THE  SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
APPELLATE DIVISION
Cite as Nahnken of Nett v. Pohnpei,
7 FSM Intrm. 485 (App. 1996)

[7 FSM Intrm. 485]

ISO NAHNKEN OF NETT,
Appellant,

vs.

POHNPEI STATE GOVERNMENT, and its agents,
employees and entities created by state law,
Appellees.

APPEAL CASE NO. P4-1995

OPINION

Argued:  April 26, 1996
Decided:  June 18, 1996

BEFORE:
Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Martin G. Yinug, Associate Justice, FSM Supreme Court
Hon. Keske S. Marar, Temporary Justice, FSM Supreme Court*

*Associate Justice, Chuuk State Supreme Court, Weno, Chuuk

APPEARANCES:
For the Appellant:     Mary Berman, Esq.
                     P.O. Box 163
                     Kolonia, Pohnpei FM 96941

[7 FSM Intrm. 486]

For the Appellee:      Arthur R. Wiedinger, Jr., Esq. (brief)
                     Todd Richards, Esq. (argued)
                     Assistant Attorneys General
                     Office of Pohnpei Attorney General
                     P.O. Box 1555
                     Kolonia, Pohnpei FM 96941

*    *    *    *

HEADNOTES
Statutes of Limitation
     For actions for the recovery of land or any interest therein the statute of limitations is twenty years after the cause of action accrues, which is when a suit may first be successfully maintained thereon.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 488-89 & n.1 (App. 1996).

Equity ) Laches, Estoppel and Waiver; Statutes of Limitation
     Laches and the statute of limitations are two different defenses.  The statue of limitations defense has only one element ) the passage of a specific statutory amount of time while the equitable defense of laches has two elements ) the passage of a nonspecific amount of time during which the plaintiff engages in inexcusable delay or lack of diligence in bringing suit, and resulting prejudice to the defendant.  Laches is always applied separate from and irrespective of the statute of limitations.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 489 (App. 1996).

Equity
     Courts may consult foreign sources about equitable principles when there is no applicable Micronesian authority on point.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 489 n.3 (App. 1996).

Equity Laches, Estoppel and Waiver
     Laches is a mixed question of law and fact.  Whether the elements of laches have been established in any particular case is one of fact depending on the circumstances, and calls for the exercise of a sound discretion by the trial court. But whether, in view of the established facts, relief is to be denied)that is, whether it would be inequitable or unjust to the defendant to enforce the complainant's right)is a question of law.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 489 (App. 1996).

Appeal and Certiorari ) Standard of Review; Equity ) Laches, Estoppel and Waiver
     An abuse of discretion standard is used to review whether the elements of laches have been established, but the question of law ) whether it would be inequitable or unjust to the defendant to enforce the complainant's right is reviewed de novo.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 489 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     In order for a plaintiff to be charged with inexcusable delay or lack of diligence the plaintiff must have had knowledge of the facts that gave rise to his claim. Ordinarily, actual knowledge on the part of the complainant is necessary in order to charge him with laches.  However, knowledge may in some circumstances be imputed to him by reason of opportunity to acquire knowledge, or where it appears he could have informed himself of the facts by the exercise of reasonable diligence, or where the circumstances were such as to put a man of ordinary prudence on inquiry. Ordinary prudence depends on the particular circumstances of the case.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 490 (App. 1996).

[7 FSM Intrm. 487]

Equity ) Laches, Estoppel and Waiver
     A plaintiff inexcusably delays in bringing suit when he was aware of or should have been aware of, the state's control and use of the land that had not been given over to his control and for which he had received no payment for at least fifteen years during which he could have brought suit against the state or its predecessor in interest.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 490 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     Delay alone does not constitute laches.  Even lengthy delay does not eliminate the prejudice prong of the laches test, but the longer the delay the less need there is to show, or search for, specific prejudice, and the greater the shift to the plaintiff of the task of demonstrating lack of prejudice.  The test of laches is prejudice to the other party.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 490 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     There are two types of prejudice that may stem from delay in filing suit.  The adverse party may be unable to mount a defense because of loss of records, destruction of evidence, missing witnesses, and the like, or the prejudice may be economic.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 490 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     The doctrine of laches is applied only where it would be inequitable to allow a person making a belated claim to prevail.  Each case is governed chiefly by its own circumstances.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 491 (App. 1996).

