FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

Cite as Beal Bank S.S.B. v. Maras
11 FSM Intrm. 351 (Chk. 2003)

[11 FSM Intrm. 351]

BEAL BANK S.S.B. and the UNITED STATES
SMALL BUSINESS ADMINISTRATION,
Plaintiffs,

vs.

SOS MARAS and MURAKO MARAS
d/b/a Egypt Store,
Defendants.

CIVIL ACTION NO. 2002-1020

ORDER CHANGING PLAINTIFF AND DISMISSING DEFENDANT

Dennis K. Yamase
Associate Justice

Decided:  February 7, 2003

APPEARANCE:

For the Plaintiffs:	Craig D. Reffner, Esq.
Law Office of Fredrick L. Ramp
P.O. Box 1480
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Motions
When no opposition has been filed to a motion, it is deemed a consent to the motion.  But even without any opposition, the court still needs good grounds before it can grant the motion.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 353 (Chk. 2003).

Civil Procedure - Parties
Rule 60(a) allows the correction of clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission.  It may be inapplicable when plaintiff’s counsel, who, through oversight, was unaware of the exact identity of his own client, seeks to substitute the real party in interest for the originally-named plaintiffs.  While Rule 60(a) may be utilized to correct mistakes by the parties as well as those committed by the clerk or by the court, including the misnomer of a party (usually a defendant), it does not appear that the rule may be used to substitute a party plaintiff for the other entities mistakenly named as plaintiffs.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 353 (Chk. 2003).

Civil Procedure
Although the court must first look to sources of law in the FSM rather than begin with a review of cases decided by other courts, when an FSM court has not previously construed FSM civil procedure 

[11 FSM Intrm. 352]

rules which are identical or similar to U.S. counterparts, the court may look to U.S. sources for guidance in interpreting the rules.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 353 n.1 (Chk. 2003).

Civil Procedure - Parties
An assignee is generally the real party in interest.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 353 (Chk. 2003).

Civil Procedure - Parties
Every action must be prosecuted in the name of the real party in interest.  But no action will be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution will have the same effect as if the action had been commenced in the name of the real party in interest.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 353 (Chk. 2003).

Civil Procedure - Parties; Civil Procedure - Res Judicata
The purpose of Rule 17(a) is to allow an assignee to sue in its own name, and it has, more importantly, come to also protect the defendant against later action by the party actually entitled to recover and thus insures that a judgment will have its proper final (res judicata) effect.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 354 (Chk. 2003).

Civil Procedure - Parties
Rule 17(a) controls the substitution of the real party in interest when the interest was transferred before the suit was filed, while Rule 25(c) applies if the transfer occurred after the start of the suit.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 354 (Chk. 2003).

Civil Procedure - Parties
When the plaintiffs’ motion asks that another entity be substituted in as plaintiff because it is the real party in interest and the motion does not seek to change any claim or the cause of action, the motion will be granted.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 354 (Chk. 2003).

Civil Procedure - Parties
Substitution of plaintiffs is allowed under Rule 15 when the substitution does not change the claim or cause of action.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 354 (Chk. 2003).

Civil Procedure - Dismissal; Civil Procedure - Parties
Once a party’s death has been suggested on the record under Civil Procedure Rule 25(a)(1), the ninety-day deadline for making a motion for substitution of that deceased party starts running, and when the ninety days has passed and no motion for substitution or for enlargement of time has been filed, that party will be dismissed.  Beal Bank S.S.B. v. Maras, 11 FSM Intrm. 351, 354 (Chk. 2003).

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COURT’S OPINION

DENNIS K. YAMASE, Associate Justice:

On January 17, 2003, plaintiffs’ counsel filed a Motion to Amend Pleadings to Reflect Name Change.  It asks that the pleadings be amended to show the actual plaintiff as LLP Mortgage Ltd., and not the Beal Bank S.S.B. or the United States Small Business Administration.  The motion states that 

[11 FSM Intrm. 353]

LLP Mortgage Ltd. is a limited liability partnership created to enforce delinquent promissory notes for the Small Business Administration and that it was assigned the promissory note at issue in this case (with Beal Bank merely the "servicing entity" for it).  The motion relies on Rules 15 and 60(a) for the relief it seeks.

No opposition has been filed, which is deemed a consent to the motion.  Actouka v. Etpison, 1 FSM Intrm. 275, 276 (Pon. 1983); FSM Civ. R. 6(d).  But even without any opposition, the court still needs good grounds before it can grant the motion.  Senda v. Mid-Pacific Constr. Co., 6 FSM Intrm. 440, 442 (App. 1994).

