Fustok v. ContiCommodity Services, Inc., 744

• Decision Date: 19 April 1989
• Docket Number: D,No. 744,744
• Citation: 873 F.2d 38
• Parties: Mahmoud FUSTOK, Plaintiff-Appellee, v. CONTICOMMODITY SERVICES, INC., ContiCapital Management, Inc., Continental Grain Company, Walter M. Goldschmidt, Norton Waltuch, Tom Waldeck and Ivan Auer, Defendants and Third-Party Plaintiffs-Appellees, v. Naji R. NAHAS, Third-Party Defendant-Appellant. ocket 88-7918.
• Court: U.S. Court of Appeals — Second Circuit

Page 38

873 F.2d 38

13 Fed.R.Serv.3d 632

Mahmoud FUSTOK, Plaintiff-Appellee, v. CONTICOMMODITY SERVICES, INC., ContiCapital Management, Inc., Continental Grain Company, Walter M. Goldschmidt, Norton Waltuch, Tom Waldeck and Ivan Auer, Defendants and Third-Party Plaintiffs-Appellees, v. Naji R. NAHAS, Third-Party Defendant-Appellant.

No. 744, Docket 88-7918.

United States Court of Appeals Second Circuit.

Argued Feb. 8, 1989.

Decided April 19, 1989.

Richard A. Rosen, New York City (Cameron Clark, Mary Jane Case, Paul, Weiss, Rifkind, Wharton & Garrison, New York City, on the brief), for defendant-third-party-plaintiff-appellee ContiCommodity Services, Inc.

James D. Zirin, New York City (Breed, Abbott & Morgan, New York City, on the brief), for third-party-defendant-appellant.

Before KEARSE and WINTER, Circuit Judges, and SWEET, District Judge. ^*

SWEET, District Judge:

This is an appeal by third party defendant-appellant Naji R. Nahas ("Nahas") of a decision by the Honorable Morris E. Lasker denying his motion pursuant to Fed.R.Civ.P. 60(b) to set aside an amended default judgment (the "Judgment") against Nahas. 122 F.R.D. 151. Nahas claims that by entering the Judgment, which is based on a settlement between plaintiff Mahmoud Fustok and defendants and third-party plaintiffs-appellees ContiCommodity Services, Inc. ("Conti"), he was deprived of his property without due process of law.

Rule 60(b)(4) of the Federal Rules of Civil Procedure provides that a court can relieve a party from a final judgment if the judgment is void, and this court has held that a judgment is void when the court " 'acted in a manner inconsistent with due process of law.' " Otte v. Manufacturers Hanover Commercial Corp., 596 F.2d 1092, 1099 (2d Cir.1979) (quoting 11 Wright & Miller, Federal Practice and Procedure, Sec. 2862 at 198 (1973)). However, there was no violation of Nahas's right to due process in this case.

Conti first served Nahas with a third-party complaint for indemnification in 1982 by sending it to him in Brazil and later to his Paris residence. In April, 1984, after Nahas failed to move or answer in timely fashion, Conti served Nahas in Brazil and his New York counsel with a motion for entry of default judgment. Nahas failed to respond. In January, 1985 Conti sent copies of amended pleadings to Nahas in Paris and Brazil and to his New York counsel, and shortly thereafter, Conti served Nahas with a request to produce documents. Again, there was no response. In September, 1985, Judge Lasker entered a default judgment against Nahas, which Nahas never moved to vacate and never appealed.

In February, 1986, the case between Fustok and Conti was settled in the midst of trial, and approximately one-third of the settlement was allocated to Nahas. Documents showing the amount of the settlement have been filed under seal. Approximately five months later, Conti moved, on notice to Nahas's New York counsel, for entry of an amended default judgment against Nahas in a precise amount representing the settlement amount plus attorney's fees. Again, neither Nahas nor his counsel appeared to oppose Conti's motion, although his New York counsel twice wrote to the District Judge stating that Nahas opposed the motion. On August 1, 1986, Judge Lasker signed the amended default judgment, which was filed with the clerk on January 7, 1987. For nearly 18 months, Nahas did not seek any type of relief from the judgment.

In order to comply with the requirements for enforcing a judgment in Brazil, Conti served its complaint in 1985 on Nahas in Brazil a third time. Nahas fought the validity of the Brazilian service. Only after the Brazilian Supreme Court rendered a decision unanimously homologating the amended default judgment on June 30, 1988 did Nahas appear to the District Court for the Southern District of New York. He sought to vacate the amended default judgment on grounds that his right to due process had been violated because he had not participated in a hearing on the amount of damages, which he claims was required by Rule 55(b)(2) of the Federal Rules of Civil Procedure.

We reject this contention on both procedural and substantive grounds. First, Nahas made no serious effort to have the court hold a hearing at which he would participate. Though Nahas had been served with the proposed Judgment and had his counsel send the court a letter which suggested that the court was obligated to hold a hearing into whether the proposed settlement between Fustok and Conti was collusive, Nahas did not indicate that he wished to participate in such a hearing. Indeed, counsel's letter was careful to state that that letter was not to be taken as a general appearance by...