Constitutional Law ) Indefinite Land Use Agreements
     Where no indefinite land use agreement existed when the Constitution took effect there was no agreement that had to have been renegotiated by 1984.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 491 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     Generally, a party who has failed to act properly ) a party who has "unclean hands" ) cannot invoke an equitable doctrine such as laches.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 491 (App. 1996).

Equity ) Laches, Estoppel and Waiver
     Where public lands are involved laches cannot be used as a defense against the government, but the government may use laches as a defense against another who seeks to claim public lands.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 491 (App. 1996).

Civil Procedure ) Res Judicata
     A municipal court judgment will not be given res judicata effect when the judgment was suspended by the state court.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 485, 492 (App. 1996).

*    *    *    *

COURT'S OPINION
RICHARD H. BENSON, Associate Justice:
     This is an appeal from the trial court's grant of summary judgment on the State of Pohnpei's affirmative defense of laches.  The plaintiff-appellant, the Iso Nahnken of Nett, disputes whether such

[7 FSM Intrm. 488]

a defense is applicable to his claim to the public lands of Nett.  We conclude that it is, and hereby affirm.

I.  Background
     By quitclaim deed in 1979, the Trust Territory of the Pacific Islands granted the State of Pohnpei [through its agency, the Pohnpei Public Lands Authority] title to the public lands in Pohnpei not in active use by the Trust Territory government.  The state acquired the rest of the public lands at a later date.  The plaintiff, the Iso Nahnken of Nett, filed his complaint on June 28, 1994.  He now seeks an accounting by the defendant State of Pohnpei for all amounts collected for the use of the public lands in the former Kingdom of Nett (including both Kolonia Town and Nett Municipalities), an award for the fair rental value of the Nett public lands, an order that the state vacate the Nett public lands, and other general, special, and punitive damages.  The plaintiff also seeks the expulsion of the State of Pohnpei from the Nett public lands and that the control of the lands be given to the Nahnken (with deeds of title to be given the people of Nett).  Although pled as an unconstitutional deprivation of property case (citing FSM Const. art. IV, 3, 5; art. XIII, 5), essentially this is a quiet title action, or an action to recover an interest in land, which also includes a claim of damages for trespass.

     The defendant did not file an answer.  Instead the defendant moved to dismiss for failure to state a claim upon which relief can be granted pursuant to Civil Rule 12(b)(6).  This motion was converted to a summary judgment motion because matters outside the pleadings were considered.  FSM Civ. R. 12(b).  Summary judgment was granted for the defendant on June 30, 1995.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 171 (Pon. 1995).  The plaintiff appealed.

II.  Issues on Appeal
     The appellant lists ten issues on appeal.  They may be fairly condensed and summarized as follows:  The appellant claims (1) that the twenty-year statute of limitations applies, instead of laches, and it has not yet run; (2) that he had no notice of his cause of action until the receipt of the Pohnpei State Attorney General's letter of June 22, 1994; (3) that his cause of action did not accrue in 1979 when the state received the public lands from the Trust Territory because the state's open occupation of the public lands did not put the Nahnken on notice of the accrual of his causes of action; (4) that even if his cause of action did accrue in 1979 when the state received the public lands from the Trust Territory laches would not bar the Nahnken's claim because there was no inexcusable delay or lack of diligence on his part that caused injury or prejudice to the state; (5) that the state cannot use the equitable defense of laches because it has "unclean hands" since it did not negotiate by 1984 a constitutionally required lease agreement with the Nahnken; (6) that laches cannot be used as a defense against the Nahnken of Nett; and (7) that a decision of the Nett District Court decides the case in the Nahnken's favor and is res judicata.

