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BoH motion to reconsider enforcement of PI denied

reporters@samoanews.com

The trial court has denied Bank of Hawaii’s reconsideration motion to enforce the preliminary injunction in a federal writ between Hawai’i based Marisco Ltd., and the American Samoa Government.

The bank in their motion had asked the High Court of American Samoa for a stay in the local court order to restore just over $800,000 frozen in the ASG general fund account “in light of ongoing [legal] proceedings” at the federal court in Honolulu in connection with an award settlement for repairs made to government vessels by Marisco.

The Federal Court’s ruling is inconsistent with a ruling issued by the Trial Court of American Samoa in July, which granted a preliminary injunction for the government, ordering the bank to return the frozen funds.

During the hearing on this motion last week, bank attorney Anne Wellborne, asked the High Court to reconsider its July ruling or in the alternative stay proceedings of the local case because of the ongoing main case in Hawaii federal court.

In response to the motion, Deputy Attorney General Salo Ale asked the court to deny the motion for reconsideration and for the court to enforce its order for the bank to release the frozen funds.   

Chief Justice Michael Kruse reminded the lawyers that no final decision has been made, just a preliminary injunction order, which is why the issue at hand is not appealable to the Appellate Division of the High Court of American Samoa.

Kruse added the court is addressing the issue of the preliminary injunction and is not concerned about the Hawaii federal court issues given that this is not before the local court.

He said what the court is concerned about is whether bank of Hawaii can solidify funds that are saved in a bank account belonging to the local government as their reaction to an order issued by the Federal Court in Hawai’i.

BOH AGRUMENT

In its argument, Wellborne told the court the government chose to participate in binding arbitration and under the terms of the arbitration agreement that any judgment made would be enforceable in either Hawaii or American Samoa.

She said the government opened itself to the Hawaii jurisdiction and therefore it exposed its funds to be garnished in the state of Hawaii where BOH is headquartered.

Wellborne said the government could have included a provision in the arbitration agreement to the effect that the payment of any judgment would be subject to laws of American Samoa, but it did not.

She asked the court to review the August ruling from Judge Leslie Kobayashi of the Hawaii federal court with respect to the issue of applying the separate entity rule that the ASG is asking the court to apply in the case.

The rule, which Kobayashi determined did not apply, states that a branch of a bank is not subject to attachment or execution of a judgment where the process is served on the main office or branch of the bank that is not the branch where the debtor’s account is located.

GOVERNMENT’S AGRUMENT

In reply, Deputy AG Ale said the federal court order is wrong because their judgment is based on a prediction of what the Hawaii Supreme Court would do if presented with the question of whether Hawaii recognizes the “separate entity rule.”

(The Separate Entity Rule provides that each bank branch is a separate entity for attachment and liability purposes. As applied here, the “separate entity rule” would require that the federal court in Hawaii have personal jurisdiction over the American Samoa branch of BOH in order to attach or garnish funds ASG funds located in its bank account with the American Samoa Branch of BOH.)

He added that in doing so, the federal court ignores Hawaii statutes that strongly suggest that Hawaii would recognize the separate entity rule. It also ignores BOH’s Business Account Agreements, which specifically recognize that each bank account is governed by the law of the location of the branch.

“We believe the federal court predicted Hawaii law incorrectly,” Ale said, and went on to say the Federal court also relied on the fact that ASG stipulated to the federal court’s jurisdiction in an arbitration agreement and agreed that any arbitration award confirmed by the federal court is enforceable in any jurisdiction.

“Simply put, there is nothing in the arbitration agreement that gives the federal court the power to attach ASG property in American Samoa, beyond the federal court’s jurisdiction”.

He added the government’s agreement that a judgment is enforceable just means that the judgment creditor has to take his judgment to the appropriate jurisdiction to collect.

In this case, Marisco should have filed its judgment in American Samoa and asked the High Court to enforce it. Ale reiterated that the federal court in Hawaii did not have authority to enforce a judgment on property located in American Samoa.

“The federal court ignores American Samoa laws and treats ASG as just another private judgment debtor,” Ale said. “Our laws prohibit garnishment of ASG assets unless approved by the Governor. It also requires Fono appropriation of funds.The federal court’s order would allow certain judgment creditors to avoid the requirements of American Samoa laws.”

Several days after the hearing, the Chief Justice issued the order in a three-page court ruling, and denied the motion last Friday.  

RECONSIDERATION MOTION

According to the order for motion for reconsideration, American Samoa statutes and rules of court provide no authority for bringing a motion to reconsider a non-final interlocutory order in a pending case.

The court quoted the case for Progressive Insurance and South Star international back in 2011, where the trial court explained that while a motion for reconsideration or new trial is a prerequisite to an appeal however statute applies to a final decision not to non-final interlocutory orders.

The ruling goes on to say that in order to appeal an interlocutory order, it must be final or fall within collateral order exception. “To fall within  the collateral order exception, an order must (1) conclusively resolve the disputed question, (2) resolve important issues completely separate from the merits of the action and (3) be effectively unreviewable on appeal from the final judgment in the main case.”

MOTION FOR STAY

The bank’s motion asks the court to stay the Trial Court’s July 11, 2012 order granting the provisional injunction, pending a decision on the motion for reconsideration. According to the order the Court’s decision to deny the reconsideration motion renders the motion to stay moot and the court does not see any reason to stay the preliminary injunction.

The order was signed by Chief Justice Michael Kruse, Chief Associate Judge Logoai Siaki, and Associate Judge Fa’amausili Pomele.



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