Common Ground Lease Mistakes

In Saipan, property may only be "purchased" by non-indigenous people by a 55 year lease interest. Therefore, many real estate transactions are not transfers of fee simple estates, but rather leasehold estates. I was recently reviewing one of these leases and came across some common mistakes which I thought I'd just remind everyone to watch out for. First of all, make sure you don't lease for one minute over 55 years. The lease I saw was for a term from April 5, 2008 to April 5, 2063. The CNMI Constitution, Article XII, requires that a non-NMI descent person cannot acquire more than a 55 year interest. As a result, the lease must be drawn up, for example, beginning at 12:01 a.m. on April 5, 2008 and ending at 11:59 p.m. on April 4, 2063. It may seem like a ridiculous technicality, but it's the kind of thing someone will go looking for if they are seeking to void your lease--and the Constitution says that any transaction in violation of Article XII is "void ab initio," so it's better not to take any risks. In addition, the lease I looked at had an insufficient spousal consent. Here in the CNMI, where spouses have certain rights to share certain land, it is important to make sure that if you lease from one spouse, you have the other spouse "sign off" on that lease, and that the spouse's signature is appropriately notarized. I will go over some more lease options which, while not absolutely necessary, can be beneficial for landowners as well as tenants in future posts.

Federalization of the practice of law?

Lawyers in the United States are licensed by state. There are many states currently who allow a lawyer admitted in another state to become a member of their bar. This is referred to as reciprocity. Here in the CNMI, there is no reciprocity. In order to become a licensed member of the bar and practice law, an attorney must take the CNMI bar exam. Attorneys who have practiced for at least 5 years may take a shortened version. The CNMI Supreme Court is very serious about policing the unauthorized practice of law. There was a recent case where the Supreme Court took action concerning a lawyer who was practicing without a local license, even though she was employed by the Attorney General's Office. (See MP 33).

The trend in some states seems to be leaning toward recognizing the broadening of legal practice. In Georgia, they have taken the idea of reciprocity one step further to allow "multi-jurisdictional" law practice. In essence, Georgia attorneys are allowed to do legal work elsewhere, and out-of-state lawyers get the right to set up shop in Georgia–without associating with local counsel. Currently in the CNMI, if an outsider wants to practice here, he may only do so under limited admission for one case pro hac vice, and the cost is prohibitive ($5,000.00 for a one year period). See the Rules of Admission, Rules 3 and 4. Otherwise, an outsider must associate with local CNMI counsel. There is a terrific website which lists the particulars for attorneys on what each state requires or allows regarding multi-jurisdictional practice.

I have no opinion on whether protectionist policies are good or bad for a particular state--and I note that particularly desirable states in which to retire, like Florida and Arizona, also do not allow reciprocity. But it seems as though the distinctions between the several states are breaking down as surely as the practice of law is expanding nationally and globally. I believe that the ease of electronic research and the continuing national standardization of bar testing suggest the inevitability of a national practice of law one day. Until then, keep checking the local rules.

Zoning Law enacted

Yesterday, Alan Barak, Esq., counsel for the Zoning Board, gave a lecture on the new Saipan Zoning Law of 2007. While the Zoning Law will be referenced at 10 CMC §3511 (PL 15-29), it is not yet in the new books and will be too big to fit, so the best bet is to go to http://www.zoning.gov.mp/ and download or order a copy. This law was enacted to improve the public health, safety and welfare of the people of the CNMI. While the actual requirements of landscaping and building setbacks will serve to beautify and de-clutter certain areas, the law is purposely not based on aesthetics but rather on specific, quantifiable requirements. In addition, private homeowners may continue to make changes to their homes without concern that they will be violating zoning laws, and this includes building additional houses on family land which may not have road access. (See Section 1304: private single family dwellings not required to obtain a zoning permit).

