AINA SAOLUAGA NUA, in his capacity as a member of and
Speaker of the House of Representatives, TUILEFANO M. VAELA`A, in his capacity
as a member of the Senate, and OTOMALESAU JOHN AH SUE, as a member of the
House of Representatives, Plaintiffs,
v.
TAUESE P.F. SUNIA, as Governor of
and individually, SPECIAL SERVICES CORPORATION,
TOGIOLA T.A. TULAFONO, as Lieutenant Governor of American Samoa and
individually, DOUGLAS J. JUERGENS, officially and individually, PATI FAIAI,
officially and individually,
JANE DOES 1-10, jointly and severally, Defendants.
High Court of
Trial Division[4ASR3d209]
CA No. 128-99
August 3, 2000
[1] The Appropriations clause of the U.S. Constitution
was intended as a restriction on the disbursing authority of the Executive
department.
[2] Under the
Revised Constitution of American Samoa, the executive branch’s role in the
appropriations process is limited to preparation of the preliminary budget
plans.
[3] The American Samoa Legislature is the only branch
explicitly granted the power to pass laws appropriating and enabling the
expenditure of public funds, and to approve budgets submitted by the Governor.
[4] In
[5] Any statute purporting to alter the spending
authorization power in derogation of the Revised Constitution of American Samoa
is a priori null and void.
[6] A.S.C.A. § 37.2010 does not provide the Executive
branch with unfettered discretion to spend public funds on the government’s
behalf.
[7] Statutory interpretation is purely a question of
law to be decided by the court.
[8] The starting point for interpretation of a statute
is the language of the statute itself.
Absent a clearly expressed legislative intention to the contrary, that
language must ordinarily be regarded as conclusive.
[9] Courts may not read into a statute an implication
that it does not warrant.
[10] The Revised Constitution of American Samoa
mandates that the Executive Branch may not obligate public funds in any manner
without an appropriation by the Legislature.
[11] The Revised Constitution and laws of
ORDER GRANTING PLAINTIFFS’ SUMMARY JUDGMENT IN PART
AND DENYING DEFENDANTS’ SUMMARY JUDGMENT[4ASR3d210]
Before
Counsel:
For Plaintiffs, Afoa L. Su`esu`e Lutu, Legislative Counsel,
Arthur Ripley,
Jr., Counsel for the Senate, and Christa Tsu-
Hsiu Lin,
Assistant Legislative Counsel
For Defendants,
Fiti Sunia, Assistant Attorney General
Procedural History
Plaintiffs Ama Saoluaga T. Nua, Tuilefano M. Vaela`a,
and Otomalesau John Ah Sue (collectively “the Legislators”) filed a complaint
on December 7, 1999 alleging that defendants (collectively “the Executives”)
violated sundry constitutional, statutory, and common law provisions as a
consequence of their purchase of the business property in Ili`ili known as the
Country Club (“CC”), comprising a restaurant and nightclub. The CC operates in a building located on land
currently leased by the American Samoa Government (“ASG”) for the purpose of
operating a public golf course.
The Legislators filed an amended complaint two days
later, on December 9, 1999, that corrected grammatical and other minor errors
in the original complaint but that did not affect its substance. The Executives answered on December 29,
1999. The Legislators moved for partial
summary judgment on January 25, 2000, and the Executives responded, after a
continuance, on March 31, 2000 with a document that both opposed the
Legislator’s bid for summary judgment and moved for partial summary judgment. The Legislators responded to the Executives’
cross-motion for summary judgment on April 7, 2000, and counsel for all parties
attended a hearing on the cross-motions on April 10, 2000.
Facts
The crux of the matter is that the Executives arranged
ASG’s purchase of the CC from Bill and Apoua Tedreck (“Tedrecks”) without the
approval or involvement of the Legislature of American Samoa (“the
Legislature”). The details of this
transaction follow.
Defendant Lieutenant Governor Togiola T.A. Tulafono
(“the Lieutenant Governor”) and two members of the Governor’s Office staff,
defendants Douglas Juergens (“Juergens”) and Pati Faiai (“Faiai”) incorporated
the Special Services Corporation (“SSC”) on May 28, 1999 for the purpose of
operating the CC restaurant and nightclub.
That same day, the Tedrecks sold the CC to ASG, represented by defendant
Governor Tauese Sunia (“the Governor”) for a sum of $253,750.00.
