Amoco Overseas Oil v. COMPAGNIE NAT. ALGERIENNE DE NAVIGATION

• Decision Date: 19 July 1979
• Docket Number: No. 1020,Docket 79-7135.,1020
• Parties: AMOCO OVERSEAS OIL CO., Plaintiff-Appellee, v. COMPAGNIE NATIONALE ALGERIENNE DE NAVIGATION ("C. N. A. N.") and T/S IN AMENAS, her engines, boilers, tackle, etc., and the freights of T/S In Amenas, Defendant-Appellant. AMOCO TRANSPORT COMPANY and Amoco Overseas Oil Company, Plaintiffs-Appellees, v. COMPAGNIE NATIONALE ALGERIENNE DE NAVIGATION ("C. N. A. N."), Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

605 F.2d 648

AMOCO OVERSEAS OIL CO., Plaintiff-Appellee, v. COMPAGNIE NATIONALE ALGERIENNE DE NAVIGATION ("C. N. A. N.") and T/S IN AMENAS, her engines, boilers, tackle, etc., and the freights of T/S In Amenas, Defendant-Appellant.

AMOCO TRANSPORT COMPANY and Amoco Overseas Oil Company, Plaintiffs-Appellees, v. COMPAGNIE NATIONALE ALGERIENNE DE NAVIGATION ("C. N. A. N."), Defendant-Appellant.

No. 1020, Docket 79-7135.

United States Court of Appeals, Second Circuit.

Argued May 22, 1979.

Decided July 19, 1979.

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Philip V. Moyles, New York City (Robert L. Mahar, John J. Walsh and Freehill, Hogan & Mahar, New York City, of counsel), for defendant-appellant.

Joseph T. Stearns, New York City (Richard A. Corwin and Walker & Corso, New York City, of counsel), for plaintiffs-appellees.

Before LUMBARD, MANSFIELD and GURFEIN, Circuit Judges.

GURFEIN, Circuit Judge:

This is an appeal from an order of the District Court for the Southern District of New York (Hon. Charles H. Tenney, Judge) refusing appellant's motion under F.R. Civ.P. 60(b) to reopen a previous default judgment entered on behalf of appellees. Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne, 459 F.Supp. 1242 (S.D. N.Y. 1978). Appellant broadly argues that there was no jurisdiction to enter the original default judgment and that in any event the District Judge should have set the judgment aside.

This case is a procedural "comedy of errors." In the summer of 1976 appellant Compagnie Nationale Algerienne de Navigation ("C.N.A.N.") entered into a contract of Tanker Voyage Charter Party with appellee Amoco Transport Company ("Transport") for the carriage of a large quantity of crude oil from Egypt to a port outside the United States. The contract was negotiated between C.N.A.N.'s broker in France and Transport's broker, Poten & Partners, Inc. ("Poten"), in New York. The oil was shipped by Amoco Egypt Oil Company and was to be delivered to appellee Amoco Overseas Oil Company ("Overseas").

Delivery was ultimately made in Curacao, Netherlands Antilles. Some time after the oil was discharged, and after the freight payments had been deposited with Poten in New York for remittance to C.N.A.N., appellees discovered that the full quantity of oil due had not actually been delivered. They commenced this action quasi in rem on August 20, 1976 by obtaining an order of attachment against funds credited to C.N. A.N. in Poten's account at the First National City Bank in New York City.

The attachment was effected under state law, N.Y.C.P.L.R. §§ 6201 et seq., pursuant to F.R.Civ.P. Supplemental Rule B (for certain admiralty and maritime claims). By inadvertence, appellees did not also utilize the federal procedure which may be employed "in addition" under Rule B(1). Accordingly, it was incumbent upon them to perfect their state quasi in rem jurisdictional base by complying with New York statutory requirements. § 6214. Among these is the requirement that within 90 days after the order of attachment is levied upon the property it must actually be taken into custody by the sheriff (if tangible) or the plaintiff must commence a special proceeding against the garnishee. § 6214(c), (d) & (e). Otherwise, the levy becomes void. § 6214(e). The 90-day period here started to run on August 20.

Appellees failed to have the funds taken into custody or to commence a special proceeding during the 90-day period. On October 21, 1976, before the 90-day period had expired, however, the District Court entered a default judgment for inquest, finding that appellant was in default and assigning assessment of damages to a magistrate. On March 21, 1977, unaware that the levy upon the funds had lapsed, the District Court adopted the magistrate's findings and two days later entered final judgment for $378,977.33 against appellant.

When appellees sought to execute this judgment, the Bank refused to surrender the funds because the levy had become void. Appellees hastened back to court to reattach the funds both under Admiralty Rule B and by seeking ex parte an "extension nunc pro tunc" of the time period during which to perfect the original attachment. The extension nunc pro tunc was granted on March 31, 1977, and on April 1, 1977, an amended default judgment was entered. Though it is quite clear that C.N.A.N. had actual notice of the action before Judge Tenney, it did not respond or appear in any way.¹ Having ignored the United States court during the proceedings and for approximately a year after final judgment, appellant finally made its first appearance.

