Sarin v. Ochsner

• Decision Date: 07 January 2000
• Docket Number: P-442
• Citation: 48 Mass. App. Ct. 421,721 N.E.2d 932
• Court: Appeals Court of Massachusetts
• Parties: (Mass.App.Ct. 2000) DONALD SARIN v. NEAL OCHSNER & another. <A HREF="#fr1-1" name="fn1-1">1 No.: 98-

721 N.E.2d 932 (Mass.App.Ct. 2000)

DONALD SARIN v. NEAL OCHSNER & another.¹

No.: 98-P-442

MASSACHUSETTS COURT OF APPEALS

Argued November 17, 1999.

January 7, 2000

Berkshire County.

Judgment, Relief from judgment. Practice, Civil, Judgment, Relief from judgment, Vacation of

judgment, Standing. Superior Court, Jurisdiction. Jurisdiction, Superior Court, Personal.

Civil action commenced in the Superior Court Department on December 13, 1993.

A motion to vacate default judgment was heard by Daniel A. Ford, J.

Dennis J. Kelly for the defendants.

Saul L. Benowitz for the plaintiff.

Present: Jacobs, Dreben, & Beck, JJ.

DREBEN, J.

In December, 1993, the plaintiff, a limited partner of Royal Capital Partners, L.P.,

brought an action against the general partners of the firm, Neal Ochsner and Royal Capital

Corporation, a Delaware corporation,² alleging, among other matters, a breach of fiduciary

duties, including a failure to give the plaintiff the accountings and the distributions to which he

was entitled. Judgment entered for the plaintiff on January 13, 1995. By motion under

Mass.R.Civ.P. 60(b)(4), or, in the alternative, under 60(b)(6),³ 365 Mass. 829 (1974), filed on

December 17, 1997, almost three years after the entry of judgment for the plaintiff, the

defendants attacked the judgment as being void because "the court from which it issue[d] lacked

jurisdiction over the parties, lacked jurisdiction over the subject matter, [and] failed to provide

due process of law." Harris v. Sannella, 400 Mass. 392, 395 (1987). We affirm the denial of the

motion as none of these claims has merit.

The circumstances of the January, 1995 judgment were as follows. The defendants failed to

comply with discovery orders, and subsequent to an order of the Superior Court informing them

that a default would enter if they failed to obey the order within thirty days, a default entered

pursuant to Mass.R.Civ.P. 55(a), 365 Mass. 822 (1974). After hearings on damages at which the

individual defendant twice personally appeared, judgment entered for the plaintiff. Although the

defendants originally appealed the judgment, they did not pursue their appeal, and it was

dismissed.

When the plaintiff learned that the individual defendant who previously had been considered

judgment proof had recently acquired assets, he brought an action in New York on July 25, 1997,

to enforce the 1995 judgment.⁴ Thereafter the defendants filed the rule 60(b) motion to vacate

that judgment.

1. Personal jurisdiction. The 1995 judgment is not void for want of personal jurisdiction.

The defendants' active participation in the proceedings, albeit they alleged the defense of lack of

personal jurisdiction in their answer, amounted to a waiver of that defense. See Vangel v. Martin,

45 Mass. App. Ct. 76, 78 (1998). Not only did the individual defendant appear for two hearings

on damages, but the defendants filed motions seeking to disqualify counsel, to stay discovery,

and to remove the default. The defense of lack of personal jurisdiction was not asserted in any of

their motions or brought to the court's attention prior to the entry of the 1995 judgment.

2. Subject matter jurisdiction. The judgment is also not void for lack of subject matter

jurisdiction. "In the interest of finality, the concept of void judgments is narrowly construed."

O'Dea v. J.A.L., Inc., 30 Mass. App. Ct. 449, 455 (1991). "Only in the rare instance of a clear

usurpation of power will a judgment be rendered void." Ibid., quoting from Harris v. Sannella,

400 Mass. at 395, in turn quoting from Lubben v. Selective Serv. Sys., 453 F.2d 645, 649 (1st

Cir. 1972). See O'Malley v. O'Malley, 419 Mass. 377, 382 (1995); Eastern Sav. Bank v. Salem,

33 Mass. App. Ct. 140, 143 (1992).

The defendants claim that the action should have been a derivative one and that the plaintiff did

not have standing to bring an individual action. As indicated in Litman v. Prudential-Bache

Properties, Inc., 611 A.2d 12, 15 (Del. 1992), cited by the defendants, "a shareholder may bring a

direct action for injuries done to him in his individual capacity if he has an injury which is

separate and distinct from that suffered by other shareholders." See Reeve v. Folly Hill Ltd.

Partnership, 36 Mass. App. Ct. 90, 97 (1994). Here there were questions of the extent of Sarin's

payment for his interest in the limited partnership which, the defendants alleged, bore on his right

to discovery.⁵ Thus there were at least some issues in which the plaintiff had a direct individual

interest⁶ and hence had standing.