ASG agreed to pay the Tedrecks this sum through
offsets of rent owed [4ASR3d211] SG
on their lease of property known as
ASG and the Tedrecks amended the CC purchase agreement
on June 6, 1999, to increase the price paid by ASG to $272,722.00 in exchange
for additional CC assets. ASG
accordingly extended the offset period for the Tedrecks’
The SSC took over CC operations following the purchase
transaction and has been running it to the date of the summary judgment
hearing. The Executives do not dispute the following facts: (1) the Legislature
has not approved the purchase of the CC; (2) the Legislature has not
appropriated funds for the purchase or operation of the CC; (3) ASG has not
received any funds from either the Fagatogo or CC leases with the Tedrecks
subsequent to the effective dates of ASG’s agreement with the Tedrecks to
purchase the CC and termination of the CC lease; (4) ASG has not received any
revenues generated by the CC under the SSC’s management.
Analysis
A. Summary
Judgment
Both parties move for partial summary judgment
pursuant to T.C.R.C.P. 56. Summary
judgment is appropriate only when the pleadings and supporting papers show
“that there is no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law.” T.C.R.C.P. 56; Etimani v.
Samoa Packing Co., 19 A.S.R.2d 1, 4 (Trial Div. 1991). In ruling on a summary judgment motion, the
court must view all pleadings and supporting papers in the light most favorable
to the opposing party, treat the opposing party’s evidence as true, and draw
from such evidence the inferences most favorable to the opposing party.
B. Executive
Expenditure of Funds
As a preliminary matter, we must determine whether
there was in fact an expenditure of funds by the Executives. The Executives attempt to portray this
transaction as a mere substitution of revenue streams, rather than an
expenditure. They assert that “[t]here
was no actual spending of [4ASR3d212] The
financing of the transaction was essentially a trade of a debt obligation—at
the time and in the future—for an asset of equal value to the debt.” (Defs.’ Resp. to Pls.’ Mot. for Summ. J. 2.)
No amount of obfuscation, however, can mask the fact
that prior to the CC purchase transaction, ASG received funds from the Tedrecks
in the form of rent payments for both the Fagatogo and CC leases. After the purchase transaction, ASG has not
received any funds to replace this lost revenue. The Executives concede that
ASG purchased the CC. (
Only if the Executives were to begin forwarding sums
from the operations of the CC to ASG in the exact amounts formerly received
from the Tedrecks would there be a substitution of revenue streams. Such a
substitution would not, however, defeat the present case because revenue from
CC operations and revenue from lease payments are two different things
entirely, even if equal in amounts. The
latter are guaranteed by a contract and security. The former are subject to the innumerable
variables controlling the success or failure of nightclubs and
restaurants. The difference is
obvious. In sum, we hold that the
Executives have caused expenditure of ASG monies without the Legislature’s
appropriation of those funds.
C. Violation
of Separation of Powers: Counts 1, 2, and First 3
The violation of the constitutional principle of
separation of powers is alleged in the Legislators’ causes of action 1, 2, and
first 3.
[1] Every
student of American government knows, or should know, that the spending
authorization power resides with the legislative branch. This principle is embodied in the
Appropriations Clause, found at Article I, Section 9, Clause 7 of the United
States Constitution, stating that “[n]o money shall be drawn from the Treasury,
but in Consequence of Appropriations made by Law.” This means that any funds spent by the U.S.
Government, by whatever agency or branch, must be authorized by statute. See, e.g., Reeside v.
[2-3] The
Revised Constitution of
[4] Thus,
while our constitution does not include the prohibitory language of the U.S.
Appropriations Clause, Section 1(c) of Article II and the statutes controlling
the budget process clearly reserve the spending authorization power to the
Legislature. We made this explicit
holding in The
Senate v. Lutali, 27 A.S.R.2d 126, 134 (Trial Div. 1995), in which
heading 4 reads “Executive cannot spend without appropriation.”
We based the decision in Lutali in part on
A.S.C.A. § 10.0601(a), a statutory provision intended to ensure the fiscal
responsibility of government officials.
This provision reads as follows:
(a) No officer or employee of the government may make
or authorize an expenditure from or create or authorize an obligation under any
appropriation or fund in excess of the amount available therein; nor may
officers or employees involve the government in contracts or other obligations,
for the payment of money for any purpose, in advance, of appropriations made
for that purpose unless the contract or obligation is authorized by law.
A.S.C.A. § 10.0601(a).
The language of the statute clearly states that officers (the Governor
of American Samoa being an officer) may not contractually obligate ASG to pay
monies without an appropriation approving the expenditure, lending support to
the constitutional principle that the Legislature controls governmental purse
strings. The Executives’ arrangement for
ASG’s agreement to purchase the CC created an obligation on ASG’s part to pay
funds in excess of the amount available.
There being zero dollars appropriated for the purchase of the CC, any
expenditure for this purpose was necessarily in excess of the amount available.
