High Court tells BOH to restore frozen funds to ASG
The High Court has ordered Bank of Hawai’i to restore the close to $1 million of American Samoa Government money the bank froze last month in the ASG general fund account to satisfy a writ of execution issued by the federal court in Honolulu.
The writ was based on a request by Honolulu based shipyard Marisco Ltd., to satisfy a federal court judgement of over $811,000 in the company’s case against ASG for failure to pay the balance of service and work done for the defendant.
After the writ was issued, ASG filed an opposing motion in the federal court in Honolulu with a hearing held last Friday. The federal court took the matter under advisement and it’s not clear as to when a decision will be issued.
In the local court, ASG filed an application on June 26 for a Temporary Restraining Order and Preliminary Injunction to prevent the bank from releasing any funds. Marisco is not a party in the local case.
A hearing was held last Thursday and a 10-page decision was issued this week Wednesday signed by Chief Justice Michael Kruse, Chief Associate Judge Logoai P. Siaki and Associate Judge Fa’amausili P. Pomele.
According to the decision, the bank treated the writ of execution as a writ of garnishment under Hawai’i state law and froze $988,980 of ASG’s general fund account, which bears appropriated ASG monies and federal grant monies for government payroll and other such government expenditures.
“This action presents a peculiar situation: a bank is attempting to comply with the enforcement of a foreign judgement in a foreign jurisdiction by accessing a bank account of a government located within this court’s territorial jurisdiction,” the judges point out.
However, the judges noted the court is not concerned with whether that foreign judgement was legally rendered, or whether such a judgement could legally be enforced in this jurisdiction.
“We are concerned with the very limited issue of whether a bank can freeze intangible property maintained in this territory from a foreign jurisdiction,” they wrote. “We are persuaded that the weight of the authorities tilts in favor of ASG’s contention that such a bank cannot.”
The judges say that the evidence presented to court indicates that ASG opened its general fund account in American Samoa and the account is maintained with the bank’s branch in Utulei.
Additionally, the bank having other branches such as Guam, from which ASG could withdraw funds does not necessarily subject ASG to that branch’s foreign jurisdiction for judgement-creditor purposes because ASG opened its account in American Samoa and is a government “domiciled” in American Samoa.
“We are required to give full faith and credit to judgments issued by other states, territorial or federal courts,” the judges says. “However, we must give full faith and credit to foreign judgments subject to our Uniform Enforcement of Foreign Judgments Act.”
“...if we issue a judgement in favor of a judgement-creditor, this court cannot also issue a writ of execution ordering a sheriff of Oregon to seize and/or sell real, tangible, or intangible property of a judgement-debtor located in Oregon,” they noted. “...a judgement-creditor travels to the state of Oregon and files an action to enforce our judgement against the judgement-debtor’s Oregon property, abiding by Oregon’s laws of process.”
The judges say the writ of execution/garnishment the federal court issued attempts to attach itself to ASG’s general fund account - which “appears not to be located in Hawai’i and therefore is not subject to attachment.”
“Again, we are not concerned with whether or not Marisco can enforce” its federal court judgement in the territorial jurisdiction, the judge said.
“The procedural posting of this action is for a mandatory preliminary injunction against BoH for BoH’s freezing of an account containing intangible property located in American Samoa under the imprimatur of an as-of-yet enforced, foreign judgement,” the decision states.
“We are... satisfied that ASG will likely succeed at trial at proving such a point — that the nexus concerning the situs of this intangible property flourishes in American Samoa, not Hawai’i, thereby favoring the issuance of ASG’s preliminary injunction against BoH,” the judges said.
HARM TO PLAINTIFF
According to the court, ASG’s general fund consists of appropriations and funds set aside for management of the entire government of American Samoa. “Not only is the nearly one million dollars a sizable amount for this government, the idea that judgement-creditors can avoid this territory’s laws concerning judgement-enforcement, liens, attachments, garnishments, etc., would cause great harm to ASG and impact the territory’s local commerce,” the judges observed.
“If BoH is allowed to freeze ASG general fund whenever a judgement-creditor enforces a judgement in a far-flung jurisdiction possessing a BoH branch, it could have alarming consequences on the ability of American Samoa’s government to function daily — not to mention adding additional cost for defending such lawsuits,” the judges says.
“Moreover, not only is the local hospital — for which lives may very well be jeopardized — dependent on the contents of the general fund account, but so much of this island community relies upon the local government for their livelihood, electricity, etc. that the harm from such perfunctory BoH freezes could be dire.”
HARM TO DEFENDANT
“BoH has the unenviable position of middleman in a jurisdictional tug-of-war concerning the reach of two separate courts,” the decision says. “BoH’s harm, however, is limited: an injunction would only have BoH releasing ASG’s funds back into ASG’s account — any court sanction BoH could suffer in Hawai’i, it could quite as easily suffer here.”
“Although BoH’s plight evokes sympathy, BoH’s claimed exposure to potential harm and conflicts of laws that arise is, after all, a consequence of banking in multiple jurisdictions,” the judges say.
According to the judges, many of the territory’s citizens rely on ASG for their livelihood and the public’s interest “weighs in favor of issuing an injunction against BoH”.
“Indeed, all the equities balance in favor of issuing the injunction against BoH,” they say.
The judges made clear in their decision that they are not ruling that Marisco is unable to satisfy its federal court judgement. “We are ruling, at a preliminary stage, that ASG has proven by preponderance of the evidence that BoH likely cannot freeze ASG’s general fund account because that account contains intangible property seemingly located in this territory and not the state of Hawai’i,” the judges said and granted ASG’s application for a preliminary injunction.
The judges then ordered BoH to restore the $988,980 frozen on June 20 back to ASG’s general fund account.