Jenkens & Gilchrist v. Groia & Co.

• Decision Date: 26 August 2008
• Docket Number: No. 07-20296.,07-20296.
• Parties: JENKENS & GILCHRIST, A Professional Corporation, Plaintiff-Appellee, v. GROIA & COMPANY, A Professional Corporation, Defendant-Appellee, v. Ingrid Felderhof, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

542 F.3d 114

JENKENS & GILCHRIST, A Professional Corporation, Plaintiff-Appellee, v. GROIA & COMPANY, A Professional Corporation, Defendant-Appellee, v. Ingrid Felderhof, Defendant-Appellant.

No. 07-20296.

United States Court of Appeals, Fifth Circuit.

August 26, 2008.

Daniel V. Flatten (argued), Nancy Hahn Elliott, Porter Hedges, Houston, TX, for Plaintiff-Appellee.

Steven J. Knight (argued), Chamberlain, Hrdlicka, White, Williams & Martin, Houston, TX, for Ingrid Felderhof.

Thomas Mente Benjamin (argued), Alan H. Goodman, Lemle & Kelleher, New Orleans, LA, for Groia & Co.

Appeal from the United States District Court for the Southern District of Texas.

Before JONES, Chief Judge, and DAVIS and GARZA, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

Ingrid Felderhof appeals the district court's denial of her motion, filed pursuant to FED.R.CIV.P. 60(b), to vacate the default judgment entered against her. For the following reasons, we affirm in part, vacate in part, and remand.

I

During 1997, John Felderhof and his wife, Ingrid Felderhof, were under investigation by the Canadian government and the United States' Securities and Exchange Commission regarding the development of gold mining prospects by Bre-X Minerals, Ltd. Mr. Felderhof was a director and senior executive with Bre-X. In response to the investigations, the Felderhofs obtained legal representation from Jenkens and Gilchrist ("Jenkens"). Worried that the Felderhofs' assets may be frozen or seized as a result of the investigations, Jenkens entered into the Modified Legal Representation Agreement (the "Agreement") with the Felderhofs. Aside from payment for hourly fees, the Agreement provided that Jenkens was to be paid a non-refundable $1-million-dollar retainer. This retainer was to be paid in cash or valuable assets. Around the same time that she entered into the Modified Agreement, Ms. Felderhof transferred to Jenkens all of the shares of Travis Close, Inc. The sole asset of Travis Close was a home in Williamsburg, Virginia.¹

In 2006, after Jenkens completed its work for the Felderhofs, Ms. Felderhof sent a letter to her counsel at Jenkens suggesting that they arrange to transfer the Williamsburg home back to her. Her letter claimed that Jenkens only agreed to hold the home as "caretaker," and that once all fees were paid that the home would be returned to her. Counsel from Jenkens responded, explaining that Jenkens was not merely "caretaker" of the home, and that because there were competing claims to the home, Jenkens could be forced to commence an interpleader action.

Jenkens subsequently filed an interpleader complaint in the Southern District of Texas to finally resolve ownership of Travis Close, Inc. and the Williamsburg home. The complaint named Groia & Company (a Canadian law firm that had represented the Felderhofs and claimed an interest in proceeds from the sale of the residence), John Felderhof, and Ingrid Felderhof as defendants. Groia and John Felderhof filed answers admitting most of the factual allegations in Jenkens' interpleader complaint. Ms. Felderhof did not file an answer. The facts surrounding Ms. Felderhof's failure to file an answer are as follows.

On November 16, 2006 in the Cayman Islands, Ms. Felderhof was personally served with a packet of papers including Jenkens' complaint. The parties dispute whether these papers included a summons as required under FED. R. CIV. P. 4. Upon receiving these papers, Ms. Felderhof took them to the offices of her lawyer, John Chapman, in Grand Cayman. Chapman was out of the country and did not return until November 28. Upon return, he reviewed the papers brought to his office by Ms. Felderhof.

Subsequently, Ms. Felderhof was served with a copy of the district court's Order for Conference and Disclosure of Interested Parties. The order required counsel to appear for a pre-trial conference and file a certificate of persons or entities with a financial interest in the litigation within fifteen days. Ms. Felderhof never filed the requisite certificate.

Because Ms. Felderhof never filed an answer, Jenkens filed a motion for entry of default as to Ms. Felderhof which was granted by the district court. Jenkens, Groia, and John Felderhof then filed a joint motion for summary judgment seeking to have the court declare, inter alia, that Jenkens is the sole and lawful owner of the stock of Travis Close, Inc. and its sole asset, the Williamsburg home. The district court granted the joint motion and entered final judgment declaring Jenkens the sole owner.