Second, in forgiving the Tedrecks’ rent payments for
the Fagatogo property for approximately the next decade, the Executives
obligated ASG to pay money in advance of any appropriation for that
purpose. It is clear that the Executives
created an ASG contract with the Tedrecks to [4ASR3d214] hem thousands of dollars annually in exchange for
acquiring the CC.
[5] The
Executives’ first response to the separation of powers principle, contained in
the Revised Constitution, fleshed out by A.S.C.A. § 10.0601, and explicitly
adopted by this Court, is an argument that the Legislature has, by enactment of
A.S.C.A. § 37.2010, provided the Executives with unfettered license to spend
ASG funds. This is preposterous. First,
even if the Legislature had intended such a result, it could not have achieved
it through legislation. A.S.C.A. §
1.0201 clearly states that the territory’s constitution takes precedence over
legislative actions. That the spending
authorization power is reserved to the Legislature is a constitutional
principle that is merely bolstered, not established, by the statutory scheme. Therefore, any statute purporting to alter
the spending authorization power in derogation of the Revised Constitution is a
priori null and void.
[6] Second,
A.S.C.A. § 37.2010 simply does not provide the Executives power with unfettered
discretion to spend public funds on ASG’s behalf. The Executives argue that
because § 37.2010 authorizes ASG to purchase private property, this necessarily
implies that the Governor is authorized to do so with absolutely no
constraints. The Executives fail to support this assumption, seemingly based on
a misreading of the statute. We could
stop there, but proceed with the discussion in order to make this point
abundantly clear.
[7-9]
Statutory interpretation is purely a question of law to be decided by the
court.
The Executives’ second argument hinges on the last
clause of A.S.C.A. § [4ASR3d215] which
reads, “unless the contract or obligation is authorized by law.” It contends that this creates an exception
whereby its purchase is authorized under A.S.C.A. § 37.2010. As we explained above, § 37.2010 confers no
power on the Executives to purchase assets in the absence of
appropriations. It does not therefore
authorize the purchase, nor does any other provision of the code. The purchase being completely unauthorized,
it is not sanctioned by the language of § 10.0601 (a).
Recent decisions of this Court should have laid to
rest any lingering doubts about the Executive Branch’s discretion to spend ASG
funds. For example, in Lutali, 27
A.S.R.2d at 137, we stated that:
The Revised Constitution and laws are clear that the
Executive recommends and proposes an annual budget to the Legislature, and the
Legislature in turn has the authority to appropriate public funds to implement
that budget as it deems necessary.
In that case we went on to declare unlawful and
unconstitutional debts incurred by the Executive Branch without specific
appropriations by the Legislature, holding that they “would exceed the role and
powers assigned to the Executive [Branch] and would infringe upon the role and
powers of the Legislature, and would violate the constitutional and lawful
constraints, requirements, and procedures applicable to the budgeting,
appropriation, and expenditure of ASG’s funds.”
This precedent should have made it abundantly clear to
the Executives that they were overstepping their constitutional powers when
they unilaterally arranged for ASG’s purchase of the CC. Even if the present administration somehow
missed that case, our decision in The Senate v. Tauese, CA No. 27-98,
slip op. (Trial Div. Sept. 23, 1998), delivered from the bench under two years
ago, should have put the Executives, and the Governor in particular, on notice
that the Executive Branch cannot lawfully spend funds without legislative
appropriation. In that case, we held
that the Executive Branch could not spend funds derived from petroleum
operations without an appropriation by the Legislature.
The parallels between that petroleum case and the one
presently before us are numerous and strikingly similar. In both cases, the Executive Branch created a
body to administer the asset in question.
In both cases, the revenues derived from the assets never found their
way into the general fund. With such
similarities, we are completely at a loss as to how the Executives could fail
to realize that ASG’s purchase of the CC was just as illegal and
unconstitutional as the Executive Branch’s diversion of petroleum revenues.
[10] It is
clear, under our Revised Constitution, its implementing [4ASR3d216]nd recent decisions of this Court that the Executives’
arrangement for ASG’s purchase of the CC violated the separation of powers
mandated by the Revised Constitution of American Samoa. Let us spell it out simply so as to put the
Executives on notice in hopes that this situation will not repeat itself yet
again. The Revised Constitution of
American Samoa mandates that the Executive Branch may not obligate public funds
in any manner without an appropriation by the Legislature. Accordingly, we will
grant the Legislators’ summary judgment on causes of action 1, 2, and first 3.
D. Statutory
Violations: Counts Second 3, 4, and 7
The Legislators allege violations of A.S.C.A. §
10.0601 in causes of action second 3 and 4, and of A.S.C.A. § 37.2010 in cause
of action 7. The Executives contend in their cross-motion for summary judgment
that violations of these statutes do not provide the Legislators with a cause
of action. They also defend on the
grounds of qualified immunity, which appears to be principally directed at
these three causes of action.
