Antoine v. Atlas Turner, Inc.

• Decision Date: 20 September 1995
• Docket Number: No. 94-3355,94-3355
• Citation: 66 F.3d 105
• Parties: Edward ANTOINE, et al., Plaintiffs-Appellees, v. ATLAS TURNER, INC., Defendant-Appellant, Royal Insurance Company of Canada; Canadian General Insurance Company; and Federal Insurance Company, Defendants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 105

66 F.3d 105

Edward ANTOINE, et al., Plaintiffs-Appellees, v. ATLAS TURNER, INC., Defendant-Appellant Royal Insurance Company of Canada; Canadian General Insurance Company; and Federal Insurance Company Defendants.

No. 94-3355.

United States Court of Appeals Sixth Circuit.

Argued Aug. 7, 1995.

Decided Sept. 20, 1995.

Desa A. Ballard, Ness, Motley, Loadholt, Richardson & Poole, L. Joel Chastain (briefed), Barnwell, SC, Steven M. Weiss (briefed), Weiss, Kwait & Associates, Cleveland, OH, and Timothy E. Eble (argued), Ness, Motley, Loadholt, Richardson & Poole, Charleston, SC, for plaintiff-appellee.

Terrance P. Gravens (argued and briefed), Coin, Gravens & Franey, Cleveland, OH, for defendant-appellant.

Before KENNEDY, WELLFORD, and SILER, Circuit Judges.

KENNEDY, Circuit Judge.

Plaintiffs in four asbestos personal injury cases ¹ obtained default judgments against defendant Atlas Turner, Inc. ("Atlas"), a subsidiary of Societe National de L'Amiante, a Crown Corporation of Canada. When plaintiffs sought to enforce the judgments, Atlas filed a motion pursuant to Rules 55(c) and 60(b)(4) of the Federal Rules of Civil Procedure for relief from the judgments. The District Court denied Atlas' motion. Atlas now appeals, arguing that it did not receive proper service of the default judgments under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. Sec. 1602 et seq., and did not receive proper service of the application for default under Rule 55(b)(2). Atlas further argues that it was denied due process through the entry of the default judgments and that the District Court erred in holding there was personal jurisdiction over Atlas. For the following reasons, we affirm in part and reverse in part.

I.

Between 1981 and 1984, the underlying cases were filed against Atlas and several other defendants in the Northern District of Ohio pursuant to that court's Ohio Asbestos Litigation ("OAL") plan. On June 5, 1985, Atlas' attorney, James Conroy, filed a Notice of Withdrawal as attorney for Atlas with the District Court and served all counsel of record. Conroy's withdrawal was caused by a coverage dispute that developed between Atlas and Chubb & Son, which had retained Conroy on behalf of Atlas. The underlying cases were settled with most of the defendants at OAL settlement conferences and the court closed the cases in September, 1985. Atlas did not participate in these settlement negotiations.

On October 24, 1985, plaintiffs sought entry of default against Atlas. In support of their application for entry of default, plaintiffs filed an affidavit given by plaintiffs' counsel Charles Cloninger. The affidavit stated that Conroy had formerly represented Atlas, that Conroy had filed a notice of withdrawal as counsel for Atlas, that Atlas would not be represented by other counsel and had indicated it would no longer defend the underlying cases, and that since June 5, 1985, Atlas had not in fact defended itself in the underlying cases.

On October 25, 1985, plaintiffs served Conroy with an application for entry of default judgment and notice that a hearing on the motion would be conducted telephonically on October 31, 1985. On October 31, Atlas failed to make an appearance. The court reopened the underlying cases and granted default judgments based on Cloninger's affidavits.

No proceedings to enforce the judgments were taken until December 14, 1990 when plaintiff filed an action to enforce the judgments. ² In March 1991, Atlas filed a motion for relief from the judgments and the motion was referred to a magistrate judge. The magistrate judge recommended granting Atlas' motion on the grounds that Atlas had not been properly served with the application for default judgment. The District Court rejected this recommendation, denied Atlas' motion, and granted enforcement of the judgments.

II.

We review a district court's decision denying a motion to set aside a default judgment for abuse of discretion. United Coin Meter Co. v. Seaboard Coastline R.R., 705 F.2d 839, 843 (6th Cir.1983). "If the underlying judgment is void, it is a per se abuse of discretion for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4)." United States v. Indoor Cultivation Equipment, 55 F.3d 1311, 1317 (7th Cir.1995). A judgment is void under 60(b)(4) "if the court that rendered it lacked jurisdiction of the subject matter, or of the parties, or if it acted in a manner inconsistent with due process of law." In re Edwards, 962 F.2d 641, 644 (7th Cir.1992) (citation omitted).

