Wabol v. Villacrusis

• Decision Date: 16 March 1992
• Docket Number: No. 87-1736,87-1736
• Citation: 958 F.2d 1450
• Parties: Concepcion S. WABOL, et al., Plaintiffs-Appellees, v. Victorino VILLACRUSIS, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1450

958 F.2d 1450

Concepcion S. WABOL, et al., Plaintiffs-Appellees, v. Victorino VILLACRUSIS, et al., Defendants-Appellants.

No. 87-1736.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 11, 1988.

Decided Feb. 20, 1990.

As Amended March 16, 1992.

Marybeth Herald, Fitzgerald, Herald & Bergsma, Saipan, Commonwealth of the Northern Mariana Islands, for defendants-appellants.

Theodore R. Mitchell, Saipan, Commonwealth of the Northern Mariana Islands, Charles K. Novo-Gradac, White, Novo-Gradac and Thompson, Saipan, Commonwealth of the Northern Mariana Islands, for plaintiffs-appellees.

Before POOLE, WIGGINS and BRUNETTI, Circuit Judges.

ORDER

The court has ordered the amended opinion filed on July 9, 1990, reported at 908 F.2d 411, to be amended as follows:

1. Change 908 F.2d at 422, footnote 19, to read as follows:

As Flores de Otero and other cases have made clear, residents of unincorporated territories are accorded fundamental rights guaranteed under either the Fifth or Fourteenth Amendments. See Examining Bd. of Engineers, Architects and Surveyors v. Flores de Otero, 426 U.S. 572, 600-601, 96 S.Ct. 2264, 2280, 49 L.Ed.2d 65 (1976). Recognition of this fact, however, does not dictate that Article XII and Covenant section 805 automatically be subjected to strict scrutiny, for the protection afforded in the territories is not without its limits. See Califano v. Torres, 435 U.S. 1, 3 n. 4, 98 S.Ct. 906, 907 n. 4, 55 L.Ed.2d 65 (1978). It is thus important to distinguish between the right claimed under the equal protection clause and the right to equal protection itself. Atalig held that not every right subsumed within the due process clause can ride the fundamental coattails of due process into the territories. The same must be true of the equal protection clause. It is the specific right of equality that must be considered for purposes of territorial incorporation, rather than the broad general guarantee of equal protection.

POOLE, Circuit Judge:

In Commonwealth of Northern Mariana Islands v. Atalig, 723 F.2d 682 (9th Cir.), cert. denied, 467 U.S. 1244, 104 S.Ct. 3518, 82 L.Ed.2d 826 (1984), we held that the Sixth Amendment right to a trial by jury does not apply in the Commonwealth of the Northern Mariana Islands (NMI or Commonwealth). This case requires us to determine whether the constitutional guarantee of equal protection of the laws limits the ability of the United States and the Commonwealth to impose race-based restrictions on the acquisition of permanent and long-term interests in Commonwealth land. Plaintiffs-appellees Concepcion S. and Elias S. Wabol (collectively Wabol) brought this action in the Commonwealth Trial Court to void their lease agreement with defendants-appellants Victorino Villacrusis and Philippine Goods, Inc. (collectively PGI). Wabol alleged the agreement violated Article XII of the NMI Constitution which provides that the sale of a freehold or a leasehold exceeding forty years, including renewal rights, to a person not of Northern Mariana Islands descent, is void ab initio. PGI defended on the ground that Article XII violates the equal protection clause of the United States Constitution. The trial court upheld the restriction but reformed the lease on equitable grounds. The Appellate Division of the District Court for the Northern Mariana Islands reversed, also upholding the restriction, but concluding that section 6 of Article XII precludes reformation of a prohibited lease. The district court remanded to the trial court "to determine the terms and conditions of any obligations which may have arisen in quasi contract or as a result of a periodic tenancy" and to account for the improvements erected on the land by PGI. PGI timely appealed.

We conclude that, despite the remand, we have jurisdiction to consider this appeal. In addition, we conclude that the Commonwealth Judicial Reorganization Act of 1989, NMI Public Law No. 6-25, enacted while this appeal was pending, does not divest this court of jurisdiction to decide the appeal. On the merits, we hold that the right to acquire permanent or long-term interests in NMI real estate is not one protected by the United States Constitution. We further hold that Article XII precludes reformation of a lease which violates its provisions. Accordingly, we affirm the judgment of the district court.

I. BACKGROUND

A. Facts

In 1978, defendant Filomenia Wabol Muna and PGI entered into an agreement, approved by Wabol, to lease a parcel of NMI property for a 30 year term with an unconditional option in lessee PGI to renew for 20 additional years. Thereafter Wabol obtained full ownership of the premises in a partition action. Muna, however, continued to collect rents, and Wabol brought this suit seeking, inter alia, a judgment voiding the lease for violation of Article XII.

