Royal Crown Insurance v. Northern Mariana Islands

FILED
NOT FOR PUBLICATION JUL 21 2011
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
ROYAL CROWN INSURANCE No. 09-17900
CORPORATION,
D.C. No. 1:09-cv-00030-ARM
Plaintiff - Appellant,
v. MEMORANDUM *
COMMONWEALTH OF THE
NORTHERN MARIANA ISLANDS;
JACINTA M. KAIPAT, in her official
capacity,
Defendants - Appellees.
Appeal from the United States District Court
for the District of the Northern Mariana Islands
Alex R. Munson, Chief District Judge, Presiding
Argued and Submitted June 13, 2011
Honolulu, Hawaii
Before: ALARCÓN, WARDLAW, and N.R. SMITH, Circuit Judges.
Royal Crown Insurance Corp. (“Royal Crown”) appeals from the district
court’s order granting the Commonwealth of the Northern Mariana Islands
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
(“CNMI”) and CNMI Acting Secretary of Labor Jacinta M. Kaipat’s (the
“Secretary’s”) motion to dismiss this action. It also appeals from the district
court’s denial of its motion to alter judgment pursuant to Rule 59(e) of the Federal
Rules of Civil Procedure. We have jurisdiction pursuant to 28 U.S.C. § 1291. We
affirm the dismissal of Royal Crown’s claim for judicial review of the
administrative appeal order as well as the dismissal of the § 1983 claim against the
CNMI.
I
Although the district court dismissed this matter pursuant to Rule 12(b)(6) of
the Federal Rules of Civil Procedure and neither party has raised the question of
subject-matter jurisdiction in this appeal, we are nonetheless “obliged to raise
questions of the district court’s subject-matter jurisdiction sua sponte.” Williams v.
United Airlines, Inc., 500 F.3d 1019, 1021 (9th Cir. 2007) (citation omitted).
Royal Crown contends that its right to due process of law was violated in its
administrative proceedings before the Department of Labor (the “Department”). It
brought a claim for relief under 42 U.S.C. § 1983 against Kaipat, in her official
capacity, and the CNMI. Only “persons” are subject to suit under § 1983. See Will
v. Mich. Dep’t of State Police, 491 U.S. 58 (1989). The CNMI “is not a ‘person’
within the meaning of § 1983.” DeNieva v. Reyes, 966 F.2d 480, 483 (9th Cir.
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1992) The district court therefore lacked subject matter jurisdiction over Royal
Crown’s § 1983 claim against the CNMI.
II
Royal Crown contends the district court erred in dismissing with prejudice
its claim for judicial review of the administrative decision as time-barred. It asserts
that CNMI law is ambiguous as to when the 30-day period for filing for judicial
review commences. It further argues that, even if the statute of limitations had
expired, the time for filing was equitably tolled. We review de novo a district
court’s dismissal of a complaint under Rule 12(b)(6). Caviness v. Horizon Cmty.
Learning Ctr., Inc., 590 F.3d 806, 811-12 (9th Cir. 2010). The district court’s
determination of state law is also reviewed de novo. Bailey v. Sw. Gas Co., 275
F.3d 1181, 1186-87 (9th Cir. 2002).
The Secretary may not begin review of an appeal from a hearing officer’s
order unless and until an appeal is filed. 3 N. Mar. I. Code § 4948(a). “Upon
completion of review, the Secretary shall confirm or modify the finding, decision,
or order in writing as soon as practicable.” § 4948(c). However, “[f]ailure by the
Secretary to confirm or modify a finding, decision, or order within thirty (30) days
shall constitute confirmation of each of the findings, decisions, or orders of the
hearing officer as the final action of the Secretary for purposes of judicial review.”
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Id. Judicial review of an administrative appeal order “shall be initiated within
thirty (30) days of final action.” 3 N. Mar. I. Code § 4949(a).
Under CNMI caselaw, a hearing officer’s decision is confirmed by default
for purposes of judicial review when the Secretary fails to act within thirty days
after the filing of the appeal. See Li Quirong v. Feng Hua Enter., Inc., No. 09-
0072-CV, slip op. at 6 (N. Mar. I. Commw. Super. Ct. Aug. 3, 2009)1 (rejecting
appellee’s contention that the limitations period under § 4948(c) begins running
“within thirty (30) days after [the Secretary] complet[es] his review of the
administrative case file” because “the Secretary could ‘review the file’ for an
indefinite period of time before the 30 day time limit began to ran [sic] making the
time period requirement contained in subsection (c) inconsequential and
superfluous”).
Royal Crown filed its appeal with the Secretary on June 1, 2009. Because
the Secretary had not issued an order by July 1, 2009, 30 days later, the hearing
officer’s decision became final by operation of law on that date. Royal Crown then
1
Absent binding state precedent, we “must attempt to determine from all
available data the manner in which the [state] Supreme Court would interpret [the
relevant statute] if confronted with the precise issue here presented.” MGM Grand
Hotel, Inc. v. Imperial Glass Co., 533 F.2d 486, 489 (9th Cir. 1976)). Thus, a state
trial court decision, while not binding, may nonetheless constitute persuasive
authority. Spinner Corp. v. Princeville Dev. Corp., 849 F.2d 388, 390 n.2 (9th Cir.
1988).
