Allaham v. Naddaf
| Decision Date | 17 December 2015 |
| Docket Number | No. 15-2575,15-2575 |
| Parties | MILAD ALLAHAM, Appellant v. FADI NADDAF, ELIAS NADAF AND MAJD NADAF |
| Court | U.S. Court of Appeals — Third Circuit |
NOT PRECEDENTIAL
On Appeal from the United States District Court for the Eastern District of Pennsylvania
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
December 8, 2015
Before: FUENTES, SHWARTZ and VAN ANTWERPEN, Circuit Judges.
Appellant Milad Allaham has brought suit in the U.S. District Court for the Eastern District of Pennsylvania against three foreign nationals: Fadi Naddaf, Elias Nadaf, and Majd Nadaf. Allaham sought a default judgment, which the District Court ultimately denied for lack of personal jurisdiction. Allaham now appeals the denial of his Motion for Reconsideration. We will affirm the decision of the District Court.
At some time shortly before 2007, Raouaeh Nadaf,1 Allaham's wife, approached Allaham while at their home in Allentown, Pennsylvania about entering into a partnership to open a jewelry business in the United Arab Emirates ("UAE"). (App. 16a-17a). The partnership was to be with Raouaeh's brothers, three of whom are Appellees. (App. 16a-17a). A fourth brother, Pierre Nadaf, a United States citizen residing in Scranton, Pennsylvania, was also involved in the business and traveled between the UAEand the United States to purchase jewelry.2 (App. 17a, 69a-70a). At all times relevant to the present action, Allaham was a United States citizen, residing in Pennsylvania. (Appellant Br. 4). During the same time period, all three Appellees were foreign nationals residing in the UAE. (App. 19a).
Shortly after Raouaeh introduced the partnership idea, Allaham traveled to the UAE to meet with Appellees in person. (App. 17a). After Allaham's visit, he believed that he had entered into an oral agreement with Appellees to be a partner in the business and provided investment capital and merchandise to this end. (App. 17a). From October 2007 through July 2008, Allaham wired approximately $252,000 dollars to Appellees from Pennsylvania bank accounts. 3 During his trip to the UAE, Allaham also gave Appellees various items of jewelry with a combined value of approximately $25,000. (App. 56-57a); (Appellant Br. 6).
At an unspecified date in 2009, Appellees, through an unidentified intermediary in New York State, told Allaham they did not intend to pursue the partnership. Instead, Appellees said they would return Allaham's money if he travelled to the UAE in two weeks.4 (App. 58a-59a). Appellees stated that they would return half of the money when he arrived, and the other half at a later date. (App. 59a). Allaham travelled to the UAE at the agreed upon time, but was unsuccessful in efforts to recover his cash or jewelry investment. (App. 59a).
Allaham filed a complaint for conversion in the Eastern District of Pennsylvania on June 21, 2013.5 (App. 30a-35a). Allaham filed a proof of service for each defendant, which he claims was done by a process server on September 10, 2013.6 (App. 36a-38a).
On March 20, 2014, Allaham filed a Motion for Entry of Default Judgment pursuant to Federal Rule of Civil Procedure ("Rule") 55(b)(1), along with a request that the clerk of court enter a default against each Defendant pursuant to Rule 55(a). (App. 39a-46a). The District Court (Smith, E.G., J.),7 denied the motion without prejudice and the clerk instructed Allaham to separately file a request for the entry of default, and thena Motion for Default Judgment, in the appropriate order. (App. 10a). A week later, Allaham made a second request for the entry of default, which the clerk entered against each Defendant. (App. 10a). The District Court ordered Allaham to file a Renewed Motion for Default Judgment, which he did on August 29, 2014. (App. 10a). A hearing was scheduled, prior to which Allaham was invited to provide the District Court with briefing supporting personal jurisdiction over Appellees. (App. 27a n.1). Allaham submitted a brief arguing that personal jurisdiction existed prior to the hearing. (Plaintiff's Long-Arm Statute Br.). Following the default judgment hearing on December 12, 2014, which focused almost exclusively on Appellees' contacts with Pennsylvania, the District Court denied Allaham's motion and dismissed the action for lack of personal jurisdiction. (App. 28a-29a).
Allaham filed a Motion for Reconsideration pursuant to Rule 59(e). The District Court denied this motion in an order and memorandum opinion issued on May 28, 2015. (App. 8a-25a). This timely appeal followed. (App. 6a-7a). As of December 8, 2015, Appellees have not responded to any documents served or filed in this matter.