Several very important points were touched upon, and I’ll try to sum them up here. First, there will be no variances awarded, and that goes especially for residential areas. This is because the purpose of a variance is not to change the current zoning scheme. However, a variance may be requested if the use fits into the character of a zone where it seems to belong, but for some reason it is not provided for specifically in the law. Second, non-conforming use property will be amortized for the life of the investment and then extinguished. However, it will be possible for nonconforming uses to convert or legalize. (See Section 1208). It was suggested that non-conforming use owners may want to register their non-conforming property before February 1, 2008 so that there is no question that the use was in effect before the implementation of the law. Third, there are a number of uses which are marked “conditional” in the law. This means that the property owner will have to ask permission and make a case before the zoning board. If, however, a property owner can convince the surrounding parcel owners to agree with a conditional use, the zoning board will accept the use. Fourth, there will be many situations where it is necessary to refer to multiple uses or multiple zones (the example was given of a ball park with a kiosk selling food and liquor). Each use and zone must be examined to determine whether the law is satisfied. Lastly, time lines have been built into the law so that prompt decisions will be rendered by the zoning board. (See Article 14).

All in all, the law looks to be very straightforward and well written. It contains tables of uses along with area by area maps to easily locate use zones, and it has a comprehensive table of contents. Developments other than single family homes will require a zoning permit. Accordingly, the zoning board suggests that owners who are planning to build contact the board first so that they can be sure to conform to the law up front instead of having to make costly changes later down the line.

Citation to unpublished cases

When I was a law clerk at the Supreme Court, the rule on citations to unpublished case law was simple: you can't do it. See Rule 51 of the Commonwealth Rules of Appellate Procedure. Now that I am out in private practice, I'm seeing a fair number of citations in Superior Court briefs to unpublished District Court cases, especially in the Ninth Circuit. I have also seen unpublished District Court cases cited by the Superior Court. In the CNMI, as a new jurisdiction, the law is still evolving, and there are certain types of cases which aren't getting published in the US that are helpful to us here: especially, I find, cases with pro se litigants. I figured that if I am a bit confused, I am not alone. So I took a look at our rules. From what I can see, we have the Rules of Practice, which address citation to unpublished opinions of the Superior Court and Ninth Circuit. See Rule 29. When there is a conflict with the Rules of Practice, the Rules of Civil Procedure govern, as they do here. See Schedule on Transitional Matters, Section 1, Rules of Civil Procedure.

Rule 83.2 of the Civil Rules deals with citation to authority. The Superior Court requires the practitioner to provide the court with unavailable authority, but this is not specifically defined. Any authority not available in the Commonwealth Law Library, such as a treatise or law review article, must be attached in a length that is enough to provide a full understanding of the author's opinion. At this point, I believe the law library is out of date by possibly 10 years. This is because the Court decided a long time ago to put its resources on the side of progressiveness, and began subscribing to electronic research services. It seems to me that this rule is expansive on purpose. The Court currently subscribes to Westlaw, and so I would say that any citation to authority which is available on Westlaw would be equivalent to the law library. Anything else would need to be attached to the back of the papers. Also in the rule is that the Superior Court doesn't want to see secondary authority cited (such as Am.Jur.) if there is primary authority available . But if you have to cite a secondary source, it is permissible to cite with a parenthetical explaining why primary wasn't available.

Similarly, the District Court's Local Rules say that all citations should be in a generally recognized form, and any authority not available in the court's law library must be provided to the court. See LR 5.2 (c) and (d). It appears that the District Court is also open to reviewing citations of unpublished decisions as long as they are made available to the Court. In addition, there are courts which have argued that Ninth Circuit Rule 36-3 does not bar citations to unpublished decisions from other circuits. See Alvarenga-Villalobos v. Reno, 133 F.Supp.2d 1164 (N.D.Cal.2000); In re Antablian, 140 B.R. 534 (C.D.Cal.1992). That being said, an unpublished decision cannot be cited as precedent but as persuasive authority at most. Ninth Cir. R. 36-3; Schmier v. United States Court of Appeals for the Ninth Circuit, 279 F.3d 817, 825 (9th Cir.2002); Hart v. Massanari, 266 F.3d 1155, 1180 (9th Cir.2001). As of January 1, 2007, the Ninth Circuit has changed its rules to allow citation to unpublished dispositions and orders of the courts of its own circuit. See Rule 36-3(b)—but older unpublished Ninth Circuit opinions are still off limits in the Ninth Circuit.