As a preliminary matter, a question exists as to
whether the Legislators possess standing to assert claims of statutory
violations against the Executives.
According to their pleadings, Legislators are suing in their official
capacities, exclusive of their status as taxpayers or citizens. (See Compl.; Am. Compl.; Pls.’ Resp.
to Defs.’ Cross Mot. for Partial Summ. J. 1.)
A legislator’s standing can differ dramatically from taxpayer or citizen
standing.
At this time, we will deny both motions for partial
summary judgment as to these causes of action.
We also advise the parties to comprehensively research and brief the
standing, cause of action, and qualified immunity issues, and any other issues
related to these causes of action, in preparation for trial or any further
pretrial motions.
E. Misappropriation/Conversion: Counts 5, 6,
and 8
We further point out that misappropriation and/or
conversion appear to be alleged as intentional torts. The Legislators must prove that they in fact
possess a property or possessory interest in the funds at issue sufficient to
constitute one or both of these torts.
Specific wrongful intent is also an element requiring proof. Accordingly, we will also deny both motions
for partial summary judgment as to these causes of action.
F. Improper
Formation of Public Corporation: Count 9
In cause of action 9, the Legislators contend that
SSC, as a public corporation, was improperly formed for two reasons. First, they assert that only the Legislature
is empowered to create, through statutory[4ASR3d217]
public corporations. Second, they contend that the Executives did
not form SSC for a public purpose, because the definition of such rests with
the Legislature.
Turning to the first argument, although the Legislators
cite a number of cases in which it appears that a legislature created public
entities by means of statutes, these cases do not state that this is the
exclusive means by which they may be constituted. The only language that supports such a
reading is found in Board of Commissioners of the
[11] In
contrast, the Revised Constitution of American Samoa contains no provisions
treating the subject of public corporations.
In addition, the Executives are correct in asserting that our
corporation statutes, A.S.C.A. §§ 30.01-.05, do not explicitly prohibit them
from creating a public corporation. Indeed,
these statutes do not treat the subject of public corporations at all.
Granted, case law demonstrates that formation of a
public corporation is generally a legislative function. See, e.g., Jones v. City of Portland,
245
In examining the Legislators’ second argument that SSC
was not constituted for a public purpose, we reiterate that standing issues
arise when a legislator asserts a cause of action based on an alleged statutory
violation by an executive branch official.
See Section D, supra.
The Legislators’ standing to pursue a claim based on an alleged
violation of A.S.C.A. § 37.2010, which grants ASG “the power and authority to
purchase property for public purposes,” thus remains in question.
The Legislators must provide much more in the way of
legal and policy arguments to support the claim that the Legislature has the
exclusive right to create a public corporation and to define that corporation’s
purpose. We also expect the Legislators
to submit evidence at trial that the SSC does not in fact serve a public
purpose. We will, therefore, also
decline to grant both motions for a partial summary judgment with respect to
cause of action 9.[4ASR3d218]
G. Breach of
Fiduciary Duty: Count 10
The Legislators allege in cause of action 10 that the
Executives have breached their fiduciary duties to the people of
At this juncture, the legal theory of this cause of
action is unclear to us. It may, as the
Executives contend, be based on negligence.
It may, as the Legislators assert, be a distinct cause of action. It may be merely an element of the
misappropriation and/or conversion causes of action.
Because of this uncertainty, we will deny both motions
for partial summary judgment as to cause of action 10. Once more we expect the parties to thoroughly
research and brief these issues for trial or any further pretrial motions.
Order
1. The
Executives’ motion for partial summary judgment is denied.
2. The
Legislators’ motion for summary judgment for declaratory relief is granted as
follows:
a. the sales agreement for the CC between ASG and. the
Tedrecks is illegal and thus null and void;
b. the leases between the Tedrecks and ASG for both
the Fagatogo and CC properties remain in effect;
c. all revenues received from the Fagatogo and CC
leases are public funds subject to appropriation by the Legislature; and
d. the Executives may spend public funds only for
purposes for which they are appropriated by the Legislature.
3. The Legislators’ motion for summary judgment for
injunctive relief is also granted as follows:
The Executives, their agents, employees, servants, and
attorneys, and all persons or entities in active concert or participation with
them are enjoined from:
a. disbursing, expending, or obligating ASG funds for
the purchase and operation of the CC; and
b. transferring, selling, depleting, or otherwise
disposing of CC and SSC assets.[4ASR3d219]
4. The Legislators’ motion for summary judgment
imposing liability on any or all of the Executives individually is denied.
5. The Executives shall prepare a detailed accounting
of all CC and SSC assets and operations for trial.
It is so ordered.