More important, even if the plaintiff had no such direct interest, the defendants may not raise the

issue of standing in a rule 60(b) motion. Whether the facts of a given case meet the standard for

exercising jurisdiction -- here whether the plaintiff has standing -- has been termed a

"quasi-jurisdictional" determination. Lubben v. Selective Serv. Sys., 453 F.2d at 649. "These

facts do not go to the subject matter of jurisdiction, 'but to a preliminary fact necessary to be

proven to authorize the court to act.'" Id. at 649 n.14, quoting from Noble v. Union River

Logging R.R., 147 U.S. 165, 174 (1893). While such a quasi-jurisdictional determination can be

challenged on appeal, unless it is "a clear usurpation of power," it is immune from attack under

rule 60(b). Id. at 649.

Similarly, Coalition of Black Leadership v. Cianci, 570 F.2d 12, 15-16 (1st Cir. 1978), held that

the consent decree entered in that case could not be challenged for lack of jurisdiction by a

motion to vacate. If there was error in determining that there was a case or controversy on the

ground that the plaintiff lacked standing, the error should have been corrected by appeal. Swift &

Co. v. United States, 276 U.S. 311, 326 (1928). See Walling v. Miller, 138 F.2d 629, 632-633

(8th Cir. 1943), cert. denied, 321 U.S. 784 (1944), which, relying on General Inv. Co. v. New

York Cent. R.R., 271 U.S. 228, 230 (1926), reached the same result saying that when a question

of standing is determined "tacitly or expressly," the judgment is one on the merits, is not void

even if erroneous, and "is not subject to attack for such an error by motion to vacate." See

generally Restatement (Second) of Judgments 12 & introductory note to 65 (1982).

The defendants' argument that the plaintiff lacks standing under G. L. c. 93A, 9, may not be

raised in this action for the same reason.

3. Due process. The defendants' due process argument based on a claim of incapacity due to

Ochsner's depression, see Gos v. Brownstein, 403 Mass. 252, 256 (1988), likewise is without

merit. Prior to 1997 no claim was made that Ochsner was suffering from such severe depression

that he was unable to comply with the court's orders. He appeared at the hearings of December

21 and December 27, 1994, and made no claim of incapacity. Indeed, in his affidavit dated

December 21, 1994, accompanying his motion to remove the default entered under

Mass.R.Civ.P. 55(a), he asserted:

"6. These financial problems placed me under severe emotional and physical stress and

compelled me to consult a physician who prescribed medication for me.

"7. I have recovered to some extent from the shock of these reverses and am now in a position to

respond to the Court's orders." (Emphasis supplied.)

Rather than showing incapacity, the record supports the judge's express finding in 1995 that the

"defendants have purposefully and fraudulently tried to conceal their activities from the plaintiff

by failing to comply with the discovery order of this court and by failing to provide him with an

annual audit" of the limited partnership.

Nothing in Ochsner's 1997 affidavit warrants the granting of his rule 60(b) motion. In alleging

that he had been "unable to . . . comply with court orders" Ochsner also states that "[o]ver time,

my depression subsided, and my wife and I returned to investment banking, forming Ochsner

Consulting Group. Inc. ('OCG') in about October 1995." Thus, on his own account, Ochsner

waited for two years prior to the filing of his rule 60(b) motion. The filing was clearly too late.

See Restatement (Second) of Judgments 72 comment c (1982). It was only after the plaintiff

sought to reach his assets that Ochsner filed the motion.

Quite apart from the late filing, Ochsner does not meet the criteria set forth in 72 of the

Restatement, reproduced in the margin,⁷ which, in certain circumstances, permits the setting

aside of a judgment where a party was incapacitated and the opposing party was on notice of that

condition. No such claim can be made here.

4. Denial under Mass.R.Civ.P. 60(b)(6). There was no abuse of discretion in the denial of the

defendants' motion to vacate the default judgment pursuant to rule 60(b)(6). The motion, brought

almost three years after the entry of judgment, was not brought within a reasonable time, see

Bromfield v. Commonwealth, 400 Mass. 254, 258 (1987), and presented no "extraordinary

circumstances" which would warrant relief. See id. at 257.

Order denying motion to vacate judgment affirmed.

1. Royal Capital Financial Corporation.

2. Royal Capital Corporation was an original general partner with Neal Ochsner until Royal

Capital Financial Corporation was substituted by the partnership as the sole general partner.

3. Unlike rule 60(b)(6), where the decision to vacate is within the judge's discretion, relief under

rule 60(b)(4) is required if the judgment is void. Field v. Massachusetts Gen. Hosp., 393 Mass

117, 118 (1984).

4. Prior thereto, on July 24, 1997, the plaintiff obtained a judgment bifurcating the earlier

judgment so that he had an individual judgment against the individual defendant.

The parties have not argued, and we do not consider, the effect of the prior pending New York

action in which Ochsner claimed in his answer that the 1995 Massachusetts judgment was not

entitled to full faith and...