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Orix Financial Services, Inc. v. Kielbasa

December 3, 2007

ORIX FINANCIAL SERVICES, INC., FORMERLY KNOWN AS ORIX CREDIT ALLIANCE, INC., PLAINTIFF,
v.
JOSEPH F. KIELBASA, DEFENDANT.



The opinion of the court was delivered by: John F. Keenan, United States District Judge.

OPINION & ORDER

Part I

BACKGROUND

Defendant Joseph Kielbasa ("Kielbasa") has moved pursuant to Rule 60(b)(4) of the Federal Rules of Civil Procedure to vacate a default judgment that was entered in May 2001, by former judge, the Hon. John Martin, in favor of Plaintiff Orix Financial Services, Inc. ("Orix"). This matter is before me as the Part One judge. For the following reasons, the motion is denied.

On March 1, 2001, Plaintiff Orix commenced this breach-of-contract action, brought in diversity, with the filing of a summons and complaint. Orix alleged that, under a personal guaranty executed by Defendant Kielbasa on November 21, 1995 (the "Guaranty"), Kielbasa owed Orix for all obligations due to Orix under a promissory note executed by Badger Front Wheel Drive Supply, Inc. ("Badger") for Orix's benefit. As a result of Badger's default on the promissory note, Orix alleged that Kielbasa owed Orix $290,861.79, plus post-maturity interest and attorneys' fees, as provided by the Guaranty.

Under the express terms of the Guaranty, Kielbasa designated C-A Credit Corp. ("C-A Credit") as an agent to accept service of process in New York. The Guaranty also provided that Orix agreed to notify Kielbasa of such service by certified mailing to Kielbasa, at the address listed by Kielbasa on the Guaranty, within three days of service on C-A Credit. On the Guaranty, Kielbasa listed his address as "2940 Richardson Street, Madison, WI 53711" (the "Richardson Street address").

On March 12, 2001, the summons and complaint were served upon James Ward, an officer of C-A Credit. (Aff. of Orix Senior Vice-President Yvonne Kalpakoff in Opposition to Mot. to Vacate Default Judgment ("Kalpakoff Aff.") Ex. 1.) On the same day, Ward sent via regular mail a copy of the summons and complaint and a cover letter to Kielbasa at the Richardson Street address (Id. Ex. 2.)

Also on March 12, 2001, pursuant to the express provisions of the Guaranty, Joseph Corral, an Orix officer, sent via certified mail, return receipt requested, a copy of the summons and complaint and a cover letter to Kielbasa at the Richardson Street address. (Id. Ex. 3.) On March 28, 2001, the certified mail was signed for by "Jami Kielbasa". On the return receipt card, the Richardson Street address was crossed out and replaced by "3009 Tucson Trail, Madison, WI 53711" (the "Tucson Trail address") (Id. Ex. 4.)

Kielbasa did not answer the complaint. On May 9, 2001, Judge Martin granted Orix's application for a default judgment (the "Judgment").

On March 3, 2005, the Judgment was transcripted to the United States District Court for the Middle District of Florida.

On March 17, 2005, the Judgment was transcripted to the clerk of the court of Brevard County, Florida, where Kielbasa then resided. (Id. Ex. 5.) On April 12, 2005, Orix sent a copy of the Judgment to Kielbasa at his Florida address via Federal Express. (Id. Ex. 6.) On April 29, 2005, Orix sent another copy of the Judgment to Kielbasa at his Florida address via regular mail. (Id. Ex. 7.) That letter was not returned to Orix. Orix claims, and it is undisputed by Kielbasa, that when an Orix representative contacted Kielbasa in August 2005 to discuss the outstanding judgment, Kilebasa stated "that he was aware of the Judgment and that since he lived in Florida there was nothing the Plaintiff could do about the judgment. He even stated that he would be 'happy to pay you when hell freezes over but not a dime until then.'" (Id. ¶ 13.) On October 15, 2007, Kielbasa moved to vacate the default judgment. On November 27, 2007, I heard oral argument on the motion.

DISCUSSION

Kielbasa moves to vacate the Judgment pursuant to Rule 60(b)(4), for lack of personal jurisdiction, on the grounds that (i) the designation of C-A Credit as an agent for service of process did not comply with the relevant provisions of New York's Civil Practice Law and Rules ("CPLR"); and (ii) C-A Credit's transmission of the summons and complaint did not provide Kielbasa with sufficient notice of the action.

Rule 60(b)(4) provides that a court may relieve a party from a final judgment "if the judgment is void." See Fed. R. Civ. P. Rule 60(b)(4). "A judgment obtained in the absence of in personam jurisdiction is void, and a court must vacate such a judgment." China Mariners Assur. Corp. v. M.T. W.M. Vacy Ash, No. 96 Civ. 9553 1999 U.S. Dist. LEXIS 2674,, 1999 WL 126921, at *3 (S.D.N.Y. Mar. 9, 1999). "A motion predicated on subsection four [of Rule 60(b)] is unique . . . in that relief is not discretionary and a meritorious defense is not necessary as on motions made pursuant to other 60(b) subsections." Am. Inst. of Certified Pub. Accountants v. Affinity Card, Inc., 8 F. Supp. 2d 372, 375 (S.D.N.Y. 1998). A Rule 60(b)(4) motion must be made "within a reasonable time" after entry of the judgment. Fed. R. Civ. P. 60(b)(4). "Courts have been exceedingly lenient in defining the term 'reasonable time,' with regard to voidness challenges. In fact, it has been oft-stated that, for all intents and purposes, a motion to ...


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