FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION (Truk)
Cite as Truk State v. Maeda Construction Co. Ltd ., 3 FSM Intrm. 487 (Truk, 1988)

[3 FSM Intrm. 487]

STATE OF TRUK,
Plaintiff,

v.

MAEDA CONSTRUCTION CO., LTD.
Defendant.

CIVIL ACTION NO. 1987-1025

OPINION

Before Honorable Richard H. Benson
Associate Justice
June 17, 1988

APPEARANCES:

For the Plaintiff: 
Jeanne H. Rayphand, Esq.
Attorney at Law
Attorney General's Office
Moen, Truk 96942

For the Defendant: 
Gary D. Hull, Esq.
Attorney at Law
Suite 903 Pac. News Bldg.
238 Archbishop Flores St.
Agana, Guam 96910 

[3 FSM Intrm. 488]

* * * *

HEADNOTE

Remedies - quantum meruit 
In an action by a party who performed work for the benefit of the state and who seeks quantum meruit relief because no valid obligation of state funds existed, that relief by summary judgment cannot be granted when the party's own authorities show that the party must overcome the presumption of knowledge of the requirements of government contracting to demonstrate good faith, and no evidence on this issue was included in the motion for summary judgment, even though the work done and the charges made were reasonable, and even though there was no evidence of bad faith, collusion or fraud. Truk v. Maeda Constr. Co. (II), 3 FSM Intrm. 487, 489 (Truk 1988).

* * * *

COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

This matter came before me for oral argument on May 12, 1988 on the motion of the defendant for summary judgment on its counterclaim.

The motion of the plaintiff for summary judgment was heard at the same time. In that matter summary judgment was entered declaring that the written obligation entered into by the then Governor of Truk State to pay for paving done by the defendant was not an enforceable obligation of the plaintiff.

In its "answer and counter-claim" the defendant had set forth in one sentence the cause of action that is the subject of the present motion. It alleged,

8. In the event that the promissory note herein is declared void or unenforceable, defendant is nevertheless entitled to recover from plaintiff the reasonable value of the underlying services provided to and accepted by Truk State in the amount of said promissory note under the doctrines of unjust enrichment and quantum meruit.

The defendant's motion for summary judgment is supported by an affidavit by a manager of the defendant. In part it states,

No bad faith, collusion, or fraud was conducted or entered into at any time by either myself, other Maeda employees, Governor Aten, or any other officials of the Truk State government.

This statement is undisputed.

[3 FSM Intrm. 489]

The parties further stipulated that the costs and charges of the paving projects were reasonable and they agreed on the unpaid amounts.

The defendant contended that upon this factual basis it was entitled to judgment as a matter of law. Its authority was the dicta in Truk ex rel. Swain v. Aten, 8 TTR 557, 576 (App. 1986) in the High Court of the Trust Territory of the Pacific Islands, Civil Appeal No. 420 of November 1986. That opinion stated that if an invalid contract is entered in good faith and the government accepts the benefits, the contractor is entitled to quantum meruit relief.

Two weeks before filing this opinion the High Court had issued its order of remand in the same case. In that order this passage appears on the subject of good faith:

Good faith shall include overcoming the presumption of knowledge of the requirements of government contracting set forth in the Truk Charter and all succeeding legislative acts in force at the time the contracts were entered into.

Order of Remand, at 5 (Nov. 3, 1986). There is nothing before the court on this factual issue.

This court is not rejecting or adopting the dicta of the High Court. It is examining that authority to see if it supports the defendant's position. The defendant's contention is that the absence of fraud, etc., plus the agreement as to the reasonableness of the charges is sufficient factual basis entitling it to judgment. The court does not agree. The defendant has not shown that it is entitled to judgment in its favor.

The motion of the defendant for summary judgment on its counter-claim for quantum meruit is accordingly denied.