Foster v. Arletty 3 Sarl

• Decision Date: 25 January 2002
• Docket Number: No. 00-2540.,00-2540.
• Citation: 278 F.3d 409
• Parties: Bruce M. FOSTER, Plaintiff-Appellant, v. ARLETTY 3 SARL; Patrick Abadie, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

278 F.3d 409

Bruce M. FOSTER, Plaintiff-Appellant, v. ARLETTY 3 SARL; Patrick Abadie, Defendants-Appellees.

No. 00-2540.

United States Court of Appeals, Fourth Circuit.

Argued October 30, 2001.

Decided January 25, 2002.

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ARGUED: Frank Langston Eppes, Eppes & Plumblee, P.A., Greenville, South Carolina, for Plaintiff-Appellant. William Stevens Brown, V, Nelson, Mullins, Riley & Scarborough, L.L.P., Greenville, South Carolina, for Defendants-Appellees. ON BRIEF: Lawrence W. Newman, Rafael E. Castilla, Baker & McKenzie, New York, New York, for Plaintiff-Appellant. Rivers S. Stilwell, Nelson, Mullins, Riley & Scarborough, L.L.P., Greenville, South Carolina; Peter F. Felfe, Leon Medzhibovsky, Fulbright & Jaworski, L.L.P., New York, New York, for Defendants-Appellees.

Before WILKINSON, Chief Judge, MOTZ, Circuit Judge, and Malcolm J. HOWARD, United States District Judge for the Eastern District of North Carolina, sitting by designation.

Affirmed by published opinion. Judge MALCOLM J. HOWARD wrote the opinion, in which Chief Judge WILKINSON and Judge MOTZ joined.

OPINION

MALCOLM J. HOWARD, District Judge.

Plaintiff-appellant Bruce Foster challenges the district court's determination that the French company with which Foster contracted did not have sufficient contacts with South Carolina to support the assertion of personal jurisdiction over this company and one of its officers. Because the exercise of jurisdiction over these appellees does not comport with "traditional notions of fair play and substantial justice," International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)), we affirm the district court's holding.

I.

Bruce Foster, a dual citizen of the United States and France residing in Greenville, South Carolina, entered into a series of business transactions with a variety of French companies.¹ These transactions included several contracts designed to allow the French companies to obtain licenses for entertainment programs they hoped to promote over the internet. Foster, as a dual citizen, served as the French companies' contact in the United States and helped secure the rights to the licenses. The contract at the heart of this dispute was negotiated, drafted, and executed in France and called for Foster to obtain the license in exchange for a fee based on the gross revenues of the companies' use of those licenses. Foster eventually obtained the licenses in the name of two French companies partially owned by Foster, Sierra Madre and BSF. The appellees, Arletty 3 S.A.R.L. ("Arletty"), a French corporation, and Abadie, an officer of Arletty, assert a right to the programs covered by the licenses.

The gravamen of the dispute concerns Foster's contractual entitlement to fees. Foster contends that he is entitled to continuing fees for his work in obtaining the licenses. Appellees counter that Foster has been paid all that he is owed and that any rights Sierra Madre and BSF had to the licenses were voided on December 19, 1995, when a French court ordered the liquidation of Sierra Madre and BSF. After this liquidation and the subsequent French bankruptcy of Sierra Madre and BSF, appellees renegotiated rights to the licenses. As a result of this renegotiation and the voidance of Sierra Madre and BSF's rights, appellees assert that Foster is not entitled to continuing fees.

On September 1, 1999, Foster filed suit against Arletty and Abadie in United States District Court in Greenville, South Carolina, alleging breach of contract and unjust enrichment.² Arletty and Abadie were served copies of the summons and complaint in both French and English pursuant to the Hague Convention. When appellees did not answer the complaint, the district court clerk filed an entry of default on January 18, 2000. Thereafter, the district court granted Foster's motion for a default judgment pursuant to Fed. R.Civ.P. 55.

Foster then filed an action to enforce the judgment in France. Arletty and Abadie appeared in a French court on July 4, 2000, attacking both the jurisdiction of the district court and the underlying merits of the claim. On August 10, 2000, Arletty and Abadie made an appearance before South Carolina's district court and moved to set aside the default judgment, arguing that it was void for want of personal jurisdiction. See Fed.R.Civ.P. 60(b)(4). On October 3, 2000, the district court granted the appellees' Rule 60(b) motion and voided the earlier default judgment, concluding that the court did not have personal jurisdiction over the appellees. It is this order Foster appeals.

In his appeal, Foster raises two main assignments of error: (1) that the district court wrongly determined that the appellees did not waive their personal jurisdiction defense; and (2) that the district court wrongly determined that it lacked personal jurisdiction over the appellees.

