48 Mass. App. Ct. 421 | Mass. App. Ct. | 2000
In December, 1993, the plaintiff, a limited partner of Royal Capital Partners, L.P., brought an action against the
The circumstances of the January, 1995 judgment were as follows. The defendants failed to comply with discovery orders, and subsequent to an order of the Superior Court informing them that a default would enter if they failed to obey the order within thirty days, a default entered pursuant to Mass.R.Civ.P. 55(a), 365 Mass. 822 (1974). After hearings on damages at which the individual defendant twice personally appeared, judgment entered for the plaintiff. Although the defendants originally appealed the judgment, they did not pursue their appeal, and it was dismissed.
When the plaintiff learned that the individual defendant who previously had been considered judgment proof had recently acquired assets, he brought an action in New York on July 25, 1997, to enforce the 1995 judgment.
1. Personal jurisdiction. The 1995 judgment is not void for want of personal jurisdiction. The defendants’ active participa
2. Subject matter jurisdiction. The judgment is also not void for lack of subject matter jurisdiction. “In the interest of finality, the concept of void judgments is narrowly construed.” O’Dea v. J.A.L., Inc., 30 Mass. App. Ct. 449, 455 (1991). “Only in the rare instance of a clear usurpation of power will a judgment be rendered void.” Ibid., quoting from Harris v. Sannella, 400 Mass. at 395, in turn quoting from Lubben v. Selective Serv. Sys., 453 F.2d 645, 649 (1st Cir. 1972). See O’Malley v. O’Malley, 419 Mass. 377, 382 (1995); Eastern Sav. Bank v. Salem, 33 Mass. App. Ct. 140, 143 (1992).
The defendants claim that the action should have been a derivative one and that the plaintiff did not have standing to bring an individual action. As indicated in Litman v. PrudentialBache Properties, Inc., 611 A.2d 12, 15 (Del. 1992), cited by the defendants, “a shareholder may bring a direct action for injuries done to him in his individual capacity if he has an injury which is separate and distinct from that suffered by other shareholders.” See Reeve v. Folly Hill Ltd. Partnership, 36 Mass. App. Ct. 90, 97 (1994). Here there were questions of the extent of Sarin’s payment for his interest in the limited partnership which, the defendants alleged, bore on his right to discovery.
More important, even if the plaintiff had no such direct interest, the defendants may not raise the issue of standing in a rule
Similarly, Coalition of Black Leadership v. Cianci, 570 F.2d 12, 15-16 (1st Cir. 1978), held that the consent decree entered in that case could not be challenged for lack of jurisdiction by a motion to vacate. If there was error in determining that there was a case or controversy on the ground that the plaintiff lacked standing, the error should have been corrected by appeal. Swift & Co. v. United States, 276 U.S. 311, 326 (1928). See Walling v. Miller, 138 F.2d 629, 632-633 (8th Cir. 1943), cert. denied, 321 U.S. 784 (1944), which, relying on General Inv. Co. v. New York Cent. R.R., 271 U.S. 228, 230 (1926), reached the same result saying that when a question of standing is determined “tacitly or expressly,” the judgment is one on the merits, is not void even if erroneous, and “is not subject to attack for such an error by motion to vacate.” See generally Restatement (Second) of Judgments § 12 & introductory note to § 65 (1982).
The defendants’ argument that the plaintiff lacks standing under G. L. c. 93A, § 9, may not be raised in this action for the same reason.
3. Due process. The defendants’ due process argument based on a claim of incapacity due to Ochsner’s depression, see Gos v. Brownstein, 403 Mass. 252, 256 (1988), likewise is without merit. Prior to 1997 no claim was made that Ochsner was suffering from such severe depression that he was unable to comply with the court’s orders. He appeared at the hearings of December 21 and December 27, 1994, and made no claim of incapacity. Indeed, in his affidavit dated December 21, 1994, accompanying his motion to remove the default entered under Mass.R.Civ.P. 55(a), he asserted:
“6. These financial problems placed me under severe emotional and physical stress and compelled me to consult a physician who prescribed medication for me.
*425 “7. I have recovered to some extent from the shock of these reverses and am now in a position to respond to the Court’s orders.” (Emphasis supplied.)
Rather than showing incapacity, the record supports the judge’s express finding in 1995 that the “defendants have purposefully and fraudulently tried to conceal their activities from the plaintiff by failing to comply with the discovery order of this court and by failing to provide him with an annual audit” of the limited partnership.
Nothing in Ochsner’s 1997 affidavit warrants the granting of his rule 60(b) motion. In alleging that he had been “unable to . . . comply with court orders” Ochsner also states that “[o]ver time, my depression subsided, and my wife and I returned to investment banking, forming Ochsner Consulting Group. Inc. (‘OCG’) in about October 1995.” Thus, on his own account, Ochsner waited for two years prior to the filing of his rule 60(b) motion. The filing was clearly too late. See Restatement (Second) of Judgments § 72 comment c (1982). It was only after the plaintiff sought to reach his assets that Ochsner filed the motion.
Quite apart from the late filing, Ochsner does not meet the criteria set forth in § 72 of the Restatement, reproduced in the margin,
4. Denial under Mass.R.Civ.P. 60(b)(6). There was no abuse of discretion in the denial of the defendants’ motion to vacate the default judgment pursuant to rule 60(b)(6). The motion, brought almost three years after the entry of judgment, was not brought within a reasonable time, see Bromfield v. Commonwealth, 400 Mass. 254, 258 (1987), and presented no “extraordinary circumstances” which would warrant relief. See id. at 257.
Order denying motion to vacate judgment affirmed.
Royal Capital Corporation was an original general partner with Neal Ochsner until Royal Capital Financial Corporation was substituted by the partnership as the sole general partner.
Unlike rule 60(b)(6), where the decision to vacate is within the judge’s discretion, relief under rule 60(b)(4) is required if the judgment is void. Field v. Massachusetts Gen. Hosp., 393 Mass 117, 118 (1984).
Prior thereto, on July 24, 1997, the plaintiff obtained a judgment bifurcating the earlier judgment so that he had an individual judgment against the individual defendant.
The parties have not argued, and we do not consider, the effect of the prior pending New York action in which Ochsner claimed in his answer that the 1995 Massachusetts judgment was not entitled to full faith and credit.
The general partners defended their admitted failure to provide the plaintiff, a limited partner, with any distributions or information concerning the financial status of the partnership on the basis that the plaintiff was in default under his investor’s promissory note. In his order assessing damages against the defendants, the motion judge rejected this defense.
Indeed, the defendants’ motion under rule 60(b) only states that the court lacked jurisdiction “over the subject matter of some or all of the actions” because the plaintiff lacked standing (emphasis supplied).
The black letter of section 72 of the Restatement is as follows:
Ҥ 72. Judgment Against Incapacitated Party
“Subject to the limitations stated in § 74, a judgment rendered in a contested action [the present action is considered a contested action, see introduction to § 65] may be avoided if:
“(1) The party was a minor, a person adjudicated as incompetent, or a person known by the party obtaining the judgment to be incapable of adequately maintaining or defending the action; and
“(2) The person was:
(a) Represented by an appointed representative but the representative failed to prosecute or defend the action with due diligence and reasonable prudence, and the opposing party was on notice of facts making that failure apparent; or
(b) Not represented by an appointed representative and the representation on behalf of the person was inadequate.”
