Pago Pago, AMERICAN SAMOA — A Temporary Restraining Order (TRO) against Hope Dialysis Center’s Chris Fisher, Chief Executive Office (CEO) and Chairman of the Board of Directors (BoD) was issued by the High Court of America Samoa on Apr. 28, 2022, with the order that a hearing be set for the application for a Preliminary Injunction.

According to the plaintiffs, the TRO stops the center from closing its doors, which Fisher as CEO of HDC had announced in press releases distributed to media in April 2022, and will allow HDC to start paying down it’s bills, while continuing to serve it’s clients, who are dialysis patients.

The TRO lists plaintiffs as John Wasko and Jean Letarte on behalf of HDC, versus Chris Fisher as the defendant. Plaintiffs’ attorney is Thomas B. Jones , Esquire of Jones & Associates, LLC while Togiola Tulafono, who is also a sitting local senator, is Fisher’s attorney.

John Wasko is listed as vice-President of HDC at the time of its incorporation in American Samoa on Oct. 16, 2018. He is identified by Fisher in a directive to the Territorial Bank of American Samoa, dated on or about Mar 20, 2020, as holding a 10% interest in HDC; while Dr. Letarte holds a 7% interest in HDC.

Fisher in the same directive is identified as holding the majority stake in HDC — 50%. Three other shareholders are also noted, including the American Samoa Venture Fund, which provided HDC with a $300K capital infusion.

The application for the TRO was filed on Apr. 12, 2022, by the plaintiffs when HDC’s board of directors came into conflict with Fisher and removed him as CEO of HDC and as President of the BoD in a Board resolution, dated Apr. 5, 2022.

This was after Fisher, in his capacity as CEO issued a press release, dated Mar. 28, to local media announcing that the center was having problems because it could no longer operate without timely Medicaid reimbursement, and was owed a lot of money by Medicaid.

In a later press release — dated Apr. 5 — Fisher said HDC would be closing its doors in May due to Medicaid no longer covering HDC dialysis patients after Apr. 16, 2022 — this is when the Public Health Emergency (PHE) declaration ended. (Samoa News reported on the matter in its April 8 issue.)

In this later press release, Fisher said that “the only options left to keep HDC open would be to have legislation approved for Medicaid reimbursement after April 16” or for ASG to buy the dialysis center. (Fisher did not quote a price for the possible acquisition.)

“It’s up to ASG.

“We are willing to work with the government for the patients,” Fisher concluded.

The amount of money that Fisher said is owed HDC is disputed by the director of the local Medicaid Office, Tofoitaufa Sandra King Young. “Medicaid is current on their payments,” she stated, via email, in response to Samoa News queries about the issue, dated Apr. 7.

As a result of the move by the HDC board to remove him as CEO and President of the Board, Fisher told Samoa News in part that he is the majority shareholder (50%) and he “can’t be outvoted”. He also called the actions by HDC’s board as an attempted corporate coup to take over HDC.

And, HDC’s lawyer, Togiola issued a Notice to Cease and Desist on Apr 7, 2022 to Jones in which the termination of Fisher by the HDC board is identified as an “illegal conspiracy” and that such action is to “Cease and desist now, and [for the board members to] publish notice and the newspaper informing the public and all those whom you have notified that Mr Fisher was terminated, informing all that the notice was a mistake and is withdrawn.

“Do this also as a retraction of the libel and slander you have all circulated against Mr. Fisher,” it stated.

Fisher also terminated Dr. Jean Letarte and Johnson Masunu as members of the Board of Directors in a notice dated Apr. 8.

TRO

Samoa News obtained a copy of the TRO, which states that “upon reviewing the affidavit and verified complaint, and after hearing testimony made under oath, we grant a TRO enjoinIng Defendant (Fisher) from doing business on behalf of HDC and from interfering with the operation of HDC.”

It further states that a “hearing be set for the application for Preliminary Injunction.” The TRO is conditioned on plaintiffs posting a $60,000 bond or surety.

In reply to Samoa News queries via email about the TRO, Fisher wrote that “I haven't seen the TRO yet so I have no idea what basis it was issued on.

“I have heard of a Board of Directors with a majority vote getting a TRO, but never by 2 shareholders owning 17%. (Fisher is referring to the plaintiffs.)

“A hostile takeover takes a majority of shares to control the company, which in this case is not possible.

“Without Medicaid reimbursement, the company can't even make payroll.

“I stand by my previous statement that HDC will close down in May as the company is out of supplies and doesn't have enough capital to buy more,” he concluded.