II.

A. Waiver

The requirement that a court have personal jurisdiction is grounded in the Due Process Clause. Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). As with other due process rights, this requirement is subject to waiver. Id., 456 U.S. at 703, 102 S.Ct. 2099. Thus, a defendant may consent to a court's exercise of jurisdiction either implicitly or explicitly, and "[a] variety of legal arrangements have been taken to represent" this consent. Id. For example, "when a defendant appears and challenges jurisdiction, it agrees to be bound by the court's determination on the jurisdictional issue." Transaero, Inc. v. La Fuerza Aerea Boliviana, 162 F.3d 724, 729 (2nd Cir. 1998). However, "[a] defendant is always free to ignore the judicial proceedings, risk a default judgment, and then challenge that judgment on jurisdictional grounds in a collateral proceeding." Insurance Corp. of Ireland, 456 U.S. at 706, 102 S.Ct. 2099.

Foster contends that appellees' appearance in the French court contesting enforcement of the default judgment constitutes an appearance sufficient to waive their personal jurisdiction defense. Foster conflates the concepts of waiver of a personal jurisdiction defense and res judicata. If the French court had reached a final decision on the merits, res judicata, not waiver, would have applied.³ See Meekins v. United Transp. Union, 946 F.2d 1054, 1057 (4th Cir.1991). Because the French court never reached a final determination, res judicata is inapplicable.

In a related argument, Foster asserts that appellees waived their right to assert their personal jurisdiction defense under Fed.R.Civ.P. 12(h)(1) because they failed to contest personal jurisdiction after receiving notice. Rule 12(h) contemplates an implied waiver of a personal jurisdiction defense by defendants who appear before a court to deny the allegations of a complaint, but who fail to make personal jurisdiction objections at the time of their appearance. See, e.g., Bethlehem Steel Corp. v. Devers, 389 F.2d 44, 46 (4th Cir.1968). Appellees did not appear in the South Carolina action prior to filing their motion to vacate judgment and, as a result, have not waived their personal jurisdiction defense.

Finally, Foster argues that appellees' motion for relief of judgment pursuant to Rule 60(b)(4) was not filed within the "reasonable time" required under the rule. Fed.R.Civ.P. 60(b); McLawhorn v. John W. Daniel & Co., Inc., 924 F.2d 535, 538 (4th Cir.1991). As evidence that appellees did not file their 60(b)(4) motion within a reasonable time, Foster cites the four-month delay between the district court's default judgment and the appellees' motion to vacate. The court finds Foster's argument unpersuasive. Given the international status of the parties, the multiple and duplicative lawsuits filed by Foster against appellees, and the fact that the motion was based on a void judgment, the court is unwilling to deem the four-month delay unreasonable. Other circuit courts addressing the issue have concluded that a motion to vacate a void judgment pursuant to Rule 60(b)(4) contains little, if any, time limit. See Precision Etchings & Findings, Inc. v. LGP Gem, Ltd., 953 F.2d 21, 23 (1st Cir.1992) ("A default judgment entered by a court which lacks jurisdiction over the person of the appellee is void and may be set aside at any time pursuant to Fed. R.Civ.P. 60(b)(4)." (internal citation omitted)); see also Briley v. Hidalgo, 981 F.2d 246, 249 (5th Cir.1993); Rodd v. Region Constr. Co., 783 F.2d 89, 91 (7th Cir.1986); V.T.A., Inc. v. Airco, Inc., 597 F.2d 220, 224 (10th Cir.1979). We therefore reject Foster's argument that res judicata or waiver barred reconsideration under Rule 60.

B. Personal Jurisdiction

Stripped to its essence, this case presents the question whether foreign appellees who negotiated, drafted, and executed a contract in France with a dual United States and French citizen residing in South Carolina had such minimum contacts with the forum state to make the exercise of jurisdiction over those appellees consistent with "traditional notions of fair play and substantial justice." International Shoe Co., 326 U.S. at 316, 66 S.Ct. 154 (quoting Milliken, 311 U.S. at 463, 61 S.Ct. 339). Because South Carolina has interpreted its long-arm statute to extend personal jurisdiction to the constitutional limits imposed by federal due process, Sheppard v. Jacksonville Marine Supply, Inc., 877 F.Supp. 260, 265 (D.S.C. 1995), our inquiry must focus on due process. In assessing whether the exertion of personal jurisdiction over appellees exceeds the limits of federal due process, the court recognizes that "[t]he unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders." Asahi Metal Ind. Co. v. Superior Court, 480 U.S. 102, 114...