III.  Analysis
A.  Laches and the Statute of Limitations
     The plaintiff contends that laches is inapplicable and the twenty-year statute of limitations should be applied instead.  For "actions for the recovery of land or any interest therein" the statute of limitations is twenty years after the cause of action accrues.  6 TTC 302(1)(b); 6 F.S.M.C. 802(1)(b).  In this case the Iso Nahnken of Nett seeks to "recover" the Nett public lands.  The twenty-year statute of limitations would therefore be the applicable statute.  Since the complaint was filed on June 28, 1994, that would mean that the statute would bar any cause of action that accrued before June 28,

[7 FSM Intrm. 489]

1974.1

     The trial court, however, did not grant summary judgment for the state based on the statute of limitations.  It granted summary judgment based on the equitable defense of laches.  The trial court correctly determined that laches and the statute of limitations are two different defenses.  Nahnken of Nett v. Pohnpei, 7 FSM Intrm. 171, 181 (Pon. 1995).  The statue of limitations defense has only one element ) the passage of a specific statutory amount of time.  The equitable defense of laches has two elements ) the passage of a nonspecific amount of time during which the plaintiff engages in inexcusable delay or lack of diligence in bringing suit, and resulting prejudice to the defendant.  Mid-Pacific Constr. Co. v. Semes (II), 6 FSM Intrm. 180, 185-86 (Pon. 1993).  Laches is always applied separate from and irrespective of the statute of limitations.2  Cornetta v. United States, 851 F.2d 1372, 1378 (Fed. Cir. 1988).3  Furthermore, "[l]aches, as an equitable doctrine, differs from the statute of limitations in that it offers the courts more flexibility, eschewing mechanical rules."  Wadell v. Small Tube Prods., Inc., 799 F.2d 69, 79 (Fed. Cir. 1986).  Thus the trial court did not err when it considered the equitable defense of laches without reference to the time span in the statute of limitations.

B.  Standard of Review for a Laches Defense
     This appeal came up on a grant of summary judgment.  Summary judgment is granted when the movant is entitled to judgment as a matter of law and no material facts are in dispute.  Matters of law we review de novo.  "[L]aches is a mixed question of law and fact . . . ."  27 Am. Jur. 2d Equity 176, at 722 (1966).  "[W]hether the elements of laches have been established in any particular case is . . . one of fact depending on the circumstances, and calls for the exercise of a sound discretion by the trial court."  Id. (footnotes omitted).  Thus "`the existence of laches is a question primarily addressed to the discretion of the trial court.'"  Czaplicki v. S.S. Hoegh Silvercloud, 351 U.S. 525, 534, 76 S. Ct. 946, 952, 100 L. Ed. 1387, 1396 (1956) (quoting Gardner v. Panama R.R., 342 U.S. 29, 30, 72 S. Ct. 12, 13, 96 L. Ed. 31, 36 (1951)).  But "whether, in view of the established facts, relief is to be denied)that is, whether it would be inequitable or unjust to the defendant to enforce the complainant's right)is a question of law."  27 Am. Jur. 2d Equity 176, at 722-23 (1966).  We therefore review de novo the question of law, but apply an abuse of discretion standard to review whether the elements of laches have been established.

[7 FSM Intrm. 490]

C.  Elements of Laches Analyzed and Applied
     In order for a plaintiff to be charged with inexcusable delay or lack of diligence the plaintiff must have had knowledge of the facts that gave rise to his claim.

Ordinarily, actual knowledge on the part of the complainant . . . is necessary in order to charge him with laches.  However, knowledge may in some circumstances be imputed to him by reason of opportunity to acquire knowledge, or where it appears he could have informed himself of the facts by the exercise of reasonable diligence, or where the circumstances were such as to put a man of ordinary prudence on inquiry.

Amlung v. Bankers Bond Co., 411 S.W.2d 689, 31 A.L.R.3d 1277, 1285 (Ky. 1967) (ellipsis in original) (citations omitted).  "`Ordinary prudence' depends, of course, on the particular circumstances of the case."  Id.

