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AMOCO OVERSEAS OIL CO. v. COMPAGNIE NATIONALE ALGE

September 27, 1978

AMOCO OVERSEAS OIL COMPANY, Plaintiff,
v.
COMPAGNIE NATIONALE ALGERIENNE de NAVIGATION ("C.N.A.N.") and T/S IN AMENAS, her engines, boilers, tackle, etc., and the Freights of T/S IN AMENAS, Defendants. AMOCO TRANSPORT COMPANY and Amoco Overseas Oil Company, Plaintiffs, v. COMPAGNIE NATIONALE ALGERIENNE de NAVIGATION ("C.N.A.N."), Defendant



The opinion of the court was delivered by: TENNEY

MEMORANDUM

The Delaware corporate plaintiffs commenced an action in August 1976 against an agency of the Democratic and Popular Republic of Algeria and a vessel owned by that foreign state; a default judgment was entered against the defendants on April 1, 1977. The defendants have now moved pursuant to Rules 55(c) and 60(b) of the Federal Rules of Civil Procedure ("Rules") to set aside this judgment on the joint and several grounds that its original entry was void for want of jurisdiction and/or that mistake, inadvertence and excusable neglect entitle the defendants to relief. For the following reasons, the motion to set aside the default judgment is denied.

An intricate set of circumstances surrounds the entry of the default judgment, and in the equally complex arguments proffered to set it aside the defendants implicate, Inter alia, the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. §§ 1602 Et seq. ("Immunities Act"), and the recent jurisdictional upheaval occasioned by the Supreme Court decision in Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977). The pertinent facts are these: Plaintiff Amoco Overseas Oil Company owned a large shipment of crude oil that was loaded aboard the defendant vessel in Egypt for discharge in Curacao, Netherlands West Indies. The vessel was under charter to plaintiff Amoco Transport Company. Delivery at Curacao was purportedly 34,094 net barrels short, something not immediately realized by the plaintiffs who had already deposited with their own broker for remittance to the shipowner a freight payment based on the presumptively complete discharge of the cargo. When the plaintiffs became aware of the shortage, they sought to recover the value of the missing cargo and of unearned freight, commencing suit quasi in rem by attachment of the very funds they had deposited to the credit of the shipowner.

 The attachment was pursued through N.Y.C.P.L.R. §§ 6201 Et seq. This procedure is sanctioned by Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims ("Admiralty Rules"), which provides an independent, federal means of attachment of property for jurisdictional purposes or permits "(i)n addition, or in the alternative" the use of state law procedures to commence maritime actions quasi in rem. Apparently the plaintiffs initially failed to perfect their state quasi in rem jurisdictional base: ninety days after the service of the order of attachment November 19, 1976 the levied-upon funds had not yet been taken into the possession of the Marshal. This put the plaintiffs athwart of N.Y.C.P.L.R. § 6214(e), which voids an unexecuted attachment after passage of that period of time or "at the expiration . . . of such further time as the court, upon motion of the plaintiff on notice to the parties to the action, has provided." Before the ninety-day period had lapsed, however, this Court had entered a default judgment for inquest declaring the defendants in default and referring the matter to a United States Magistrate for assessment of plaintiffs' damages. On March 21, 1977, unaware that quasi in rem jurisdiction was unperfected and that the attachment had become void, the Court adopted the findings of the Magistrate. Two days later judgment was entered against the defendants in the total amount of $ 390,229.25.

 The plaintiffs realized their dilemma when they attempted to execute the Court's judgment, for it was then that the garnishee, aware that the crucial ninety-day period had gone by, refused to release the funds. Plaintiffs immediately reattached pursuant to Admiralty Rule B and simultaneously returned to this Court to request an "extension nunc pro tunc" to perfect the original state law attachment. Believing that N.Y.C.P.L.R. § 6214(e) sanctions such procedure, this Court entered the requested Order on March 31, 1977. The Court was moved to its decision because Admiralty Rule B does not itself require reducing the res to possession as a condition to perfection of the jurisdictional attachment, because the plaintiffs could have relied solely on Admiralty Rule B to initiate this action, and because the plaintiffs represented to the Court that they had intended to use both state and federal procedure (which is permissible), believed in good faith that Admiralty Rule B attachment had been accomplished, and had complied absolutely with Admiralty Rule B(2) notice policies by fully and properly apprising defendants of all proceedings. Affidavit of LeRoy S. Corsa, sworn to March 30, 1977, PP 4, 7. On April 1, 1977, an amended default judgment was entered against the defendants in the same amount as the March 23, 1977, judgment.

 On April 3, 1978, one year and two days after the last juridical act in this procedural circus, the instant motion to vacate the default judgment was filed by the defendants. They have raised several interrelated arguments, which should be numbered and parsed for clarity. Defendants assert:

 
1) that the final default judgment of this Court entered on April 1, 1977, was void because plaintiffs did not request within a "reasonable time" the nunc pro tunc extension to perfect the state attachment, that in any event no such extension would be permitted by section 6214(e), and that the lapse had the effect of voiding all proceedings had under the attachment;
 
2) that the default judgment was void even assuming arguendo that the Court could grant an extension of time in which to perfect attachment because, on January 19, 1977, in the period between lapse and nunc pro tunc order, the Immunities Act became effective, and sections 1609 and 1610 thereof barred the "revival" of this attachment;
 
3) that plaintiffs' issuance of process of maritime attachment pursuant to Admiralty Rule B on March 28, 1978, was a nullity because it directly contravened the newly effective Immunities Act subsection 1610(d)(2), which forbids attachment to obtain jurisdiction over foreign states, their agencies or instrumentalities; and
 
4) that defendants should be relieved of this judgment for reasons of mistake, inadvertence and excusable neglect, Rule 60(b)(1), for other "just" reasons, Rule 60(b)(6), and because they have a good and meritorious defense against plaintiffs' claim.

 The plaintiffs maintain that their original state attachment was validly perfected by the nunc pro tunc order of March 31, 1977, that the only judgment of significance is the original default judgment for inquest entered by this Court during the ninety-day period when the state attachment was unquestionably valid, *fn1" that defendants are time-barred under Rule 60(b) on various theories of vacatur that they propound, that the merits of the dispute demand that the judgment stand, and, finally, that there was in personam jurisdiction in this Court all the while. The validity and complexity of all arguments aside, the Court believes that it retained proper jurisdiction to enter its final judgment on April 1, 1977, that the Immunities Act did not interfere with that jurisdiction, and that there is no just reason for opening the default.

 Effect of the Nunc Pro Tunc Order of March 31, 1978

 The use of state attachment procedures for commencement of law, equity and maritime actions is specifically sanctioned in federal procedure by Rule 64 and by Admiralty Rule B. In either case "the availability of (attachment) will be determined by the current law of the state." 7 Moore's Federal Practice P 64.07(2), at 64-28 (2d ed. 1978). "(S)tate law, Existing at the time the remedy is sought, determines whether . . . an action by the marshal to reduce attached property to possession is necessary and the time within which it must be brought." Id. at 64-28 & -29 (emphasis added). *fn2" N.Y.C.P.L.R. § 6214 governs the levy upon and seizure of property which, under New York procedure, perfect an attachment forming the basis for quasi in rem jurisdiction. Subsection (e) states:

 
At the expiration of ninety days after a levy is made by service of the order of attachment, or of such further time as the court, upon motion of the plaintiff on notice to the parties to the action, has provided, the levy shall be void except as to property or debts which the sheriff has taken into his actual custody, collected or received ...

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