International Controls Corp. v. Vesco

• Citation: 556 F.2d 665
• Decision Date: 03 June 1977
• Docket Number: No. 811,D,811
• Parties: INTERNATIONAL CONTROLS CORP., Plaintiff-Appellee, v. Robert L. VESCO et al., Defendants, and Vesco & Co., Inc., Defendant-Appellant. ocket 76-7580.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 665

556 F.2d 665

INTERNATIONAL CONTROLS CORP., Plaintiff-Appellee, v. Robert L. VESCO et al., Defendants, and Vesco & Co., Inc., Defendant-Appellant.

No. 811, Docket 76-7580.

United States Court of Appeals, Second Circuit.

Argued April 6, 1977.

Decided June 3, 1977.

Albert G. Besser, Newark, N. J. (Arum, Friedman & Katz, New York City, Hannoch, Weisman, Stern & Besser, Robert C. Epstein, Newark, N. J., of counsel), for defendant-appellant.

Milton S. Gould, New York City (Sheldon D. Camhy, Daniel L. Carroll, Dean G. Yuzek Shea, Gould, Climenko & Casey, New York City, of counsel), for plaintiff-appellee.

Before OAKES, Circuit Judge, and WYZANSKI ^* and HOLDEN, ^** District Judges.

OAKES, Circuit Judge:

The litigation between International Controls Corp. (ICC) and Robert L. Vesco has been before this court on several prior occasions, two of which resulted in published opinions, ICC v. Vesco, 490 F.2d 1334 (2d Cir.), cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 236 (1974); ICC v. Vesco, 535 F.2d 742 (2d Cir. 1976). In the earlier of these, Chief Judge Kaufman wrote of "the multifarious financial manipulations of Robert Vesco" and referred to "a web of corporate and personal transactions of astonishing intricacy." 490 F.2d at 1338. While those transactions are not before us in the instant appeal, it was Mr. Vesco's "multifarious manipulations" that led him to absent himself from this country and to be unavailable for service of process. This persistent refusal to appear in any American court is the single most important contributing cause to the procedural problems that have culminated in this appeal, which is from an order denying a motion to vacate judgment entered in the United States District Court for the Southern District of New York, Charles E. Stewart, Jr., Judge. We affirm.

The underlying facts are set forth in the two earlier opinions of this court. It suffices here to state that ICC filed its initial complaint in June, 1973, and an amended complaint in September, 1973. In October, 1973, the district court entered a default judgment against Vesco, without any specification of damages; in July, 1974, a second default judgment, specifying some damages, was entered. ICC sought to satisfy these personal judgments against Vesco with assets of Vesco & Co. (the Company or appellant). The district court, in August, 1975, issued an execution order that pierced the corporate veil on the ground that the Company, wholly owned by Vesco and his children, is the alter ego of Vesco. An appeal from this order raised problems about the finality of the judgments on which it was based, and in May, 1976, this court remanded for clarification and the entry of a new judgment. The court did not reach the question of the validity of the alter ego ruling. 535 F.2d at 749.

It is the judgment on remand, issued by the district court in late May, 1976, that was the subject of the Company's motion to vacate below. Initially, the Company filed an appeal from that judgment nine days out of time, and this court accordingly dismissed the appeal as untimely. Alleging excusable neglect, the Company then moved in the district court for an extension of time within which to file the appeal, pursuant to Fed.R.App.P. 4(a). Judge Stewart denied the motion, and no appeal from that denial was taken. At about the same time, the Company moved for vacation of the judgment under Fed.R.Civ.P. 60(b), ¹ appealing to the court's discretion and sense of justice ² and alleging as well that the judgment was void because it was entered on the original complaint, which had been superseded and rendered functus officio by the amended complaint, and that the judgment was entered nunc pro tunc as of an erroneous date. ³ The district court rejected all of the Company's arguments and denied the motion. This appeal followed.

Reliance on the Original Complaint

The judgments issued by the district court in this case, all of which were incorporated by reference into the May, 1976, judgment challenged here, were based on ICC's original complaint, filed in June, 1973. Prior to any of the judgments, however, ICC filed an amended complaint in September, 1973. The district court found that the amended complaint was not properly served on Vesco, a finding not challenged by appellant here. The amended complaint, moreover, had to be served on Vesco personally, despite his failure to appear, because it asserted "additional claims for relief." Fed.R.Civ.P. 5(a). These somewhat unusual facts leave us with an apparent question of first impression.