B. Article XII of the NMI Constitution and the Covenant

Article XII of the NMI Constitution implements section 805 of the Covenant to Establish a Commonwealth in Political Union With the United States of America, reprinted as amended in 48 U.S.C.A. § 1681 note (West 1987) (Covenant). Section 805 provides that, notwithstanding federal law, the Commonwealth government shall regulate the alienation of local land to restrict the acquisition of long-term interests to persons of Northern Mariana Islands descent. ¹ The avowed motive of the drafters was "to protect [the people] against exploitation and to promote their economic advancement and self-sufficiency" and to preserve the islanders' culture and traditions, which are uniquely tied to the land. Accordingly, Article XII, section 1 provides that

[t]he acquisition of permanent and long-term interests in real property within the Commonwealth shall be restricted to persons of Northern Marianas descent.

Section 3 of that Article defines the restricted interests:

The term permanent and long-term interests in real property used in Section 1 includes freehold interests and leasehold interests of more than forty years including renewal rights. ²

Section 4 defines a person of Northern Marianas descent as one

who is a citizen or national of the United States and who is of at least one-quarter Northern Marianas Chamorro or Northern Mariana Carolinian blood or a combination thereof or an adopted child of a person of Northern Marianas decent if adopted while under the age of eighteen years. For purposes of determining Northern Marianas descent, a person shall be considered to be a full-blooded Northern Marianas Chamorro or Northern Marianas Carolinian if that person was born or domiciled in the Northern Mariana Islands by 1950 and was a citizen of the Trust Territory of the Pacific Islands before the termination of the Trusteeship with respect to the Commonwealth. ³

Section 6 of Article XII provides in pertinent part that "[a]ny transaction made in violation of Section 1 shall be void ab initio."

C. Proceedings below

On Wabol's motion for summary judgment, the trial court ruled that: (1) the lease violated Article XII, section 1; (2) Article XII did not violate the equal protection clause; but (3) in light of Wabol's "waiver, laches and estoppel" in allowing PGI to pay rent for almost seven years and construct extensive improvements on the property, the lease was valid for the forty year allowable term. In its equal protection analysis, the court applied a relaxed rational basis standard of review, drawing an analogy to decisions dealing with classifications favoring American Indians. The parties stipulated to judgment and appealed. The appellate division of the district court agreed that the lease was invalid, also applying minimal equal protection scrutiny. However, the district court rejected the trial court's implicit conclusion that section 6 permitted reformation of a nonconforming lease, and reversed. The case was remanded to the trial court for a determination of (1) the value of the improvements and (2) the extent of any rights arising in quasi contract or as the result of a periodic tenancy. This appeal timely followed.

II. JURISDICTION

Preliminarily, we must determine whether the district court's remand order deprives us of jurisdiction over this appeal. ⁴ In addition, we must determine whether NMI Public Law 6-25 divests this court of jurisdiction over the appeal. We determine our jurisdiction de novo. Schlegel v. Bebout, 841 F.2d 937, 941 (9th Cir.1988).

A. Finality of the Remand Order

It is axiomatic that our jurisdiction extends only to "final" judgments of the district court. However, we measure the finality of decisions of the appellate divisions of the district courts for Guam and the Commonwealth by analogy to the standard the Supreme Court applies in reviewing state court judgments under 28 U.S.C. § 1257. See Guam v. Kingsbury, 649 F.2d 740, 742 (9th Cir.), cert. denied, 454 U.S. 895, 102 S.Ct. 392, 70 L.Ed.2d 210 (1981).

Clearly, the decision at hand is "not final in the strict sense of a decree that leaves nothing further to be addressed by the [local] courts." American Export Lines, Inc. v. Alvez, 446 U.S. 274, 277, 100 S.Ct. 1673, 1675, 64 L.Ed.2d 284 (1980). However, the Supreme Court in Cox Broadcasting Corp. v. Cohn, 420 U.S. 469, 95 S.Ct. 1029, 43 L.Ed.2d 328 (1975), described four categories of judgments with "sufficient characteristics of finality to warrant an assertion of ... appellate jurisdiction." Alvez, 446 U.S. at 277, 100 S.Ct. at 1675. See Cox Broadcasting, 420 U.S. at 477-87, 95 S.Ct. at 1037-42. We recently summarized the exceptions:

The [Supreme] Court will review federal issues in state court cases even though further proceedings are pending when: (1) the federal issue is conclusive or the outcome is preordained; (2) the federal issue will survive the further proceedings and require adjudication; (3) the federal issue has been fully decided and review after remand might be precluded; (4) the federal issue has been fully decided and the case might be...