     The Nahnken states in his affidavit that his father and other traditional leaders "were instrumental in obtaining the transfer of `public lands' from the Trust Territory Government to the Public Lands Trust."  Aff. Iso Nahnken para. 4 (Sept. 13, 1994) (Ex. C Pls.' Response (Sept. 13, 1994)).  The traditional leaders (some of whom signed the quitclaim deed in 1979) were thus aware of the transfer.  The Nahnken may have had actual knowledge of the transfer to and use by the state of the public lands.  If the Nahnken did not, the knowledge can be imputed to Nahnken.  He knew that the Trust Territory transferred the land, and he certainly must have been aware that it was not under his control and that he was not receiving rent from the government for it.  We can take judicial notice of the fact that Nett and Kolonia are small so that the presence of state government facilities is readily apparent.  A man of ordinary prudence in these particular circumstances would be put on inquiry to acquire the knowledge that the public lands in Nett and Kolonia had not been given over to his control and that the state has not paid him rent for their use the whole time.  Thus knowledge of the facts underlying this cause of action must be imputed to the Nahnken.4  Yet he delayed at least fifteen years in bringing suit.

     No excuse is given for the delay other than that the state did not adopt its current constitution until 1984.  The Nahnken, however, could have sued the state government that existed before the adoption of the state constitution, or he could have sued the state's predecessor in interest ) the Trust Territory.  The delay was thus inexcusable.

     But "[d]elay alone does not constitute laches."  Brundage v. United States, 504 F.2d 1382, 1386 (Ct. Cl. 1974).  "Even lengthy delay does not eliminate the prejudice prong of the laches test."  Cornetta, 851 F.2d at 1378.  But "the longer the delay the less need is there to show, or search for, specific prejudice, and the greater the shift to the plaintiff of the task of demonstrating lack of prejudice." Gersten v. United States, 364 F.2d 850, 852 (Ct. Cl. 1966).  "The test of laches is prejudice to the other party."  Gutierrez v. Waterman S.S. Corp., 373 U.S. 206, 215, 83 S. Ct. 1185, 1191, 10 L. Ed. 2d 297, 304 (1963).  "There are two types of prejudice that may stem from delay in filing suit."  Cornetta, 851 F.2d at 1378.  The adverse party may be unable to mount a defense because of loss of records, destruction of evidence, missing witnesses, and the like, or the prejudice may be economic.  Id.

     In this case the prejudice is economic.  The plaintiff, in his complaint, alleges, among other

[7 FSM Intrm. 491]

things, that the state has "occupie[d] public lands in Nett . . . by means of building structures upon, and/or by means of executing leases to third persons who have built structures upon, . . . and/or by means of permitting illegal occupation by entities created by State law."  Complaint para. 5 (June 28, 1994).  In his prayer the Nahnken also seeks an accounting of amounts the state collected for use of Nett public lands.  He wants in damages the fair market value rental for the public land the state has leased to others.  And he wants the state to be ordered off all the public land in Kolonia Town and Nett Municipalities that it has used and maintained.  Presumably the state government must then either find itself new facilities or negotiate substantial rental fees, either of which no doubt would place a great and unexpected burden on its budget.  Thus the existence of facts that amount to substantial prejudice to the state is not disputed; the plaintiff alleges them in his complaint and other filings.  Instead the Nahnken contends that because the state has never paid him rent, the state has benefitted from, rather than been prejudiced by the delay.  That argument carries no weight.  The economic prejudice is substantial.  This satisfies the prejudice prong.  We conclude that the trial court did not abuse its discretion when it determined that the elements of laches exist here.

     "The doctrine [of laches] is applied only where it would be inequitable to allow a person making a belated claim to prevail.  Each case is governed chiefly by its own circumstances."  State v. Peterson, 347 N.W.2d 398, 48 A.L.R.4th 355, 364 (Iowa 1984) (citations omitted).  Therefore laches may be applied if it is equitable to do so.  We hold that under these circumstances the application of laches is equitable.

D.  "Unclean Hands" ) Indefinite Land Use Agreement Argument
     Generally, a party who has failed to act properly ) a party who has "unclean hands" ) cannot invoke an equitable doctrine such as laches.  Ponape Transfer & Storage v. Federated Shipping Co., 3 FSM Intrm. 174, 178 (Pon. 1987).  The Nahnken contends that the state has unclean hands and thus cannot invoke a laches defense.  He bases this contention on the state's alleged failure to negotiate a lease agreement with him for the use of the Nett public lands.  For this point he relies on the prohibition in section 5, article XIII of the FSM Constitution of "agreement[s] for the use of land for an indefinite term" and the requirement that all such existing agreements be renegotiated within five years [by May 10, 1984] of the effective date of the Constitution at which point the existing agreements become void.  The Nahnken, however, does not argue that such an agreement ever existed.  His contention is that no agreement with him for use of the land ever existed.  The state could not be required to renegotiate land use agreement that did not exist.  Thus this constitutional provision has no application to this case or to any argument in this case.  The state thus does not have "unclean hands" that would bar it from using the equitable defense of laches.