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had 30 days from that date – until July 31, 2009 – to file for judicial review. See 3
N. Mar. I. Code § 4949(a) (“Judicial review of a final action of the Secretary . . .
shall be initiated within thirty (30) days of final action.”). Royal Crown did not
file its complaint in the district court until August 17, 2009. Therefore, its claim
was untimely.
Royal Crown asserts that, even if it filed its complaint in the district court
after the statutory period for doing so had expired, the issuance of Kaipat’s written
order dismissing its appeal prior to the expiration of the 30-day period for seeking
judicial review “misled” Royal Crown as to the date the limitations period
terminated. We disagree. The Secretary did not misrepresent the state of CNMI
law with respect to the date of final action. See Glus v. Brooklyn E. Dist. Terminal,
359 U.S. 231, 232-35 (1959) (statute of limitations was subject to equitable tolling
where respondent’s agents “induced the delay by [erroneously] representing to
petitioner that he had seven years in which to sue”), cited with approval in
Marianas Ins. Co. v. Commonwealth Ports Auth., 2007 MP 24, ¶ 35 (N. Mar. I.
2007)). “[A] late filing that results from counsel’s misreading of a statute’s
allowable refiling period” does not warrant equitable tolling under CNMI law.
Oden v. N. Marianas Coll., 6 N. Mar. I. 601, 605 (2003); see Zhang Gui Juan v.
Commonwealth, 6 N. Mar. I. 322, 329 (2001) (citing Irwin v. Dep’t of Veterans
5
Affairs, 498 U.S. 89, 96 (1990)) (claimant’s “good faith reliance that [28 U.S.C.]
§ 1367(d) gave her an extended limitations period” was “a garden variety claim of
excusable neglect” and thus “[fell] woefully short of justifying the application of
equitable tolling”). The district court did not err in dismissing Royal Crown’s
claim for judicial review because the limitations period had run.
III
Royal Crown argues the district court erred in dismissing its § 1983 claim
under the doctrine of res judicata. It contends that the dismissal of the judicial
review claim under the statute of limitations does not have preclusive effect, and
that, in any case, the § 1983 action is not precluded by dismissal of the judicial
review claim because the § 1983 claim does not present issues identical to those
presented in the administrative action. This court reviews de novo the district
court’s dismissal of a claim based on the doctrine of res judicata. Mpoyo v. Litton
Electro-Optical Sys., 430 F.3d 985, 987 (9th Cir. 2005).
Under CNMI law, “[t]he doctrine of administrative res judicata bars an
action that has already been the subject of a final administrative decision.” Estate
of Muna v. Commonwealth, 6 N. Mar. I. 71, 73 (2000) (citing In re Estate of
Ogumoro, 4 N. Mar. I. 124, 127 (1994) (setting forth principles of res judicata
under CNMI law)). Unreviewed state administrative determinations have
6
preclusive effect in federal court according to law of the forum state so long as the
agency has complied with the fairness requirements of federal common law.
Misischia v. Pirie, 60 F.3d 626, 629 (9th Cir. 1995) (citing United States v. Utah
Constr. & Mining Co., 384 U.S. 394, 422 (1966), superseded on other grounds by
Contract Disputes Act of 1978, 41 U.S.C. §§ 601-13 (Supp. V 1981)); see also
Wehrli v. Cnty. of Orange, 175 F.3d 692, 694 (9th Cir. 1999) (quoting Plaine v.
McCabe, 797 F.2d 713, 719 n.12 (9th Cir. 1986)) (“‘If an adequate opportunity for
review is available, a losing party cannot obstruct the preclusive use of the state
administrative decision simply by foregoing her right to appeal.’”). The legal as
well as factual determinations of the agency are preclusive. Skysign Int’l, Inc. v.
City of Honolulu, 276 F.3d 1109, 1115 (9th Cir. 2002) (citing Misischia, 60 F.3d at
629). Because the agency’s adjudication was fair according to federal law and
Royal Crown failed to petition in a timely manner for review from the Secretary’s
final action, both the legal and factual issues resolved in that action gained
preclusive effect in federal court pursuant to the doctrine of administrative res
judicata.
Furthermore, administrative res judicata applies in this matter because there
is an identity of claims between the due process claim Royal Crown asserted
before the Department and its § 1983 claim. See United States v. Liquidators of
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European Fed. Credit Bank, 630 F.3d 1139, 1150 (9th Cir. 2011) (“Three elements
constitute a successful res judicata defense. Res judicata is applicable whenever
there is (1) an identity of claims, (2) a final judgment on the merits, and (3) privity
between parties.” (citation omitted)). The Department in the instant matter
adjudicated the question whether its procedures in its bond action against Royal
Crown comported with due process. Royal Crown states that it “does not seek to
litigate or relitigate the facts at issue in the judicial review claim” because its
§ 1983 claim presents a “systemic challenge” to the Department’s “policy and
procedures, or lack thereof,” in adjudicating bond disputes. Permitting the § 1983
claim to go forward, however, would necessarily involve relitigating whether the
Department violated Royal Crown’s due process rights based on the “same
transactional nucleus of facts” presented before the Department. See id. at 1151.
The district court therefore did not err in concluding that Royal Crown’s § 1983
claim against Kaipat was precluded by res judicata.
AFFIRMED.
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