I.  Substitution of LPP Mortgage, Inc. as Plaintiff

Rule 60(a) allows the correction of "clerical mistakes in judgments, orders or other parts of the record and errors therein arising from oversight or omission."  FSM Civ. R. 60(a).  It may be inapplicable.  The movant does not seek correction of a judgment as no judgment has been entered, and it also does not seek correction of any court order.  Instead, plaintiff’s counsel, who, through oversight, was unaware of the exact identity of his own client, seeks to substitute the real party in interest for the originally-named plaintiffs.  While Rule 60(a) "may be utilized to correct mistakes by the parties" as well as those committed by the clerk or by the court, 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2854, at 239 (2d ed. 1995), including the misnomer of a party (usually a defendant), id. at 244 & n.13, it does not appear that the rule may be used to substitute a party plaintiff for the other entities mistakenly named as plaintiffs.  This case does not involve the misnomer of a plaintiff, but rather a mistake as to who the real party in interest was and therefore who should be named as the party plaintiff.

Exhibit D attached to the Complaint is a copy of an assignment of the promissory note by the Small Business Administration to "LPP Mortgage Ltd. f/k/a Loan Participant Partners, Ltd., a Texas limited partnership" (not LLP Mortgage Ltd. as stated in the present motion).  An assignee is generally the real party in interest.  See, e.g., Cobb v. National Lead Co., 215 F. Supp. 48, 51 (E.D. Ark. 1963).

Rule 17(a) requires that every action "be prosecuted in the name of the real party in interest."  FSM Civ. R. 17(a).  Thus, in effect, the motion asks that the complaint be amended to conform to the Rules of Civil Procedure by substituting the assignee - the real party in interest - for the originally-named plaintiffs.  Rule 17(a) further provides that:

No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.

FSM Civ. R. 17(a).  Although no objection was made to the original plaintiffs, the only relief the motion seeks is the substitution of the real party in interest.

[11 FSM Intrm. 354]

It would be contrary to the spirit and purpose of the rule if the real party in interest could only be substituted in for an original plaintiff once another party had objected instead of on the real party’s own motion.  The purpose of Rule 17(a) is to allow an assignee to sue in its own name, and it has, more importantly, come to also protect the defendant against later action by the party actually entitled to recover and thus insures that a judgment will have its proper final (res judicata) effect.  Macmillan v. Federal Ins. Co., 741 F. Supp. 1079, 1085 (S.D.N.Y. 1990); Whitehall Bldg. Corp. v. Profexray Div. of Litton Indus., 387 F. Supp. 1202, 1206 (E.D. Pa. 1974).

Rule 17(a) controls when the interest was transferred before the suit was filed, while Rule 25(c) applies if the transfer occurred after the start of the suit.  Hillbrands v. Far East Trading Co., 509 F.2d 1321, 1323 (9th Cir. 1975).  In this case, the loan and mortgage were assigned before the suit was brought, as evidenced by the assignment attached to the Complaint as Exhibit D.

Accordingly, under Rule 17(a) LPP Mortgage Ltd. should be substituted as plaintiff because it is the real party in interest.  Furthermore, substitution of plaintiffs is allowed under Rule 15 when the substitution does not change the claim or cause of action.  Fidelity & Deposit Co. v. Fitzgerald, 272 F.2d 121, 129 (10th Cir. 1959), cert. denied, 362 U.S. 919 (1960).  The present motion does not seek to change any claim or the cause of action.

The motion is therefore granted and LPP Mortgage Ltd. (the correct name of the real party in interest) is substituted as plaintiff in this action.  The clerk shall correct the docket to show LPP Mortgage Ltd. as plaintiff and all future captions shall reflect this substitution.  The Complaint is hereby amended to name LPP Mortgage Ltd. as the sole plaintiff; to remove all reference to the Beal Bank S.S.B. and the United States Small Business Administration as parties plaintiff; and so that paragraph 11 reads:  "On or about July 23, 2001, the SBA assigned the Promissory Note at issue in this Complaint to Plaintiff LPP Mortgage Ltd.  Ex. D (Assignment of Note)."  If, in light of this amendment, the defendant wishes to amend a pleading, it may be done within ten days of service of this order; otherwise the answer and any motions already filed shall stand as is.

II.  Dismissal of Sos Maras

The Answer, filed on November 7, 2002, which stated that defendant Sos Maras was deceased, constituted a suggestion of death upon the record under Civil Procedure Rule 25(a)(1). Once the death of a party has been suggested on the record, the ninety-day deadline for making a motion for substitution of that deceased party starts running.  The court noted these points in its December 27, 2002 scheduling order.  No motion for substitution of Sos Maras, or for enlargement of time, has been filed.  The ninety days have passed.  Sos Maras is accordingly dismissed as a party defendant.

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Footnotes:
 Although the court must first look to sources of law in the FSM rather than begin with a review of cases decided by other courts, FSM Const. art. XI, § 11; Alaphonso v. FSM, 1 FSM Intrm. 209, 214 (App. 1982), when an FSM court has not previously construed FSM civil procedure rules which are identical or similar to U.S. counterparts, the court may look to U.S. sources for guidance in interpreting the rules, see, e.g., Primo v. Pohnpei Transp. Auth., 9 FSM Intrm. 407, 413 n.3 (App. 2000); Tom v. Pohnpei Utilities Corp., 9 FSM Intrm. 82, 87 n.2 (App. 1999); Senda v. Mid-Pacific Constr. Co., 6 FSM Intrm. 440, 444 (App. 1994).