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AMOCO Overseas Oil Co. v. De Navigation

decided: July 19, 1979.

AMOCO OVERSEAS OIL CO., PLAINTIFF-APPELLEE,
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, DEFENDANT-APPELLANT ; AMOCO TRANSPORT COMPANY AND AMOCO OVERSEAS OIL COMPANY, PLAINTIFFS-APPELLEES, V. COMPAGNIE NATIONALE ALGERIENNE DE NAVIGATION ("C.N.A.N."), DEFENDANT-APPELLANT.



Appeal from an order of the District Court for the Southern District of New York (Hon. Charles H. Tenney, Judge) refusing a motion under F.R.Civ.P. 60(b) to reopen a previous default judgment. The Court of Appeals held that there was no jurisdictional defect in the judgment and that the District Court had not abused its discretion in declining to reopen the judgment on other grounds. Affirmed.

Before Lumbard, Mansfield and Gurfein, Circuit Judges.

Author: Gurfein

This is an appeal from an order of the District Court for the Southern District of New York (Hon. Charles H. Tenney, Judge) refusing appellant's motion under F.R.Civ.P. 60(b) to reopen a previous default judgment entered on behalf of appellees. Amoco Overseas Oil Co. v. Compagnie Nationale Algerienne, 459 F. Supp. 1242 (S.D.N.Y. 1978). Appellant broadly argues that there was no jurisdiction to enter the original default judgment and that in any event the District Judge should have set the judgment aside.

This case is a procedural "comedy of errors." In the summer of 1976 appellant Compagnie Nationale Algerienne de Navigation ("C.N.A.N.") entered into a contract of Tanker Voyage Charter Party with appellee Amoco Transport Company ("Transport") for the carriage of a large quantity of crude oil from Egypt to a port outside the United States. The contract was negotiated between C.N.A.N.'s broker in France and Transport's broker, Poten & Partners, Inc. ("Poten"), in New York. The oil was shipped by Amoco Egypt Oil Company and was to be delivered to appellee Amoco Overseas Oil Company ("Overseas").

Delivery was ultimately made in Curacao, Netherlands Antilles. Some time after the oil was discharged, and after the freight payments had been deposited with Poten in New York for remittance to C.N.A.N., appellees discovered that the full quantity of oil due had not actually been delivered. They commenced this action quasi in rem on August 20, 1976 by obtaining an order of attachment against funds credited to C.N.A.N. in Poten's account at the First National City Bank in New York City.

The attachment was effected under state law, N.Y.C.P.L.R. §§ 6201 Et seq., pursuant to F.R.Civ.P. Supplemental Rule B (for certain admiralty and maritime claims). By inadvertence, appellees did not also utilize the federal procedure which may be employed "in addition" under Rule B(1). Accordingly, it was incumbent upon them to perfect their state quasi in rem jurisdictional base by complying with New York statutory requirements. § 6214. Among these is the requirement that within 90 days after the order of attachment is levied upon the property it must actually be taken into custody by the sheriff (if tangible) or the plaintiff must commence a special proceeding against the garnishee. § 6214(c), (d) & (e). Otherwise, the levy becomes void. § 6214(e). The 90-day period here started to run on August 20.

Appellees failed to have the funds taken into custody or to commence a special proceeding during the 90-day period. On October 21, 1976, before the 90-day period had expired, however, the District Court entered a default judgment for inquest, finding that appellant was in default and assigning assessment of damages to a magistrate. On March 21, 1977, unaware that the levy upon the funds had lapsed, the District Court adopted the magistrate's findings and two days later entered final judgment for $378,977.33 against appellant.

When appellees sought to execute this judgment, the Bank refused to surrender the funds because the levy had become void. Appellees hastened back to court to reattach the funds both under Admiralty Rule B and by seeking Ex parte an "extension nunc pro tunc" of the time period during which to perfect the original attachment. The extension nunc pro tunc was granted on March 31, 1977, and on April 1, 1977, an amended default judgment was entered. Though it is quite clear that C.N.A.N. had actual notice of the action before Judge Tenney, it did not respond or appear in any way.*fn1 Having ignored the United States court during the proceedings and for approximately a year after final judgment, appellant finally made its first appearance.

On April 1, 1978, appellant made a motion in the District Court seeking relief from the default judgment under F.R.Civ.P. 60(b); inasmuch as April 1 was a Saturday, the motion was not actually docketed until April 3, more than a year after final judgment.

Appellant attacked the jurisdiction of the court to enter the judgment on several grounds, asserting that (1) under state law jurisdiction under the void attachment could not be restored by an order nunc pro tunc; (2) restoration of the levy was in any event barred after January 1977 when the Foreign Sovereign Immunities Act of 1976, 28 U.S.C. § 1602 Et seq., came into effect; and (3) quasi in rem jurisdiction in this case was a violation of due process. Appellant further urged that the default should be set aside under Rule 60(b) (1) for mistake, inadvertence and excusable neglect, or, alternatively, under 60(b)(6) for "just" reasons.

Judge Tenney rejected the jurisdictional challenges, ruling that (1) state law permitted a nunc pro tunc restoration of the levy; (2) the Immunities Act did not apply because jurisdiction over appellant was originally asserted before the Act came into effect; and (3) the jurisdiction quasi in rem was governed by traditional admiralty principles and was not, in any event, within the scope of the Supreme Court's recent decision in Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977), concerning due process limitations on quasi in rem jurisdiction. The District Judge also held that the motion to set aside under Rule 60(b)(1) was untimely and that extraordinary relief under Rule 60(b) (6) was unwarranted. From this decision, C.N.A.N. appeals.

I

Authority under New York law for a judicial extension of the period of time in which a levy of attachment may be perfected is found in N.Y.C.P.L.R. § 6214(e). That section's predecessor under the old Civil Practice Act was § 922, which provided that an extension of the 90-day period could be had upon an application to the court Prior to the expiration of the 90 days. See Carroll v. Manufacturers Trust Co., 202 F.2d 714, 715 (2d Cir. 1953) (per curiam); Nemeroff v. National City Bank, 262 App.Div. 145, 146-47, 28 N.Y.S.2d 295 (1st Dept. 1941). If § 922 were still in force, it would have been error in this case for the District Court to extend the 90-day period of the levy after it had expired.

When C.P.L.R. § 6214(e) superseded § 922, however, the wording of the extension provision was significantly altered. Unlike § 922, § 6214(e) does not specify that an extension of the 90-day term of the levy must be ordered Prior to the close of that period. The new subsection "is worded broadly enough . . . to permit a court to grant an extension after the levy becomes void as long as any rights in the property or debt acquired by a third person are protected." 7A Weinstein, Korn & Miller, New York Civil Practice § 6214.15, at 62-140; Accord McLaughlin, Supplementary Practice Commentaries, 7B McKinney's ...


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