E.  Government Use of Laches Defense
     The appellant contends that he is a sovereign and that laches cannot be used as a defense against him because he is acting in the public interest.  For this proposition he relies on Utah Power & Light Co. v. United States, 243 U.S. 389, 37 S. Ct. 387, 61 L. Ed. 791 (1916).  However, that case stands for the proposition that where public lands are involved laches cannot be used as a defense against the government.  Id. at 409, 37 S. Ct. at 391, 61 L. Ed. at 818.  It does not bar the government from using laches as a defense against another who seeks to claim public lands.  Sena v. United States, 189 U.S. 233, 241-42, 23 S. Ct. 596, 599, 47 L. Ed. 787, 791-92 (1903) (claim to public land under old Spanish land grant dismissed upon ground of laches).  Thus the State of Pohnpei, the sovereign government holding title to Pohnpei public lands, may use the defense of laches against

[7 FSM Intrm. 492]

the claimant here, the Iso Nahnken of Nett.

F.  Judgment of the Nett District Court
     The appellant contends that a judgment of the Nett District Court that the public lands of Nett must be returned to the Nahnken is res judicata and requires a decision in his favor.  The state contends that the Nett District Court had no jurisdiction over the matter because section 63 of the Pohnpei Judiciary Act, Pon. S.L. 2L-160-82, 63 (as amended by Pon. S.L. 2L-238-83, 2), limits municipal court jurisdiction to cases involving $500 or less.

     We need not decide this question.  The Pohnpei Supreme Court has ordered the suspension of the execution of any judgment or order and of any court process of the Nett District Court that involves any interest in public lands.  Pohnpei Public Lands Bd. of Trustees v. Nett Dist. Court, PCA Nos. 48-94 & 65-94, slip op. at 5 (Pon. S. Ct. Tr. May 3, 1994).  That order remains in effect.  The order specifically refers and applies to the Nett District Court judgment that the appellant relies upon. We will therefore defer to the Pohnpei Supreme Court on this point.

IV.  Conclusion
     The State of Pohnpei may use a defense of laches against a claim to public lands on Pohnpei, and the trial court properly applied that defense in this case. The trial court's judgment is accordingly affirmed.
 
 
Footnotes:
 
1.  A cause of action accrues when a suit may first be successfully maintained thereon.  Waguk v. Kosrae Island Credit Union, 6 FSM Intrm. 14, 17 (App. 1993). The Nahnken, or his predecessor, could have sued the Trust Territory, Pohnpei's predecessor in interest, for the recovery of the public lands of Nett.  The Trust Territory courts were open to suits to recover public land after 1951.  See, e.g., Trust Territory v. Konou, 8 TTR 522, 524-25 (App. 1986).  Therefore the statue of limitations should bar the Nahnken's suit for recovery of any public land to which the Trust Territory held title to on June 28, 1974.

2.  As a practical matter, in any case where the defendant can show the passage of the statutory time he will usually seek to prevail on that defense without the necessity of showing the additional element of prejudice required for the equitable defense of laches.  Thus, laches will generally, but not necessarily, be raised only when the passage of time has not been long enough to use the statutory bar.

3.  The parties have relied upon U.S. cases in their arguments concerning the equitable doctrine of laches.  We may consult such foreign sources about equitable principles when there is no applicable Micronesian authority on point.

4.  Thus this knowledge must be imputed to the Nahnken long before he received a letter from the Pohnpei Attorney General's Office in June 1994 denying the Nahnken's April 21, 1994 request to the Governor that the Nett public lands be transferred to his ownership.

5.  This provision was amended in 1991.  That amendment has no bearing on this argument.