When to file a notice of Appeal

With the Supreme Court’s recent decision of CPA v. Tinian Shipping Company, Inc. 2007 MP 22, I thought it would be a good idea to discuss notices of appeal. Filing a notice of appeal on time is crucial. The rule is that you have to file within 30 days after judgment from Superior Court. Our Supreme Court has made it clear that it will not assert jurisdiction over untimely filings. The law has been a bit confusing lately because the Supreme Court has recently changed the format of what constitutes a final appealable judgment.

"In Kumagai, we noted that '[w]hile our rules do not explicitly state the obvious, we find that an entry of judgment or order issued as a separate document is a necessary adjunct that must be filed with the Superior Court clerk.' Id. at ¶ 22 (footnote omitted). We went on to state that “[a] thorough evaluation and collective reading of our Rules of Appellate Procedure, Rules of Civil Procedure and Rules of Practice make evident that without such an entry of judgment or order, this Court has no jurisdiction.” Id. Furthermore, we took explicit note that “Rule 54(a) . . . state[s]: ‘A judgment shall not contain a recital of pleadings, the report of a master, or the record of prior proceedings.’” Id. at ¶ 19 (quoting Com. R. Civ. P. 54(a))." CPA v. Tinian Shipping Company, Inc. 2007 MP 22 at ¶ 12

I think the Court is attempting to clarify the new rule now. In CPA, there were two judgments issued: one was issued initially as part of a “findings of fact and conclusions of law,” and then another judgment was issued subsequently containing essentially the same final judgment. The Supreme Court held that the correct judgment from which to start counting was the second judgment, or the “entry of judgment.” Essentially, the trial court writes out what it has found and what it has held, and, usually, the judgment amount, if any. Then, the clerk makes a separate piece of paper, approved and signed by the trial court, which it calls the final “judgment.” This is the official piece of paper that counts. The clerk enters that judgment, serves the parties, and then we start counting.

As the Kumagai Court put it, “[f]rom these rules, it is apparent that an “entry of judgment or order” is different from the announcement of a decision, sentence or order. An entry of judgment or order has been singled and differentiated from announced orders, decisions and sentences in the rules and must therefore itself be in a different form. It is further clear that an entry of judgment or order, filed with the clerk of the Superior Court is required before an appeal is permitted.” Commonwealth v. Kumagai, 2006 MP 20 at ¶ 18.

Now here is the potential problem I see. First of all, entry of judgment is left to the clerk. Time does not start running to appeal until entry of judgment. In many US courts, the clerk prepares the judgments to be signed the same day the decisions are made, and the judge just signs both the decision and the judgment concurrently. But what if the clerk doesn’t enter the judgment immediately after the decision is made by the trial court? In CPA, the first decision/judgment was made on May 21, 2004, and the second “entry of judgment” was issued June 18, 2004. How long do you have to wait for entry? Can you be sure, if you want to appeal, that it is okay to wait months or years for entry without foregoing your right to appeal? Can you be sure if you want to be able to depend on the finality of the judgment that the opposing party won't swoop down six months later with an appeal from a newly entered judgment? I would consider calendaring post judgment time for entry if you do not receive the entry of judgment with the initial decision and order. My recommendation would be that if the Court has not entered judgment within a month, to prompt the court to enter the judgment, if necessary by motion. Although it is not specifically laid out in the rule, I would be wary of trying to appeal very late in the game, even without an entry of judgment. Also keep in mind that under Rule 4(a)(2) of the Appellate Rules, a notice of appeal filed after the order but before the entry of judgment is treated as filed on the date of entry. So if you are not sure, it can't hurt to file your notice early.