However, in a statement to Samoa News via email, John Wasko said that “The High Court of American Samoa has made a decision based on the evidence given in court. Fisher was represented by his counsel who was served appropriately.

“The shareholder plaintiffs stand by the decision of the High Court.

“As a matter of law, Dr. Letarte has been vested with signatory control of the HDC TBAS bank account.

“Further assignment of corporate duties will be decided by board members according to the articles of incorporation and by-laws of Hope Dialysis Center,” he stated.

Wasko also pointed out that “defendants request for a continuation was denied by the court based on ‘the gravity’ of the situation.

“Judge Patea recognized the medical urgency of continued patient care in his decision to strip the defendant of his bank account signatory responsibility.

“In doing so Hope Dialysis will continue to serve patients on a regular basis. 

“Please note that Judge Patea’s decision was based, in part, on TBAS account records. Defendant’s attorney, who is also the TBAS board of directors’ chairman, did not challenge the validity of the evidence presented at trial,” he concluded.

In its discussion to grant the TRO in favor of the plaintiffs, the High Court states that “minority shareholders are entitled to judicial relief against corporate managers or majority shareholders” if they “have breached a fiduciary duty to the corporation.” Haythornwaite v. Transpac Corp. et al. 6 ASR 2d 110, 111 (Trial Div. 1987) (Op. & Order on Mot. for Prelim. Inj.) is cited.

“A fiduciary duty is breached ‘when management engages in acts of self-dealing… clearly detrimental to the corporation as to overcome the strong resumption that a court should not interfere with the business judgment of those charge with managing business enterprises’.”

Other issues also noted in the TRO pointing to sufficient grounds for the issuance of the TRO, include that “…a great or irreparable injury will result to the applicant before a hearing can be reasonably held…” and that there is evidence that Fisher “has engaged in conduct that is detrimental to HDC,” — including a very real possibility of Defendant causing irreversible harm by continuing to blockade access to the corporate bank account… thereby harming HDC’s ability to operate and pay for expenses associated with providing dialysis.”

It point out that “HDC must be governed and operated for the purpose it was created.”

BACKGROUND

The application for the the Temporary Restraining Order was filed in the High Court of American Samoa on Apr. 12, 2022, on behalf of HDC by Dr. Letarte and John Wasko as shareholders of the corporation. It sought to enjoin Fisher “from interfering with the governance and/ or operation of HDC.”

The document laid out what the plaintiffs assert are sufficient grounds “set forth in the Verified Shareholder Derivative Complaint for Breach Of Fiduciary Duty, Breach Of Duty To Account, Corporate Waste, And Unjust Enrichment.”

The plaintiffs allege that Fisher failed to pay FICA taxes for HDC’s employees for 2021 which led to the seizure by the IRS of $56,000 in Medicaid funds bound for HDC; he removed tens of thousands of dollars from HDC’s bank account for personal use without authorization or explanation to the BoD; paid $65,421.59 of his personal credit cards bills from the corporation’s bank account between Jan. 2021 and Feb. 2022; “is using corporate funds to purchase a house in California; failing to follow corporate formalities, including issuing stock certificates,” as well as issuing a fraudulent stock certificate to Plaintiff Dr. Letarte.

Fisher is also alleged to have taken out personal loans from HDC’s bank account — all which were not authorized by the Board or shareholders. He has also, the plaintiffs allege, to have repeatedly refused to produce the corporation’s books and records for inspection.

The plaintiffs were able to obtain the Corporation’s TBAS account statement for the period Jan 2021- Feb. 22, which showed the credit card payments as well as money transfers to himself during this period. While alleging corporate expenses, the plaintiffs said no evidence was provided to prove this.

Also noted is Fisher “actively harming the interests” of HDC by making unauthorized statements to the media about HDC, i.e. press releases stating that HDC would close its doors the following month (May) due to its financial woes and that ASG could buy HDC to keep it open. The plaintiffs say that Fisher did not discuss this issue with the board and made the decision on his own. Such statements, according to plaintiffs have “already caused great harm to the Corporation casting doubt on the competency of its management and the quality of its services.”

In addition, the plaintiffs state that “the Corporation is in a dire financial situation, in arrears on its federal taxes and back payments for local utilities to the American Samoa Power Authority. The Corporation is already at risk of being unable to make payments to its providers for medicines needed for its patients. Any further unauthorized withdrawals by the Defendant from the Corporation's bank account will render the Corporation unable to continue providing dialysis services.”