88 F.R.D. 545 | S.D.N.Y. | 1980
MEMORANDUM OPINION
Defendant, Hellenic Lines Limited, has moved for an order of this court to set aside the default judgment entered on February 14, 1980, awarding to plaintiff, Insurance Company of North America, damages of $33,352.02 with interest and costs for cargo damages, shortage, loss and non-delivery. Defendant advances two grounds in support of this motion: 1) defective service of process on defendant pursuant to Rule 4(d)(3), (7) of the Federal Rules of Civil Procedure; and 2) defendant’s excusable neglect, mistake or inadvertence pursuant to Rule 60(b) of the Federal Rules of Civil Procedure. Finally, and in the alternative, defendant seeks to have the default judgment set aside to the extent of the amount of damages awarded, and requests an inquest to determine separately the amount of damages to which plaintiff is entitled. The motion to set aside this judgment on the basis of improper service of process and defendant’s excusable neglect is denied. Defendant’s motion to set aside the damages award and request for an evidentiary hearing on the issue of damages is hereby granted.
The adjuster who had accepted service of the summons and complaint is not expressly authorized by defendant to accept service of process; the only employees endowed with express authority to accept service of process on behalf of defendant are all titled officers and the Claims Manager. At the time of service of the Summons and Complaint, the Claims Manager was absent due to illness and the adjuster, an assistant to the Claims Manager, accepted service.
Since the adjuster misplaced the summons and complaint, defendant remained unaware of the pendency of the lawsuit until March 10, 1980, when defendant’s bank informed it that defendant’s bank account had been attached by plaintiff. It was at this time that defendant first learned that plaintiff’s counsel had filed a default judgment and that a writ of execution had been issued on the judgment for $36,392.06.
First, defendant argues that the default judgment should be set aside because service of the summons and complaint was defective under Rules 4(d)(3), (7) of the Federal Rules of Civil Procedure, and thus rendering the subsequent judgment void on jurisdictional grounds. This court, however, rejects this contention since it finds that service on defendant was properly executed in accordance with Rules 4(d)(3), (7).
Rule 4(d)(3) provides in relevant part: Service shall be made as follows:
(3) Upon a domestic or foreign corporation or upon a partnership or other unineorporated association which is subject to suit under a common name, by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process and, if the agent is one authorized by statute to receive service and the statute so requires, by also mailing a copy to the defendant.
Rule 4(d)(7) provides in relevant part: (7) Upon a defendant of any class referred to in paragraph (1) or (3) of this subdivision of this Rule, it is also sufficient if the summons and complaint are served in the manner prescribed by any statute of the United States or in the manner prescribed by the law of the state in which the district court is held for the service of summons or other like process upon any such defendant in an action brought in the courts of general jurisdiction of that state.
Rule 4(d)(3) has been liberally construed by the courts and, as interpreted, does not require rigid formalism. To be valid, service of process is not limited solely to officially designated officers, managing agents or agents appointed by law for the receipt of process. Rather, “[rjules governing service of process [are] to be construed in a manner reasonably calculated to effectuate their primary purpose: to give the defendant adequate notice that an action is pending.. . . [T]he rule does not require that service be made solely on a restricted class of formally titled officials, but rather permits it to be made ‘upon a representative so integrated with the organization that he will know what to do with the papers. Generally, service is sufficient when made upon an individual who stands in such a position as to render it fair, reasonable and just to imply the authority on his part to receive services.’ ” Top Form Mills, Inc. v. Sociedad Nationale Industria Applicazioni Viscosa, 428 F.Supp. 1237, 1251 (S.D.N.Y.1977) (quoting Montclair Electronics, Inc. v. Electra/Midland Corp., 326 F.Supp. 839 (S.D.N.Y.1971)).
Next, defendant argues that the default judgment should be set aside for the reason that the loss of the summons and complaint constitutes “excusable neglect” pursuant to Rule 60(b)(1) of the Federal Rules of Civil Procedure. Rule 60(b)(1) provides:
On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1)- mistake, inadvertence, surprise, or excusable neglect. . . .
While Rule 60(b)(1) is designed to grant relief for the mistakes and excusable neglect of a party who seeks to vacate a default judgment, this remedy has been utilized by courts to rectify mistakes of attorneys but not those of clients. Fischer v. Dover Steamship Co., 218 F.2d 682 (2d Cir. 1955); Greenspun v. Bogan, 492 F.2d 375 (1st Cir. 1974). “[T]he liberal construction is usually reserved for instances where error is due to failure of attorneys or other agents to act on behalf of their clients, not where the client’s own internal procedures are at fault.” Id. at 382. See Horn v. Intelectron Corp., 294 F.Supp. 1153 (S.D.N.Y.1968).
In the case at hand, the adjuster’s loss of the summons and complaint clearly cannot be ascribed to any carelessness on the part of defendant’s counsel. The procedure for handling the receipt of summonses and complaints is clearly an “internal procedure” of defendant. The adjuster’s loss of the summons and complaint is a mistake in the ordinary course of the internal operations of defendant’s business and thus does not merit remedial relief pursuant to Rule 60(b)(1).
Finally, defendant requests an inquest to determine the amount of damages for the cargo loss and damage, claiming that the judgment was not based upon a “sum certain” as required by Rule 55(b)(1) of the Federal Rules of Civil Procedure. It is well-established that a default judgment may be entered only for a “sum certain.” A “sum certain” is a sum which is susceptible to reliable computation or determined by the court after an accounting. See Flaks v. Koegel, 504 F.2d 702 (2d Cir. 1974); Ace Grain Co. v. American Eagle Fire Ins., 11 F.R.D. 364 (S.D.N.Y.1951). Plaintiff’s estimate of the cargo damage cannot be labelled as a “sum certain.”
In the instant case, the surveyor’s estimate of the damage to the cargo is not a binding, final determination of damages for the purposes of entry of the default judgment. The court concludes that the default judgment entered in this action is not based upon a sum certain and, accordingly, vacates the default judgment to the extent of the damage award.
For the above stated reasons, defendant’s motions under Rules 4(d)(3), (7) and 60(b)(1), (6) are denied. Defendant’s request for an inquest to determine the amount of damages recoverable by plaintiff is granted.
. Defendant has also failed to show good cause for relief, under Rule 60(b)(6), from entry of the default judgment. See International Controls Corp. v. Vesco, 556 F.2d 665 (2d Cir. 1977), cert. denied, 434 U.S. 1014, 98 S.Ct. 730, 54 L.Ed.2d 758 (1978).