On April 1, 1978, appellant made a motion in the District Court seeking relief from the default judgment under F.R.Civ.P. 60(b); inasmuch as April 1 was a Saturday, the motion was not actually docketed until April 3, more than a year after final judgment.

Appellant attacked the jurisdiction of the court to enter the judgment on several grounds, asserting that (1) under state law jurisdiction under the void attachment could not be restored by an order nunc pro tunc; (2) restoration of the levy was in any event barred after January 1977 when the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 et seq., came into effect; and (3) quasi in rem jurisdiction in this case was a violation of due process. Appellant further urged that the default should be set aside under Rule 60(b)(1) for mistake, inadvertence and excusable neglect, or, alternatively, under 60(b)(6) for "just" reasons.

Judge Tenney rejected the jurisdictional challenges, ruling that (1) state law permitted a nunc pro tunc restoration of the levy; (2) the Immunities Act did not apply because jurisdiction over appellant was originally asserted before the Act came into effect; and (3) the jurisdiction quasi in rem was governed by traditional admiralty principles and was not, in any event, within the scope of the Supreme Court's recent decision in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977), concerning due process limitations on quasi in rem jurisdiction. The District Judge also held that the motion to set aside under Rule 60(b)(1) was untimely and that extraordinary relief under Rule 60(b)(6) was unwarranted. From this decision, C.N.A.N. appeals.

I

Authority under New York law for a judicial extension of the period of time in which a levy of attachment may be perfected is found in N.Y.C.P.L.R. § 6214(e). That section's predecessor under the old Civil Practice Act was § 922, which provided that an extension of the 90-day period could be had upon an application to the court prior to the expiration of the 90 days. See Carroll v. Manufacturers Trust Co., 202 F.2d 714, 715 (2d Cir. 1953) (per curiam); Nemeroff v. National City Bank, 262 App.Div. 145, 146-47, 28 N.Y.S.2d 295 (1st Dept. 1941). If § 922 were still in force, it would have been error in this case for the District Court to extend the 90-day period of the levy after it had expired.

When C.P.L.R. § 6214(e) superseded § 922, however, the wording of the extension provision was significantly altered. Unlike § 922, § 6214(e) does not specify that an extension of the 90-day term of the levy must be ordered prior to the close of that period. The new subsection "is worded broadly enough . . . to permit a court to grant an extension after the levy becomes void as long as any rights in the property or debt acquired by a third person are protected." 7A Weinstein, Korn & Miller, New York Civil Practice § 6214.15, at 62-140; accord McLaughlin, Supplementary Practice Commentaries, 7B McKinney's Consolidated Laws of New York, 1964-1978 Supplementary Pamphlet CPLR XXXX-XXXX, at 61 ("This result is commendable, so long as there are no intervening lienors.").

Two New York courts have taken this change in the statutory wording to hold that the levy period may be extended even after the levy has become void. Seider v. Roth, 28 A.D.2d 698, 280 N.Y.S.2d 1005 (2d Dep't 1967); Cenkner v. Shafer, 61 Misc.2d 807, 306 N.Y.S.2d 634 (Sup.Ct.1970) (dictum). Contra, Worldwide Carriers, Ltd. v. Aris Steamship Co., 312 F.Supp. 172, 175 n.5, 177 (S.D.N.Y.1970).² Appellant attempts to distinguish Seider and Cenkner on the ground that they involved attachment of insurance policies, pointing out that the Seider Court remarked that "this is a proper case for the grant of extension of time . . . in view of the novelty of the question, the uncertain state of the law and the fact that the requirement of CPLR 6214 is largely ministerial as it relates to intangible property." (Emphasis added.) 28 A.D.2d at 699, 280 N.Y.S.2d at 1007. Without inquiry into whether the credit balance attached is an "intangible," we note that the Appellate Division did not hold that the court, in case of a tangible, would be without power to grant the extension after 90 days, but rather that the ease of administering an attachment of intangibles was a factor for the consideration of the court. Certainly § 6214(e) itself makes no distinction between tangible and intangible property with respect to extensions of the levy period.

Appellant also argues that permitting post-90-day extensions of the levy period will reduce the 90-day time limit on levies to insignificance. We disagree. The fact that courts have the power to extend the period after 90 days have passed does not mean that extensions will always be granted. Moreover, the 90-day period retains significance with respect to the rights of third parties. Weinstein, Korn & Miller, supra, at 62-140; McLaughlin, Supplementary Practice Commentaries, supra, at 61.

Nor is appellant in a position to complain that the extension of time here was unfair. Had appellees originally also attached under Admiralty Rule B, as they would have done absent a clerical oversight, jurisdictional attachment would not have required physical possession of the res within any specified period. In the context of this admiralty case, therefore, the lapse of the levy is not significant in...