5ASR3d168

AMOS E. COFFELT, Plaintiff,

 

v.

 

PACIFIC RIM CONSULTING AND INSPECTING CORP., a Hawaii corporation, and

KENNETH A. BENISH, Defendants.

 

High Court of American Samoa

Trial

Division

 

CA

No. 48-98

 

August

27, 2001

 

 

[1] Judgment may not be rendered

against garnishee who has not been notified of controversion pleading and of

time and place of trial.

 

[2] Judgment may not be entered

against garnishee until principal debtor defendant on underlying debt has been

given seven days’ written notice of controversion proceeding and trial date.

 

[3] Where Court found principal

defendant controlled garnishee as his alter ego, based on organizational and

operational history of corporate garnishee, and principal defendant’s general

authority to handle affairs of purported sole owner and operator of garnishee,

service of controversion pleading and notice of trial on principal defendant

satisfied requirement of notification to garnishee.

 

[4] Where Judgment creditor failed to

prove by preponderance of evidence that garnishee was indebted to principal

defendant or had any of principal defendant’s property at time writ of

garnishment was served on garnishee, Court properly dismissed judgment

creditor’s controversion proceeding and terminated his garnishment proceeding.

 

Before

RICHMOND, Associate Justice, LOGOAI, Chief Associate Judge, and SAGAPOLUTELE,

Associate Judge.

 

Counsel: For

Plaintiff, Paul F. Miller

 For Defendant Kenneth A. Benish, William H.

Reardon

 

ORDER

DISMISSING CONTROVERSION PROCEEDING

AGAINST

GARNISHEE, AND IN AID OF JUDGMENT

 

On September 10, 1997, plaintiff Amos E. Coffelt

(“Coffelt”) obtained a judgment against defendants Pacific Rim Consulting and

Inspection Corp., a Hawaii corporation (“Pacific Rim HI”), and Kenneth A.

Benish (“Benish”), jointly and severally, in the amount of $1,199,347.00 in the

Circuit Court of the First Circuit, State of Hawaii (“the HI judgment”).

 

On April 30, 1998, pursuant to the Uniform Enforcement

of Judgments Act, A.S.C.A. §§ 43.1701-.1709, Coffelt petitioned for

registration of the HI judgment as a foreign judgment in this court.  Notice of filing the HI judgment was given to

Pacific Rim HI and Benish in accordance with A.S.C.A. § 43.1704(b).  As authorized by A.S.C.A. § 43.1705, in April

of 1999, more than 30 days having passed, Coffelt initiated process to enforce

the HI judgment by execution, garnishments, an application for an order in aid

of judgment, and discovery.

 

Coffelt applied for an order in aid of judgment on

April 3, 2000, pursuant to A.S.C.A. §§ 43.1501-.1506.  A hearing was scheduled on May 22, 2000, but

on the hearing date, the motion was taken off-calendar at Coffelt’s

request.  On September 6, 2000, a hearing

on the motion was rescheduled on October 2, 2000.  The hearing was continued to November 16,

2000, and again to January 12, 2001.  However, when Coffelt’s counsel did not

appear on January 12, 2001, the motion again was taken off-calendar.  The motion remains pending.

 

Pacific Rim of American Samoa, Ltd., (“Pacific Rim AS”) was among the

various garnishees.  A writ of

garnishment, notice of garnishment, and interrogatories as set forth in A.S.C.A.

§ 43.1805 were issued to Pacific Rim AS on January 17, 2001.  On January 18, 2001, in compliance with

A.S.C.A. § 43.1802(b), the Marshal served those documents on Benish as the

purported manager of Pacific Rim AS.  The

notice was defective by failing to state the garnishee’s appearance date in

court (the second Tuesday following service required under A.S.C.A. §

43.1802(b)), but did properly direct the garnishee to answer the

interrogatories in lieu of the court appearance.  When no answers were forthcoming, a hearing

was scheduled on March 19, 2001, upon Coffelt’s motion, to compel the

answers.  However, this hearing was

cancelled when, on March 7, 2001, Pacific Rim AS filed answers.  The answers were signed on behalf of Pacific

Rim AS by Tina V. Benish (“Tina Benish”) on March 5, 2001, in Apia, Samoa.

 

On March 15, 2001, pursuant to

A.S.C.A. § 43.1807, Coffelt filed a controversion of the answers provided by

Pacific Rim AS.  Pacific Rim AS has not

filed any pleading related to the controversion proceeding beyond its original

answers to the garnishment interrogatories. 

Likewise, neither Pacific Rim HI nor Benish has filed any pleading

permitted by A.S.C.A. § 43.1810.  Trial

on the controversion was originally scheduled on April 6, 2001, and then continued,

first to May 7, 2001, and ultimately to July 30, 2001.  On June 5, 2001, Benish was served with the

controversion pleading and notice of the July 30, 2001, trial date.  On July 30, 2001, counsel for Coffelt was

present.  Benish and his counsel were also

present.  Tina Benish was not present.

 

Discussion

 

A.  Notice

Issues

[1-2] A

judgment may not be rendered against a garnishee who has not been notified of

the controversion pleading and the time and place of trial.  A.S.C.A. § 43.1808.  In addition, a judgment may not be entered

against a garnishee until the principal debtor defendant on the underlying debt

has been given seven days written notice of the controversion proceeding and

trial date.  A.S.C.A. § 43.1812.

 

Benish was served with the controversion

pleading and written notice of the July 30, 2001 trial date on June 5,

2001.  Pacific Rim HI was not separately

served with these documents.  We hold

that the service on Benish was sufficiently compliant with A.S.C.A. § 43.1812

for purposes of the controversion proceeding before us.

