chapter 7 trustee is taking on the claims of IDP and GCG filed in th receiveiship against YFC.

     The Receiver is directed to contact the trustee in the Chapter 7 cases and to ad ise the court whether the trustee intends to go forward with or abandon t e claims filed in the receivership. against YFC. The Receiver shall also apprise the court of the status of any courlterclaims in the .FSM Supreme Court litiation. The Receiver shall do this no later than July 30, 1996, and the court  enter such additional orders as may be appropriate.

DATED THIS    25TH      DAY OF     JUNE      1996.

                                   Constantine Yinug,Chief Justice
Received and filed:
Date:    06-25-96   

By       /s/              
Clerk of Yap State Court

1.  A copy of the complaint in the Hawaii litigation, styled "Complaint for Damages" is an exhibit to the Receiver's first petition for an order to show cause. By this court's count, reference is made to the Yap receiver or receivership in five paragraphs (paragraphs 2142, 43, 44, and -97) of the 157 paragraph complaint, Which alleges one US. statutory Count (Count lli, RICO, based on 18 USC I961 et seq ), and 19 various common law counts.In  the complaint, the plaintiffs do not mount ,a collateral attack on the  validity of the February  25,1995, order imposing the receivership Rather, the complaint is a civil suit seeking  damages and equitable relief against YFC, the entity in receivership, and other parties.(Back to Opinion)