III.

Atlas contends that the District Court erred in denying its motion to set aside the default judgments because plaintiffs had served Conroy, its former counsel, rather than Atlas itself, with the application for default and the default judgments. The District Court held that Conroy still represented Atlas in the underlying actions because it was the court's policy for an attorney to obtain leave of court before withdrawing. Conroy had not obtained leave but rather had filed a notice of withdrawal and given notice to the other parties and the clerk. The court held that plaintiffs' service of the applications for default on Conroy constituted service of Atlas. We disagree.

The local rules for the Northern District of Ohio contain no provision with respect to the withdrawal of an attorney. Rule 83 of the Federal Rules of Civil Procedure authorizes each district court to adopt local rules but provides that the court must give "appropriate public notice and an opportunity to comment" and that copies of these rules shall be "made available to the public." FED.R.CIV.P. 83. "[T]he name given to local procedures is irrelevant. If the purpose of such local procedures, practices or policies is to control practice in a district court ... such procedures effectively are local rules and must be created in accordance with Rule 83." Brown v. Crawford County, 960 F.2d 1002, 1008 n. 8 (11th Cir.1992). The District Court's "policy" had not been promulgated as a local rule. In the absence of a local rule or at least some notice to counsel and the parties that more was required, Conroy's notice of withdrawal was sufficient to end his representation of Atlas in this matter. We note that the clerk's docket sheet indicated Conroy's withdrawal and that Atlas was unrepresented.

Atlas contends that because its counsel had withdrawn, the default judgments were void because they were not served on Atlas in accordance with FSIA section 1608(e). ³ This section provides:

No judgment by default shall be entered by a court of the United States ... against a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence satisfactory to the court. A copy of any such default judgment shall be sent to the foreign state or political subdivision in the manner prescribed for service in this section. (emphasis added).

We must first determine whether Atlas, an instrumentality of a foreign state, was required to be served under Sec. 1608(e). The Ninth Circuit has held that this section only requires service of default judgments against foreign states and their political subdivisions and not agencies or instrumentalities of foreign states. See Straub v. AP Green, Inc., 38 F.3d 448, 454 (9th Cir.1994). In Straub, the court reasoned that, because 28 U.S.C. Sec. 1603(a) says that "foreign state" includes agencies or instrumentalities of foreign states "except as used in section 1608," service of default judgments is not required when the judgment is against an agency or instrumentality of a foreign state. Id.

We disagree with this reading of Sec. 1608(e) because "[w]e do not ... construe statutory phrases in isolation; we read statutes as a whole." United States v. Morton, 467 U.S. 822, 828, 104 S.Ct. 2769, 2773, 81 L.Ed.2d 680 (1984). The first sentence of Sec. 1608(e) establishes the procedure for obtaining a default judgment against "a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state." 28 U.S.C. Sec. 1608(e). (emphasis added). The second sentence says that "such default judgment" shall be sent to "the foreign state or political subdivision." (Emphasis added). This requires that any judgment, including judgments against agencies and instrumentalities or political subdivisions, obtained through the procedure described in the first sentence should be sent to the foreign state.

We found no authority to aid our determination of whether a judgment is void or merely voidable when copies of the default judgments are not served in accordance with Sec. 1608(e). We hold that such a default judgment is voidable rather than void because the requirement of service is a condition subsequent to the entry of the judgment. Failure to serve copies of a judgment does not change the propriety of entry of the judgment itself if it was otherwise properly entered. Cf. Planet Corp. v. Sullivan, 702 F.2d 123, 126 n. 2 (7th Cir.1983) (holding that default entered without Rule 55(b)(2) notice is voidable not void).

Whether or not the judgments here were voidable because Atlas was not served turns on whether Atlas had actual notice of them. In Sherer v. Construcciones Aeronauticas, S.A., 987 F.2d 1246 (6th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 72, 126 L.Ed.2d 41 (1993), we found that service was sufficient under the FSIA even though the complaint was not translated as required where all other requirements, including actual notice, were met. We stated that the purpose of the FSIA is "to ensure actual notice to foreign states of the fact and substance of pending litigation" and held that "[w]here a party has received such notice, despite technical omissions in the manner of service, the purpose of the Act if not its letter has been satisfied." Id. at 1250 (citation omitted). Thus, if Atlas did have actual notice, the...