Unpublished Disposition, 868 F.2d 1273 (9th Cir. 1988)

MEMORANDUM^* 

Defendants Sam Esquerra (Esquerra), Southern Cross Investment Corporation (Southern Cross), and Mitsuko Uezato (Uezato) appeal the district court order affirming the Northern Mariana trial court's decision that defendants must vacate the premises and pay reasonable rent for the holdover period.

* Robert Untalan (Untalan) and Pacific Islands Traders, Inc. (Pacific) sued to eject defendants Esquerra, Southern Cross, and Uezato from land located in the Northern Mariana Islands. Plaintiff Untalan owns the disputed land in fee simple absolute, and plaintiff Pacific and defendants claim contradictory interests under overlapping leases to the property.

The trial court held that the defendants failed to prove that they had a right to be on the land. Defendants' only claim to possession was based on the 1977 lease from Rafael Villagomez, a prior owner, to Dudley Crittenden. The trial court held, among other grounds, that Untalan and Pacific prevailed because Pacific's 1975 recorded lease took priority over Crittenden's 1977 lease to the same parcel.

Defendants appealed to the district court of the Northern Mariana Islands pursuant to 48 U.S.C. § 1694b(a). The appellate division affirmed the trial court's decision in an order dated January 5, 1988. The district court gave as one reason for its decision that " [i]t is hornbook law that a subsequent lessee takes subject to a prior, valid, recorded lease." Consequently, Pacific and Untalan prevailed over defendants regardless of which party was the intended lessee under the 1977 lease. Alternatively, the district court held the 1977 lease was not ambiguous, and affirmed the trial court's decision preventing introduction of parol evidence to show either Southern Cross or Uezato was an intended party to the lease.

The defendants have raised only two issues on appeal. First, the defendants contend that the 1975 lease was invalid under Northern Mariana Islands law prohibiting leases to foreigners without High Commissioner approval. Second, the defendants appeal the trial court's decision prohibiting parol evidence to establish that Uezato was an intended lessee of the 1977 lease.

II

On appeal, defendants now claim that the 1975 lease is invalid because the High Commissioner did not approve the lease to a foreign corporation, Pacific Islands Traders. The validity of the two leases is governed by the law existing when the Northern Mariana Islands was part of the Trust Territory of the Pacific Islands. Volume 1 of the Trust Territory Code (TTC), section 13 states " [s]ubject to the applicable laws of the Trust Territory, the High Commissioner may restrict or forbid the acquisition of interests in real property and in business enterprises by persons who are not citizens of the Trust Territory." 1 TTC Sec. 13 (1970). Pursuant to this authorization, the High Commissioner promulgated the Office of Land Management Regulation Number 4. Section 4 of this regulation states:

[N]o acquisition of interests in real property by persons who are not citizens of the Trust Territory, or by a foreign corporation or any corporation or association in which an alien owns any interest, shall be valid without the prior written approval of the High Commissioner.

Office of Land Management Regulation No. 4 (March 11, 1965) (emphasis added); see Madrainglai v. Emesiochel, 6 TTR 440, 442-43 (1974) (lease to foreign corporation is prima facie invalid unless the High Commissioner's approval is endorsed on the lease).¹ 

It was the defendants' responsibility to raise and litigate the validity of the 1975 lease to establish their superior right to be on the premises. Untalan and Pacific raised the question whether both leases were invalid due to lack of High Commissioner approval. Defendants, at trial, never presented evidence that the lessees under the 1977 lease were natives of the Trust Territory. Defendants tried to distinguish their lease solely on the ground that Untalan adopted the lease and somehow made it valid. Trust Territory law, however, invalidated long term leases to foreigners regardless of the lessor's actions or interest in the land. See Madrainglai, 6 TTR at 443. Defendants now contend that the trial court never "made a definitive finding as to whether the 1975 or 1977 lease agreement was operative or whether Uezato's claim would be foreclosed by such a finding." It was, however, the defendants that skirted this factual issue before the Commonwealth trial court.