This Court reviews the denial of a motion for reconsideration for abuse of discretion. Max's Seafood Cafe ex rel. Lou-Ann, Inc. v. Quinteros, 176 F.3d 669, 673 (3d Cir. 1999). This Court exercises de novo review over a district court's dismissal for lackof personal jurisdiction. Eurofins Pharma US Holdings v. BioAlliance Pharma SA, 623 F.3d 147, 155 (3d Cir. 2010). Factual findings made by a district court in determining personal jurisdiction are reviewed for clear error. Control Screening LLC v. Tech. Application & Prod. Co., 687 F.3d 163, 167 (3d Cir. 2012).
As an appeal from a denial of a Motion for Reconsideration, stemming from the denial of a Motion for Default Judgment, this Court's role is to determine whether the District Court erred based on the reason Allaham asserts in his Rule 59(e) motion. There are limited grounds on which a court will grant a Rule 59(e) Motion for Reconsideration. To succeed on a Rule 59(e) motion, the moving party must present one, or more, of the following: "(1) an intervening change in the controlling law; (2) the availability of new evidence that was not available when the court granted the [motion]; or (3) the need to correct a clear error of law or fact or to prevent manifest injustice." U.S. ex rel. Schumann v. Astrazeneca Pharm. L.P., 769 F.3d 837, 848-49 (3d Cir. 2014) (quoting Max's Seafood Cafe ex rel. Lou-Ann, Inc., 176 F.3d at 677). Allaham argues that his Motion for Reconsideration should have been granted since the District Court "failed to recognize that the defendants engaged in certain activities directed at Pennsylvania that supported an exercise of such jurisdiction." (App. 11a). The entry of default judgment is not a matter of right, but rather a matter of discretion, which "is not without limits." Hritz v. Woma Corp., 732 F.2d 1178, 1180-81 (3d Cir. 1984). Because the exercise of this discretion is contingent on a district court's determination that it can exercise personal jurisdiction over each defendant, and as discussed infra, the District Court did not err indenying Allaham's Motion for Reconsideration. See Budget Blinds, Inc. v. White, 536 F.3d 244, 259 (3d Cir. 2008) (); see also Stranahan Gear Co., Inc. v. NL Indus., Inc., 800 F.2d 53, 56, 59 (3d Cir. 1986) ().
Before a plaintiff can obtain a default judgment pursuant to Rule 55(b), a plaintiff must secure an entry of default per Rule 55(a). 10A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2682, at 13 (3d ed. 1998). Once default is entered against a specific defendant, Rule 55(b) allows the plaintiff to request that the clerk or the court enter a default judgment against that defendant, depending on whether the claim is for a sum certain. Id. While entry of a default judgment is largely within a district court's discretion, three factors control this determination: "(1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000).
While unlike subject matter jurisdiction, a court generally may not raise personal jurisdiction sua sponte, when a default judgment is requested, a court is required to make a threshold determination regarding any jurisdictional defects. See Bolden v. Se. Pennsylvania Transp. Auth., 953 F.2d 807, 812 (3d Cir. 1991) (citing Mansfield, Coldwater & Lake Michigan R.R. v. Swan, 111 U.S. 379, 382 (1884)) ( that whilethis Court does not address issues that the parties have ignored, "[w]e are always obligated to ensure that we have jurisdiction over the cases that come before us"). If a court lacks personal jurisdiction over a defendant, the court does not have jurisdiction to render a default judgment, and any such judgment will deemed void. Budget Blinds, Inc., 536 F.3d at 258 (citing Marshall v. Bd. of Educ., 575 F.2d 417, 422 (3d Cir. 1978)); see Hanson v. Denckla, 357 U.S. 235 (1958) (citing Pennoyer v. Neff, 95 U.S. 714, 733 (1877)) ("With the adoption of [the Fourteenth] Amendment, any judgment purporting to bind the person of a defendant over whom the court had not acquired in personam jurisdiction was void within the State as well as without."). In the absence of an evidentiary hearing, a plaintiff's complaint need only establish a prima facie case of personal jurisdiction. Eurofins Pharma US Holdings, 623 F.3d at 155; Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009). However, at an evidentiary hearing before a district court, a plaintiff bears the burden of proving that the court has personal jurisdiction over the defendant by a preponderance of the evidence. Control Screening LLC, ...
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