Motorola Credit Corp. v. Uzan

• Decision Date: 31 March 2009
• Docket Number: Docket No. 07-2076-cv.
• Citation: 561 F.3d 123
• Parties: MOTOROLA CREDIT CORPORATION and Nokia Corporation, Plaintiffs-Appellees, v. Kemal UZAN, Cem Cengiz Uzan, Murat Hakan Uzan, Melahat Uzan, Aysegul akay, and Antonio Luna Betancourt, Defendants-Appellants.<SMALL><SUP>*</SUP></SMALL>
• Court: U.S. Court of Appeals — Second Circuit

561 F.3d 123

MOTOROLA CREDIT CORPORATION and Nokia Corporation, Plaintiffs-Appellees, v. Kemal UZAN, Cem Cengiz Uzan, Murat Hakan Uzan, Melahat Uzan, Aysegul akay, and Antonio Luna Betancourt, Defendants-Appellants.^*

Docket No. 07-2076-cv.

United States Court of Appeals, Second Circuit.

Argued: February 9, 2009.

Decided: March 31, 2009.

Howard H. Stahl (Stephen K. Davidson and Bruce C. Bishop, on the brief), Steptoe & Johnson LLP, Washington, D.C., for Plaintiff-Appellee Motorola Credit Corp.

Jason Brown, Ropes & Gray LLP, New York, NY, and David D. Howe, Holland & Knight LLP, New York, NY, for Plaintiff-Appellee Nokia Corp.

May Orenstein, Brown Rudnick LLP, New York, N.Y. (David Molton, Brown Rudnick LLP, New York, N.Y. and R. Stan Mortenson, Baker Botts LLP, Washington, DC, on the brief) for Defendants-Appellants.

Before CABRANES, WESLEY, Circuit Judges, and KORMAN, District Judge.^**

JOSÉ A. CABRANES, Circuit Judge:

The principal question in this appeal is whether a judgment for damages must be amended pursuant to Rule 60(b) of the Federal Rules of Civil Procedure where plaintiffs have partially recovered from other sources and have agreed to use this partial recovery as a "set-off" against the judgment. For the reasons stated below, we hold that the relief available under Rule 60(b) is both discretionary and equitable, and that the District Court did not abuse its discretion in denying defendants' motion for post-judgment relief.

BACKGROUND

Defendants-appellants—members of the Uzan family of Turkey and a close associate, Antonio Luna Betancourt (collectively, the "Uzans" or "defendants")—are the former, controlling shareholders of Telsim Tekelomunikayson Mobil Hizmetleri A.S. ("Telsim"), a now-defunct Turkish telecommunications company. The Uzans are well known to the courts of our Circuit, as there are already ten published decisions in this Circuit chronicling the background of this case and "the extraordinary nature of the Uzans' wrongful behavior." Motorola Credit Corp. v. Uzan, 509 F.3d 74, 88 (2d Cir.2007) ("Uzan X"); see also id. at 77-80 (summarizing the history of this litigation); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 42-44 (2d Cir.2004) ("Uzan VII") (explaining the underlying fraud perpetrated by the Uzans).¹ Briefly, in July 2003 the United States District Court for the Southern District of New York (Jed S. Rakoff, Judge) found that the Uzans defrauded plaintiffs Motorola Credit Corporation ("Motorola") and Nokia Corporation ("Nokia") out of more than $ 2 billion. See Uzan VII, 388 F.3d at 42. The District Court awarded compensatory damages in excess of $2 billion and an equal sum in punitive damages, see Uzan III, 274 F.Supp.2d at 580-81, but later reduced the award of punitive damages to $1 billion, see Uzan IX, 413 F.Supp.2d at 353, following a remand by a panel of this Court, see Uzan VII, 388 F.3d at 65.

The instant appeal concerns the denial by the District Court, in an unpublished order entered April 11, 2007, of the Uzans' motion for post-judgment relief pursuant to Rule 60(b) of the Federal Rules of Civil Procedure.² See Motorola Credit Corp. v. Uzan, No. 02 Civ. 0666, 2007 WL 1098689, 2007 U.S. Dist. LEXIS 27377 (S.D.N.Y. April 11, 2007). The Uzans sought three forms of relief from the District Court: (1) a reduction in the judgment for compensatory damages awarded to Motorola and Nokia, equal to the sums plaintiffs have recovered in settlement agreements with the Turkish Savings Deposit Insurance Fund ("SDIF"), which seized control of Telsim in 2004; (2) a discharge of the compensatory damages awarded to Motorola because Motorola has assigned its contract claims against Telsim to Bayindirbank, a bank controlled by the Republic of Turkey; and (3) an end to a permanent injunction, imposed pursuant to the District Court's July 31, 2003 Opinion and Order, see Uzan III, 274 F.Supp.2d at 581-82. On appeal, the Uzans argue that the District Court erred in denying all three forms of relief.