The State of the Restatements

In the CNMI, we cite to the Restatements as precedent in the absence of local law. 7 CMC 3401. Recently, I’ve noticed a proliferation of Restatement Third editions and drafts, and this raises some questions for me. If a prior Restatement has been used as authority by our local courts, does that version of the Restatement then become the CNMI local law, such that we would not cite to a later edition? Will the CNMI courts find a Restatement Draft persuasive, considering that the Restatement is supposed to be a reflection of the common law of the United States? Does the fact that there has been some discussion about the validity of the Restatements themselves impact the CNMI? At this point, I haven’t seen any direct precedent on these issues from our courts. There are a lot of cases which parrot our statute, but not much to answer my questions. CJ Dela Cruz, in a one man opinion (with concurrences), noted that our reliance on the Restatements was merely a “short-hand attempt to fill a gap due to the absence of statutory laws in many areas.” Borja v. Goodman, 1 N. Mar. I. 225, n.4 (1990). Perhaps this suggests that we stick to whatever we have come up with, even if it’s from an old Restatement. My problem with this approach, however, is that I find that the newer editions are clearer and easier to understand than their predecessors. Of course, then we have to deal with the issue of whether the Restatement is actually reflecting the common law of the United States. Professor Kristen David Adams wrote a terrific article discussing these issues as they pertain mostly to the Virgin Islands, a jurisdiction with a very similar statute directing the courts to consider the Restatements authoritative in the absence of local law. “The Folly of Uniformity? Lessons from the Restatement Movement,” 33 Hofstra L. Rev. 423 (also to a lesser extent discussing CNMI cases and precedent). She cites to several Virgin Islands cases which have followed Restatement Drafts, suggesting that there is some persuasive reasoning out there for us to follow the Drafts--but the VI cases are a mixed bag. The article is actually very comprehensive and interesting, and I don’t do it justice to sum it up here—get on your electronic search vehicle of choice and take a look. [Professor Adams has recently followed up with an in depth discussion of the criticisms leveled at the Restatements, and how this may just reflect defects inherent in the common law system. “Blaming the Mirror: The Restatements and the Common Law,” 40 Ind. L. Rev. 205.]

New Zoning Law Open for Comment

The Zoning Board has requested comment on a new draft of the Saipan Zoning Law. According to the Saipan Tribune, there will be an open house on Monday, October 15, 2007 from 8:30am to 8:00pm at the American Memorial Park Visitor’s Center Auditorium, and then a Public Hearing on October 25, at 6:30pm at the Multi-Purpose Center in Susupe. I took a look at the new law, and I’m very impressed by the effort put forward by the Board. I like the emphasis on landscaping: especially the provisions for sidewalks and plantings. There are only two small concerns I have. For one, the requirement that Beach Road buildings have 75% windows facing the frontage may be excessive for this climate, even with covered walkways. I like the idea, and it is a beautiful look; I just can’t help but think of the owners and their power bills. I also like the sections which address nuisances and enforcement. The only thing I would add here is that there are other municipalities which have added criminal penalties to a willful failure to accept a citation issued by a code inspector. Also, it might be a good idea to include a catchall enforcement clause so that other departments with powers over dwellings (such as condemnation, for example) continue to be able to independently enforce their rules. Here’s an example: Enforcement by other means. Nothing contained in this division shall prohibit the municipality from enforcing its codes or ordinances by any other means.

Service of Process on Korean Nationals

The CNMI business community draws members from many nationalities. When it comes to litigation, service of process can get tricky. I came across a terrific blog by Brendon Carr, an American lawyer in Korea who has some great insights into Korean business and law practices. Regarding service on a Korean resident-defendant, the only party who may effect service of process is the court. Korea has adopted the Hague Service Convention, and has a "Central Authority" through which all papers must be routed in addition to an official form (downloadable PDF). American attorneys may make service requests directly to:

Ministry of Court Administration
Attn.: Director of International Affairs
967 Seocho-dong, Seocho-gu
SEOUL 137-750, SOUTH KOREA

All papers must be translated into Korean. For a terrific primer on international service, check out the Proskauer Rose LLP manual on international litigation.