This court, ordinarily, will not decide an issue that was not addressed by the district court. See Andersen v. Cumming, 827 F.2d 1303, 1305 (9th Cir. 1987); see also Greater Los Angeles Council on Deafness v. Zolin, 812 F.2d 1103, 1107 (9th Cir. 1987); International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir. 1985) ("We will not, however, review an issue not raised below unless necessary to prevent manifest injustice."). This court, however, has "discretion to review issues raised for the first time on appeal, if to do so would not require the development of new facts." Andersen, 827 F.2d at 1305 (citation omitted).

Defendants have offered no explanation for their failure to litigate this issue below. We therefore decline to consider it for the first time on appeal. Furthermore, defendants' argument would require the development of new facts. Defendants, in effect, ask this court to decide whether the lessees under the 1975 and 1977 leases were "foreigners" within the meaning of Trust Territory law restricting leases of land to non-natives. In Trust Territory Policy Letter P-1, a native was defined "as a person who does not owe allegiance to a government other than that of the Trust Territory and who was either born in the Trust Territory, had established a residence therein prior to December 7, 1941, and has resided therein since September 1, 1946." (emphasis added).

Defendants also argue that the 1975 lease was clearly invalid because Hemlani, a prior grantee of the property, was an alien and allegedly a principal of Pacific Islands Traders. The latter is the lessee under the 1975 lease, however, and there is no clear indication in the record that Hemlani is associated with this company. "The appealing litigant must ensure that sufficient facts are developed at trial to support a challenge on appeal." Andersen, 827 F.2d at 1305. The only citation to the record defendants furnish for this "fact" is the portion of the transcript where Untalan's attorney argued that if the court found the 1975 lease was invalid then both leases involved foreigners and were invalid. Defendants bear the burden of a factual record that is incomplete on the issue it raises. See id. The transcript demonstrates that the trial court was told that both leases involved foreigners. Defendants had the opportunity to present factual evidence that the lessees of the 1977 lease were natives, and consequently the 1977 lease was valid despite the lack of the High Commissioner's approval. The defendants, for whatever reason, failed to present any evidence regarding the "native status" of Crittenden and Uezato. Moreover, the defendants did not dispute opposing counsel's characterization of the 1977 lessees as foreigners.

Last, the appellate panel of the district court stated that the defendants did not assert as error the trial court's decision that Untalan and Pacific prevailed because their lease prevailed under a "first in time first in right" theory. Consequently, it appears that the defendants did not even raise the issue of foreign leases before the district court in their first appeal.

III

Defendants argue that the trial court erred by forbidding parol evidence to establish that Uezato was an intended party to the 1977 lease. We need not reach this question because even if Uezato proved she was an intended co-lessee under the 1977 lease, Untalan and Pacific would still prevail because Pacific's lease pre-dated the 1977 lease.

At trial, the defendants also argued that the 1975 lease was extinguished in the prior civil suit between Rafael Villagomez and Hemlani. The defendants did not raise this issue in their opening brief, but raised it at oral argument. " [W]e will not ordinarily consider matters on appeal that are not specifically and distinctly raised and argued in appellant's opening brief." International Union of Bricklayers v. Martin Jaska, Inc., 752 F.2d 1401, 1404 (9th Cir. 1985). This court, however, has discretion to hear improperly presented claims of error, "where the appellee is not misled and the issue has been fully explored." Id. at n. 4. This issue was fully explored before the Commonwealth trial court, and the trial court correctly held that this prior action did not involve the question of the validity of the 1975 lease. This prior suit invalidated only the 1970 land sales contract between Villagomez and Hemlani.

Last, the defendants raised other issues at oral argument that were not raised below or raised in their opening brief, including the argument that the 1975 lease is invalid because Pacific was never properly formed as a corporation. This issue was not explored below and defendants have offered no reason for their failure to raise it below. Consequently, we refuse to address the question for the first time on appeal. See Martin Jaska, 752 F.2d at 1404.

Consequently, the judgment of the appellate panel of the district court is AFFIRMED.