After learning of the default judgment against her, Ms. Felderhof filed a motion in the district court to have the default judgment set aside pursuant to FED. R. CIV. P. 60(b)(1) and FED. R. CIV. P. 60(b)(4). Rule 60(b)(1) provides that a party may be relieved from a final judgment for "mistake, inadvertence, surprise, or excusable neglect." Ms. Felderhof argued that her neglect in failing to answer was excusable under FED. R. CIV. P. 60(b)(1) because she was never served with a summons, or in the alternative because the summons was lost prior to her or her attorney ever seeing it; and that she never learned of her duty to answer. Rule 60(b)(4) provides that a party may be relieved from a final judgment if it is determined that "the judgment is void." Ms. Felderhof argued that the default judgment was void under FED. R. CIV. P. 60(b)(4) because she was never served with a summons, and thus, the court never had personal jurisdiction over her. After receiving briefing, affidavits, and documentary evidence, the district court summarily denied Ms. Felderhof's motion.

II

The district court's order provided no factual finding as to whether Ms. Felderhof was served with a summons. Nor did the district court address any of the factors traditionally considered in determining whether relief from a default judgment is proper under Rule 60(b)(1).

We review de novo a district court's conclusion as to whether a judgment is void for lack of personal jurisdiction under Rule 60(b)(4). See Goetz v. Synthesys Technologies, Inc., 415 F.3d 481, 483 (5th Cir.2005). We review the district court's denial of relief under Rule 60(b)(1) for abuse of discretion. See Lacy v. Sitel Corp., 227 F.3d 290, 292 (5th Cir. 2000). "Because of the seriousness of a default judgment, and although the standard of review is abuse of discretion, even a slight abuse of discretion may justify reversal." Lacy, 227 F.3d at 292. We normally review the district court's factual conclusions for clear error. See Lacy, 227 F.3d at 292 (noting that factual determinations underlying a 60(b)(1) denial are reviewed for clear error); Goetz, 415 F.3d at 483 (noting that clear error applies to factual findings related to 60(b)(4) rulings). However, in this circumstance, we analyze the district court's denial of relief under Rule 60(b)(1) and 60(b)(4) in light of the lack of findings provided by the district court.

III

A

We turn first to Ms. Felderhof's argument under Rule 60(b)(4). On appeal, Ms. Felderhof argues that the district court's judgment was void under Rule 60(b)(4) because she was not served with a summons as required under Rule 4. See FED. R. CIV. P. 4(c) ("A summons must be served with a copy of the complaint."); Recreational Props., Inc. v. Southwest Mortgage Serv. Corp., 804 F.2d 311, 314 (5th Cir.1986) ("If a court lacks jurisdiction over the parties because of insufficient service of process, the judgment is void and the district court must set it aside.").² While the district court failed to resolve the disputed facts surrounding the service of summons, FED.R.CIV.P. 52(a)(3)³ indicates that a district court is not required to state findings or conclusions when deciding a Rule 60(b) motion. Moreover, even where findings are specifically required at the conclusion of a bench trial, under FED.R.CIV.P. 52(a)(1), we have recognized that a remand for specific findings is unnecessary "if a complete understanding of the issues may be had without the aid of separate findings." Armstrong v. Collier, 536 F.2d 72, 77 (5th Cir.1976). "[A] remand is often deemed unnecessary if all the evidence is documentary and the appellate court can pass upon the facts as well as the trial court, or if all the facts relied upon to support the judgment are in the record and are undisputed, or if the record as a whole presents no genuine issue as to any material fact." Id. We have also stated that a remand is not necessary if "the record would not support" a finding in the appellant's favor, and if such a finding would be deemed clearly erroneous had it been made. See Kratzer v. Capital Marine Supply, Inc., 645 F.2d 477, 483 (5th Cir.1981). Applying the above rule to determine whether a remand is necessary in this instance, we ask whether the record could support a finding in Ms. Felderhof's favor as to the service of the summons.

The evidence before the district court concerning service of the summons was as follows. Jenkens submitted a copy of a signed return of service form. Jenkens also submitted two affidavits from the process server. The process server averred that he personally served the complaint and summons on Ms. Felderhof at a Grand Cayman shopping mall on November 16, 2006. Finally, Jenkens submitted a copy of a summons directed to Ms. Felderhof that had been issued by the district court on November 14, 2006 and initialed by the process server. The process server averred that he initialed a copy of the summons upon serving Ms. Felderhof. Ms. Felderhof submitted affidavits from herself and Chapman, her attorney in the Cayman Islands. Ms. Felderhof admitted that she was served with a bundle of what looked like "legal papers" while at a shopping mall on November 16. However, she averred that she did not review the papers served on her. Instead, she took them to Chapman's office on November 16. Chapman was out of the country until November 28. Chapman averred that upon returning to his...