Federal Deposit Insurance v. SLE, Inc.
722 F.3d 264
| 5th Cir. | 2013Background
- FDIC obtained a stipulated judgment in 1996 against S.L.E., Inc., Future Revenues, Inc., and Roger LeBlanc for promissory-note liabilities.
- CadleRock (successor/assignee of interests tracing to the FDIC) moved ex parte in 2006 to reopen and revive that stipulated judgment; the district court granted the revival based on CadleRock’s filings and an affidavit asserting ownership and an unsatisfied balance.
- Appellants first learned of the revived judgment years later when CadleRock sought collection in 2011 and then moved to vacate the revival under Fed. R. Civ. P. 60(b)(4).
- Appellants argued the revived judgment was void because CadleRock had not moved to substitute as plaintiff under Rules 25(c) and 25(a)(3), denying Appellants notice and opportunity to contest standing and the claimed balance.
- The district court denied the motion to vacate; Appellants appealed. The Fifth Circuit reviewed the Rule 60(b)(4) challenge de novo and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether revived judgment is void because CadleRock failed to substitute under Rules 25(c) and 25(a)(3) | CadleRock was required to substitute before reviving the judgment; failure to do so deprives CadleRock of standing and renders the judgment void | Rule 25(c) is permissive; substitution is not a precondition to bring a revival motion; CadleRock’s affidavit established its interest | Rejected plaintiff’s argument — Rule 25(c) is permissive and does not require substitution; judgment not void under Rule 60(b)(4) |
| Whether failure to substitute violated Appellants’ due process rights | Lack of substitution and ex parte filing denied meaningful notice and opportunity to contest standing and amount owed | Appellants conceded substitution would have established standing; they retain remedies (e.g., Louisiana annulment procedure) to contest amounts; no hearing requirement under Rule 25(c) | Rejected — procedures did not render the judgment void for lack of due process; Appellants retain avenues to challenge the debt |
| Whether federal Rules (69 and 25) preempt Louisiana revival procedures | Federal rules preempt state revival procedures that do not require substitution, creating conflict | Rule 25 does not impose a substitution requirement, so no actual conflict exists; Rule 69(a)(1) delegates revival procedure to state law absent a conflicting federal statute | Rejected — no conflict or preemption because Rules do not mandate substitution and CadleRock followed state revival procedures |
Key Cases Cited
- Jackson v. FIE Corp., 302 F.3d 515 (5th Cir. 2002) (standard and de novo aspects of Rule 60(b)(4) review)
- Transocean Air Lines, Inc. v. United States, 356 F.2d 702 (5th Cir. 1966) (substitution issues when separate proceedings and voluntary dismissal implicated)
- Cadle Co. v. Neubauer, 562 F.3d 369 (5th Cir. 2009) (use of affidavit to demonstrate transferee’s interest and standing to substitute)
- Callon Petroleum Co. v. Frontier Ins. Co., 351 F.3d 204 (5th Cir. 2003) (due process may render a judgment void under Rule 60(b)(4) in extreme cases)
- Pacific Gas & Electric Co. v. State Energy Res. Conservation & Dev. Comm’n, 461 U.S. 190 (U.S. 1983) (preemption framework for conflicts between federal and state law)