 

Benish argues

that the service on him did not constitute the statutorily mandated notice of

the controversion proceeding and trial date to the garnishee Pacific Rim AS,

A.S.C.A. § 43.1808, because he is no longer a director, officer, employee, or

agent of, or otherwise associated with Pacific Rim AS.  We take judicial notice of the ongoing

proceedings in Benish v. Benish, DR No. 105-99, in addition to

the evidence taken at the trial of the controversion proceeding, in our assessment

of this argument.

 

Pacific Rim AS

was incorporated by Benish, his former wife Ta`alolo Galeai Benish (“Galeai”),

and Clara Snow.  Until Benish and Galeai

were divorced on October 21, 1999, they clearly owned, but Benish essentially

operated, the corporation.  Under the

settlement agreement approved and incorporated in the decree of divorce in Benish,

Benish became the sole shareholder of Pacific Rim AS.  Galeai completely severed her relationship

with Pacific Rim AS, and new officers and directors were put in place.  Although undocumented, Benish claims that, at

an unspecified time (under the evidence) after the divorce was granted but

before the original garnishment documents were served on Pacific Rim AS, he

transferred all shares in Pacific Rim AS to Tina Benish, the former secretary

of the company.  He claims that Tina

Benish is now the sole owner and operator of Pacific Rim AS, and that he

conducts business as a consultant on various construction issues totally

independent of any connection with Pacific Rim AS.  Because Tina Benish presently lives in

[Western] Samoa, she has neither been nor can be readily served on behalf of

Pacific Rim AS with the present controversion pleadings and trial date notice.

[3] As admitted in Tina Benish’s answers on behalf of Pacific Rim

AS, Benish was an employee of the corporation as of January 18, 2001, when the

garnishment documents were served on him. 

Tina Benish also stated that Benish was no longer an employee of Pacific

Rim AS when she signed the answers on March 5, 2001.  However, she further added, “but as my

husband, he will look after my interests.” 

Based on the organizational and operational history of Pacific Rim AS

and Benish’s general grant of authority to handle Tina Benish’s affairs, we

find that Benish controls the corporation Pacific Rim AS as his alter ego.  See,

e.g., Amerika Samoa Bank v. Adams,

22 A.S.R.2d 38, 43 (Trial Div. 1992) (finding a corporation to be the alter ego

of an individual based on a totality of circumstances, including his dominion

and control of the corporation).  The

service on June 5, 2001, of the controversion pleading and trial notice on

Benish thus satisfies the statutory requirement of A.S.C.A. § 43.1808 of

notification to the garnishee.

 

B.  Controversion

Issues

 

Pacific Rim AS has submitted answers

to Coffelt’s garnishment interrogatories stating that it does not “hold or

control any property, rights, or credits” belonging to Benish, and that he is

no longer an employee of Pacific Rim AS, though he does “look after” the

interest of his wife, Tina Benish, the owner the corporation. Coffelt

controverts these answers, and asks this Court to find that Pacific Rim AS, in

addition to being Benish’s alter ego, indeed holds property, rights, or credits

belonging to Benish, or is indebted to him. 

Such a finding would form a basis for the Court to render a judgment in

the garnishment controversion proceeding holding Pacific Rim AS liable to

Coffelt for the amount owed under the HI judgment.  A.S.C.A. § 43.1811.

 

[5] However, Coffelt has failed to prove by a preponderance of

the evidence that Pacific Rim AS “was indebted to Benish or had any of his

property” at the time the writ of garnishment was served on the

corporation.  A.S.C.A. § 43.1811.  Indeed, Coffelt has failed to prove that

Pacific Rim AS has any property at all, much less the property of Benish.  Without a finding of Pacific Rim AS’s

indebtedness to Benish or its possession or control of his property that would

be subject to garnishment, we cannot render a judgment holding Pacific Rim AS

liable as a garnishee.  See also Commercial State Bank of Nacogdoches v. Van Dorn, 25 S.W.2d 192, 193 (Tex. Ct.

App. 1930).

 

We will hold

that, in the controversion proceeding, Pacific Rim AS as garnishee is not

liable to Coffelt on the HI judgment against Pacific Rim HI and Benish.  We will therefore dismiss Coffelt’s

controversion proceeding and terminate his present garnishment proceeding

against Pacific Rim AS.

C.  Order in

Aid of Judgment

 

As indicated

above, Coffelt’s motion for an order in aid of judgment is still outstanding.

Benish was ordered in Benish v. Benish, DR No. 105-99, to pay to

Galeai spousal support of $1,000 per month and $300 per month in child support

for each of their three children, a total of $1,900 per month.  This order was based on the agreement between

Benish and Galeai, and the Court’s determination that Galeai reasonably

required spousal and child support in this amount and Benish could afford to

pay it.  Since then, one of the three

children has reached adulthood.  Thus,

the total amount of spousal and child support has been reduced to $1,600 per

month.  Benish is still able to pay the

larger amount.  Accordingly, pursuant to

A.S.C.A. § 43.1503, we will conclude the pending application for an order in

aid of judgment by ordering Benish to pay $300 per month in aid of the HI

judgment at this time.

 

Order

 

1. The

controversion proceeding against Pacific Rim AS is dismissed, and the present

garnishment proceeding against it is terminated.

 

2. Benish shall

pay $300 per month, beginning in the month of September 2001, in aid of the HI

judgment.  Payments shall be made to the

Clerk of the Court, who shall release the funds paid to counsel Paul F. Miller

for disbursement to Coffelt.

 

It is so ordered.

 

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