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Motorola Credit Corp. v. Uzan

March 31, 2009

MOTOROLA CREDIT CORPORATION AND NOKIA CORPORATION, PLAINTIFFS-APPELLEES,
v.
KEMAL UZAN, CEMCENGI ZUZAN, MURAT HAKAN UZAN, MELAHAT UZAN, AYSEGULAKAY, AND ANTONIO LUNA BETANCOURT, DEFENDANTS-APPELLANTS.*FN1



SYLLABUS BY THE COURT

Appeal from a final order of the United States District Court for the Southern District of New York (Jed S. Rakoff, Judge), denying a motion for post-judgment relief under Rule 60(b) of the Federal Rules of Civil Procedure. We hold that Rule 60(b) provides for equitable relief and that defendants-appellees did not proceed with "clean hands." Accordingly, they are not entitled to relief under Rule 60(b).

Affirmed.

The opinion of the court was delivered by: JOSÉ A. Cabranes, Circuit Judge

Argued: February 9, 2009

Before: CABRANES, WESLEY, Circuit Judges, and KORMAN, District Judge.*fn2

The principal question in this appeal is whether a judgment for damages must be amended pursuant to Rule 60(b) of the Federal Rules of Civil Procedure where plaintiffs have partially recovered from other sources and have agreed to use this partial recovery as a "set-off" against the judgment. For the reasons stated below, we hold that the relief available under Rule 60(b) is both discretionary and equitable, and that the District Court did not abuse its discretion in denying defendants' motion for post-judgment relief.

BACKGROUND

Defendants-appellants-members of the Uzan family of Turkey and a close associate, Antonio Luna Betancourt (collectively, the "Uzans" or "defendants")-are the former, controlling shareholders of Telsim Tekelomunikayson Mobil Hizmetleri A.S. ("Telsim"), a now-defunct Turkish telecommunications company. The Uzans are well known to the courts of our Circuit, as there are already ten published decisions in this Circuit chronicling the background of this case and "the extraordinary nature of the Uzans' wrongful behavior." Motorola Credit Corp. v. Uzan, 509 F.3d 74, 88 (2d Cir. 2007) ("Uzan X"); see also id. at77-80 (summarizing the history of this litigation); Motorola Credit Corp. v. Uzan, 388 F.3d 39, 42-44 (2d Cir. 2004)("Uzan VII") (explaining the underlying fraud perpetrated by the Uzans).*fn3 Briefly, in July 2003 the United States District Court for the Southern District of New York (Jed S. Rakoff, Judge) found that the Uzans defrauded plaintiffs Motorola Credit Corporation ("Motorola") and Nokia Corporation ("Nokia") out of more than $2 billion. See Uzan VII, 388 F.3d at 42. The District Court awarded compensatory damages in excess of $2 billion and an equal sum in punitive damages, see Uzan III, 274 F. Supp. 2d at 580-81, but later reduced the award of punitive damages to $1 billion, see Uzan IX, 413 F. Supp. 2d at 353, following a remand by a panel of this Court, see Uzan VII, 388 F.3d at 65.

The instant appeal concerns the denial by the District Court, in an unpublished order entered April 11, 2007, of the Uzans' motion for post-judgment relief pursuant to Rule 60(b) of the Federal Rules of Civil Procedure.*fn4 See Motorola Credit Corp. v. Uzan, No. 02 Civ. 0666, 2007 U.S. Dist. LEXIS 27377 (S.D.N.Y. Apr. 11, 2007). The Uzans sought three forms of relief from the District Court: (1) a reduction in the judgment for compensatory damages awarded to Motorola and Nokia, equal to the sums plaintiffs have recovered in settlement agreements with the Turkish Savings Deposit Insurance Fund ("SDIF"), which seized control of Telsim in 2004; (2) a discharge of the compensatory damages awarded to Motorola because Motorola has assigned its contract claims against Telsim to Bayindirbank, a bank controlled by the Republic of Turkey; and (3) an end to a permanent injunction, imposed pursuant to the District Court's July 31, 2003 Opinion and Order, see Uzan III, 274 F. Supp. 2d at 581-82. On appeal, the Uzans argue that the District Court erred in denying all three forms of relief.

DISCUSSION

Rule 60(b) provides "a mechanism for extraordinary judicial relief [available] only if the moving party demonstrates exceptional circumstances," Ruotolo v. City of New York, 514 F.3d 184, 191 (2d Cir. 2008) (internal quotation marks omitted), and relief under the rule is discretionary, see Fed. R. Civ. P. 60(b)(5) ("On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding, for the following reasons: . . . (5) the judgment has been satisfied, released or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable." (emphasis added)). We therefore review the denial of a Rule 60(b) motion for abuse of discretion. See, e.g., Ruotolo, 514 F.3d at 191; cf. Sims v. Blot, 534 F.3d 117, 132 (2d Cir. 2008) ("A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, or rendered a decision that cannot be located within the range of permissible decisions." (citations and internal quotation marks omitted)).

A. Reduction of Judgment for Compensatory Damages

As the District Court found, Motorola and Nokia have settled certain contractual claims with Telsim, acting through SDIF, and each plaintiff has received cash payments from Telsim that, together, exceed $1.2 billion. Plaintiffs have "set off" these amounts against their judgments, "resulting in a pro tanto reduction in the amounts owed by the Individual Defendants," who still owe "hundreds of millions" in damages. Motorola Credit Corp., 2007 U.S. Dist. LEXIS 27377, at *2. The Uzans argue that "[a] district court must reduce a judgment under . . . Rule 60(b)(5) . . . if the plaintiff's injury has been fully or partially satisfied by another judgment or settlement." Appellant's Br. at 25 (emphasis added). They further posit that plaintiffs' set-off is unreliable because there is a risk that plaintiffs will apply their settlement compensation to the punitive, instead of compensatory, portions of the judgment entered against the Uzans.

The discretionary relief available under Rule 60(b) is equitable. See Fed. R. Civ. P. 60(b)(5) (stating that a "court may relieve a party or its legal representative from a final judgment . . . [where, inter alia,] applying it prospectively is no longer equitable" (emphasis added)); 12 James Wm. Moore et al., Moore's Federal Practice § 60.22[5] (3d ed. 2008) ("The relief provided by Rule 60(b) is equitable in nature and, in exercising its discretion under Rule 60(b), a court may always consider whether the moving party has acted equitably.") (collecting cases); 11 Charles Allen Wright et al., Federal Practice and Procedure § 2857, at 255 (2d ed. 1995) ("Equitable principles may be taken into account by a court in the exercise of its discretion under Rule 60(b)."). The record before us-and the record described in the ten published decisions predating this opinion, of which we take judicial notice, see, e.g., New York v. Operation Rescue Nat'l, 273 F.3d 184, 198 (2d Cir. 2001) (taking judicial notice of factual findings in a related contempt proceeding)-demonstrate that the Uzans have not acted equitably because they have not pursued their defense with "clean hands," Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S. 806, 814 (1945) (stating that "he who comes into equity must come with clean hands" (internal quotation marks omitted)). See generally Shondel v. McDermott, 775 F.2d 859, 867-68 (7th Cir. 1985) (Posner, J.) (noting that the concept of "clean hands" originated ...


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