It is well established that an amended complaint ordinarily supersedes the original and renders it of no legal effect. See, e. g., Washer v. Bullitt County, 110 U.S 558, 562, 4 S.Ct. 249, 28 L.Ed. 249 (1884); Miller v. American Export Lines, Inc., 313 F.2d 218 (2d Cir. 1963) (per curiam); Cicchetti v. Lucey, 514 F.2d 362, 365 n. 5 (1st Cir. 1975); 3 Moore's Federal Practice P 15.08(7) (2d ed. 1974); 6 C. Wright & A. Miller, Federal Practice and Procedure § 1476, at 389-90 (1971). Of the authorities stating this rule, however, none focuses on the point in time at which the superseding of the original by the amended complaint occurs. ⁴ Appellant argues that the critical point is the filing of the amended complaint, while appellee argues, and the court below held, that the original complaint is not superseded until the amended complaint is served. We agree with the court below, at least where, as here, the amended complaint is required to be served under Rule 5(a).

It is the rule in this circuit that, "after the filing of (an initial) complaint, the action remains pending in an inchoate state until service is completed . . .." Messenger v. United States, 231 F.2d 328, 329 (2d Cir. 1956); see 2 Moore's Federal Practice P 4.09, at 1024-25 (2d ed. 1975). This rule implies that an amended complaint, at least one that must be personally served pursuant to Rule 5(a), is also in an "inchoate state" until served. It would make little sense to hold, as appellant urges, that a complaint in such a state supersedes a properly served complaint. Such a holding would leave a case in a state of suspended animation in the interim between filing and service of the amended complaint, with the court perhaps even lacking personal jurisdiction over the defendant.

Such a holding would also introduce a substantial risk factor into a plaintiff's decision whether to amend his complaint. A plaintiff considering amendment would have to evaluate the likelihood that the amended pleading could actually be served on the defendant or defendants. If it appeared that such service on even one defendant would be difficult as was clearly the case here, where ICC had had great difficulty serving its original complaint on Vesco the plaintiff might well have to decide not to file an amended complaint, since failure to serve it would, under the rule urged by appellant, leave the plaintiff, which had once had an effective complaint (the original), without any remaining effective complaint on which it could obtain judgment. It seems plain that the introduction of such a consideration into the decision whether to amend, requiring the plaintiff in effect to gamble on the likelihood of obtaining service, would discourage amendments and thus would be inconsistent with the amendment policy underlying the federal procedural system, see Fed.R.Civ.P. 15(a); 6 C. Wright & A. Miller, supra, §§ 1471, 1473. Accordingly, in the circumstances of this case, we cannot hold void the judgment entered on the original complaint.

The Date of the Nunc Pro Tunc Entry of Judgment

Appellant next complains that the May, 1976, judgment, entered nunc pro tunc as of the date of the signing of the order imposing damages for the previously entered default (July 12, 1974), should have been entered as of the date of the actual filing of that order (July 16, 1974). Appellant does not here argue that merely the entry of judgment nunc pro tunc renders the judgment void, although it apparently planned to make such an argument in its untimely direct appeal and before us presented this argument as part of the "context" of its Rule 60(b) motion. Rather, it here contends that use of an allegedly wrong nunc pro tunc date amounted to the type of "mistake" by the court that requires vacation of the judgment under Rule 60(b)(1).

We believe that appellant's argument is based on a failure to appreciate the difference between Rule 60(a) ⁵ and Rule 60(b)(1). While the latter's reference to "mistake" has been held to include mistakes by the district court, see Tarkington v. United States Lines Co., 222 F.2d 358, 360 (2d Cir. 1955) (Frank, J.); 11 C. Wright & A. Miller, supra, § 2858, at 176 (1973), a motion for relief from such judicial mistakes under Rule 60(b)(1) may not be made after the time for appeal has elapsed, see Schildhaus v. Moe,335 F.2d 529, 531 (2d Cir. 1964), at least if the mistake alleged is of a substantive legal nature, see 11 C. Wright & A. Miller, supra, § 2858, at 178. If, on the other hand, the mistake alleged is of a "clerical" nature, " arising from oversight or omission," then a motion may be made only under Rule 60(a), which allows the court to correct such errors "at any time." Unlike the grant of a Rule 60(b) motion, however, the grant of a Rule 60(a) motion does not lead to relief from the underlying judgment, as is apparent upon comparison of the relevant language, see notes 1 and 5 supra. The time for appeal from the underlying judgment correspondingly dates from the original rendition of judgment in the Rule 60(a) context, whereas in the Rule 60(b) situation it dates from the entry of the amended judgment. See 11 C. Wright & A. Miller, supra, § 2871, at 257-58.

Appellant here is thus caught on the horns of a dilemma. It characterizes the mistake alleged as "significant," a term that may have been meant to imply that the mistake was substantive. ⁶ If so, however, a...