DISCUSSION

Rule 60(b) provides "a mechanism for extraordinary judicial relief [available] only if the moving party demonstrates exceptional circumstances," Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir.2008) (internal quotation marks omitted), and relief under the rule is discretionary, see Fed.R.Civ.P. 60(b)(5) ("On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding, for the following reasons: ... (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable." (emphasis added)). We therefore review the denial of a Rule 60(b) motion for abuse of discretion. See, e.g., Ruotolo, 514 F.3d at 191; cf. Sims v. Blot, 534 F.3d 117, 132 (2d Cir.2008) ("A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a decision that cannot be located within the range of permissible decisions." (citations and internal quotation marks omitted)).

A. Reduction of Judgment for Compensatory Damages

As the District Court found, Motorola and Nokia have settled certain contractual claims with Telsim, acting through SDIF, and each plaintiff has received cash payments from Telsim that, together, exceed $1.2 billion. Plaintiffs have "set off" these amounts against their judgments, "resulting in a pro tanto reduction in the amounts owed by the Individual Defendants," who still owe "hundreds of millions" in damages. Motorola Credit Corp., 2009 WL 819041, at *2, 2007 U.S. Dist. LEXIS 27377, at *2. The Uzans argue that "[a] district court must reduce a judgment under ... Rule 60(b)(5) ... if the plaintiff's injury has been fully or partially satisfied by another judgment or settlement." Appellant's Br. at 25 (emphasis added). They further posit that plaintiffs' set-off is unreliable because there is a risk that plaintiffs will apply their settlement compensation to the punitive, instead of compensatory, portions of the judgment entered against the Uzans.

The discretionary relief available under Rule 60(b) is equitable. See Fed. R.Civ.P. 60(b)(5) (stating that a "court may relieve a party or its legal representative from a final judgment ... [where, inter alia,] applying it prospectively is no longer equitable" (emphasis added)); 12 James Wm. Moore et al., Moore's Federal Practice § 60.22[5] (3d ed. 2008) ("The relief provided by Rule 60(b) is equitable in nature and, in exercising its discretion under Rule 60(b), a court may always consider whether the moving party has acted equitably.") (collecting cases); 11 Charles A. Wright, Arthur R. Miller and Mary Kay Kane, Federal Practice and Procedure § 2857, at 255 (2d ed. 1995) ("Equitable principles may be taken into account by a court in the exercise of its discretion under Rule 60(b)."). The record before us—and the record described in the ten published decisions predating this opinion, of which we take judicial notice, see, e.g., New York v. Operation Rescue Nat'l, 273 F.3d 184, 198 (2d Cir.2001) (taking judicial notice of factual findings in a related contempt proceeding)—demonstrate that the Uzans have not acted equitably because they have not pursued their defense with "clean hands," Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814, 65 S.Ct. 993, 89 L.Ed. 1381 (1945) (stating that "he who comes into equity must come with clean hands" (internal quotation marks omitted)). See generally Shondel v. McDermott, 775 F.2d 859, 867-68 (7th Cir.1985) (Posner, J.) (noting that the concept of "clean hands" originated in "the moralistic, rule-less, natural-law character of the equity jurisprudence created by the Lord Chancellors of England when the office was filled by clerics," and observing that "[t]oday, `unclean hands' really just means that in equity as in law the plaintiff's fault, like the defendant's, may be relevant to the question of what if any remedy the plaintiff is entitled to").³

Relying on their vast personal wealth, the Uzans have time and again deployed their lawyers to raise legal roadblocks to the enforcement of the judgment against them. They have persistently endeavored to evade the lawful jurisdiction of the District Court and undermine its careful and determined work. See, e.g., Motorola Credit Corp., 2009 WL 819041, at *3, 2007 U.S. Dist. LEXIS 27377, at *11 ("[T]he Individual Defendants' willful failure to comply with this Court's order that they provide post-judgment discovery makes the arrest orders still applicable."); Uzan IX, 413 F.Supp.2d at 350 ("[T]he individual defendants, despite repeated discovery orders, have refused to produce evidence of their financial situation—evidence largely or exclusively in their control."); Uzan III, 274 F.Supp.2d at 491 ("The defendants contemptuously refused to obey the Court's orders, in one case even breaking their sworn promise not to further eviscerate the collateral. The defendants also repeatedly reneged on promises to provide discovery ... and instructed their counsel not to reveal to this Court or the Court of Appeals secret steps they were taking in Turkey to obtain ex parte orders undercutting the prior orders of this Court."); id. at 494 ("Moreover, defendants have repeatedly resisted, and gone into contempt of, this Court's orders to transfer the collateral (or its functional equivalent) to the registry of this Court so that it could be used to satisfy any judgment. They have also declined the proffered alternative of posting a bond in lieu of the collateral, preferring to remain in contempt.").⁴ As counsel confirmed at oral argument, the Uzans remain in contempt of court for failure to comply with the District Court's orders that they transfer stock holdings to the Court's registry, and they remain subject to arrest should they set foot in the United...