Electronic Discovery in the Federal Courts

On Saturday, the CNMI Bar got together for the Fourteenth Annual District Meeting for the Northern Mariana Islands, hosted by our own Judge Munson. Judge Consuelo B. Marshall from the US District Court of the Central District of California gave a terrific presentation on e-discovery. From audience response, it appears that at this point e-discovery has not been heavily utilized here in the CNMI-- but it is surely coming. With the amount of emails being sent, and the amount of data being stored electronically, it is just a matter of time before attorneys in the CNMI will have to start dealing with e-discovery. In addition to a thorough presentation, Judge Marshall referred the bar to the Federal Judicial Center publication (2007) entitled Managing Discovery of Electronic Information: A Pocket Guide for Judges. The publication details amendments to the Federal Rules of Civil Procedure 16, 26, 33, 34 and 37 which went into effect December 1, 2006 and deal with electronically stored information (“ESI”). ESI is different from traditional data in that it is dependent on the computer system which created it, it typically contains “metadata,” i.e. hidden or embedded data as to creation date, author, etc, and it doesn’t necessarily get deleted when the user deletes it. Basically, ESI is treated the same as other discovery as far as evidentiary objections. But because of the “dynamic” nature of ESI, the rules have evolved to identify and preserve data which might otherwise be deleted. Judge Marshall stressed that in order for lawyers to avoid sanctions, they must advise their clients not to destroy relevant ESI when litigation is imminent—even if the client has a good faith memory recycling system in place. (But see Rule 37). Rule 26(f) deals with ensuring parties meet responsibilities for avoiding spoliation of evidence. Rule 26(b)(5) deals with establishing procedures for asserting a privilege or attorney work product protection claim after an ESI document has been discovered. The issue of whether a privilege has been waived continues to be a substantive legal question which is an issue for the court. Proposed Rule 502 of Evidence was published for comment in August, 2006, and provides that inadvertent disclosure of ESI constitutes a waiver only if a party did not take reasonable precautions to prevent disclosure and did not make reasonable and prompt efforts to rectify the error. In April, 2007, the Advisory Committee on Evidence recommended that the Standing Committee on Rules of Practice and Procedure adopt Rule 502 with some changes. Among the pertinent changes, the text was clarified to indicate that Rule 502 applies in all federal court cases, including cases in which state law provides the rule of decision. In addition, language which strengthened the protections against waiver by inadvertent disclosure was added, while the selective waiver provision was dropped. If the court finds that a disclosure is not a waiver, that finding will be enforceable in subsequent proceedings regardless of party agreement. Finally, the definition of work product will also include intangible information.

Negligence Suit against Doctor Defendant Dismissed under Public Law 15-22

The CNMI Public Employee Legal Defense and Indemnification Act (PELDIA) was repealed by Public Law 15-22, which mandates that Commonwealth employees who obtain a certification from the Attorney General that they were acting within the scope of their employment be dismissed from negligence lawsuits. Public Law 15-22, enacted on July 28, 2006, is based on the Federal Tort Claims Act. In this personal injury case, the court dismissed Plaintiff’s negligence claim against a doctor Defendant. Owens v. Saccomanno, Civ. Action No. 04-0288, March 21, 2007 (Wiseman, J.). As a threshold matter, the court held that it could adopt the review procedure employed by federal courts and find that Attorney General certifications are subject to review by the trial court. The court cited to 9^th Circuit cases which provide that: 1. the trial court should apply respondeat superior when reviewing a certification; 2. the initial burden of proof is on the party seeking review of the certification; 3. the certification is prima facie evidence that the employee was acting within the scope of his employment; and 4. the trial court may hold a hearing to resolve factual hearing as long as there is a disputed issue of material fact. Plaintiff argued that the doctor should not have received a certification because he was an “independent contractor.” The CNMI Supreme Court has spoken on the factors to be considered in determining whether a person serves as an employee or independent contractor. Castro v. Hotel Nikko Saipan, Inc., 4 N.M.I. 268, 273 (1995). Judge Wiseman further identified factors which relate to medical professionals enumerated by federal courts. These factors are whether: 1. the professional accepted an assignment as an employee or a contractor; 2. the hired professional was required to provide personal liability coverage; 3. the professional provided his own equipment; and 4. the Government supervised the professional daily. Because the employment contract specifically characterized defendant’s position as “employee-employer,” the Court gave little weight to the fact that the contract was short in duration. In addition although the contract did not provide all benefits usually covered for Commonwealth employees, those omissions did not conclusively indicate that defendant was not an employee. Finally, plaintiff did not establish an issue of fact regarding the supervision of defendant. Looking to whether defendant acted within the scope of his employment, the Court found that the conduct was not so “unusual or startling” that it would be unforeseeable to an employer.