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ASG appeals court ruling ordering bank to release funds to Marisco

fili@samoanews.com

The American Samoa Government has appealed the ruling by the federal court in Honolulu regarding the garnishment of more than $800,000 from ASG’s account at the Bank of Hawai’i to pay for the debt owed to Hawai’i based shipyard, Marisco Ltd.

ASG, thru attorney Mark S. Hamilton with the Honolulu-based law firm of Frame & Nakano, gave notice on Tuesday at the federal court in Honolulu that the defendant is appealing to the U.S. Ninth Circuit Court of Appeals in San Francisco the Aug. 23 order by U.S. District Court Judge Leslie E. Kobayashi.

The lower court’s ruling was based on a request by Marisco for an ex-parte order   directing the disbursement of funds from garnishee Bank of Hawai’i, who had sought federal direction on how to disburse the funds without violating the ex parte order by the federal court and the order by the High Court of American Samoa to return to ASG the money frozen in the ASG account.

Kobayashi had declared that the federal court in Honolulu has “exclusive jurisdiction” over the federal lawsuit by Marisco against ASG, who had waived all rights in this case under a federal Arbitration Agreement.

Kobayashi ordered the bank to release to Marisco the more than $800,000 frozen in the ASG account to pay for the outstanding debts.

According to the Appeal’s court record, ASG has until Dec. 20 to file its opening brief and excerpts of record while the other party has 30 days later to respond.  ASG’s brief will outline its points of argument regarding Kobayahi’s ruling.

Among the issues ASG is expected to raise in the appeal process, is the “separate entity rule” — the rule that foreign branches of a bank are not subject to execution through process on an in-state office or branch of the bank, the decision states.

In its arguments at the federal court in Honolulu against the ex parte motion, ASG pointed out that pursuant to federal rules of civil cases, state law governs the garnishment of property to satisfy a judgment. ASG argued that, although there is no case law directly on point, Hawaii’s Uniform Commercial Code suggests that the State of Hawai’i treats bank branches as separate entities.

Marisco responded that the separate entity rule has been widely criticized and is inapplicable in post-judgment proceedings. Marisco also argues that the federal court has personal jurisdiction over ASG, which waived its sovereign immunity and agreed to sue and be sued in this district court.

Marisco contends that the Honolulu federal court has personal jurisdiction over BoH and can therefore order BoH to freeze property that BoH controls.

In her August ruling, Kobayashi said the Hawai’i Supreme Court has never addressed whether to adopt the separate entity rule. Additionally, the federal court’s task is to predict how the state's supreme court would decide the issue.

“This Court predicts that, if the Hawai`i Supreme Court were to rule upon the issue, the supreme court would consider case law criticizing the separate entity rule as being: ‘a somewhat dated and seldom-cited legal doctrine’,” said Kobayashi citing a mainland court decision.

Kobayashi also pointed out that during the course of this case, ASG, through Attorney General Fepuleai Arthur Ripley Jr., entered into the Arbitration Agreement and that ASG did not contest Marisco’s “Motion to Confirm Arbitration Award, nor did ASG appeal the final judgment entered after the court confirmed the Arbitration Award.”



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