Court Opinion

ID: 2684303
Source: CourtListenerOpinion
Date Created: 2014-07-17 17:00:16.169017+00
Date Added: 2024-06-11T09:43:53.015827
License: Public Domain

NOT PRECEDENTIAL

   UNITED STATES COURT OF APPEALS
        FOR THE THIRD CIRCUIT
             _____________

                  No. 13-2075
                 _____________

         In Re: JEFFREY J. PROSSER,
                               Debtor

 In Re: Innovative Communication Corporation,
                                 Debtor

 JAMES P. CARROLL, Chapter 7 Trustee of the
Estate of Jeffrey J. Prosser and Liquidating Trustee
   Under the Reorganization Plan of Innovative
           Communications Corporation

                         v.

  JEFFREY J. PROSSER; DAWN PROSSER;
  JUSTIN PROSSER; MICHAEL PROSSER;
SYBIL G. PROSSER; MICHELLE LABENNETT;
           LYNDON A. PROSSER

            Jeffrey J. Prosser and Dawn Prosser,
                                       Appellants

        On Appeal from the District Court
    of the Virgin Islands – Appellate Division
       (District Court No.: 3-11-cv-00113)
   District Judge: Honorable Curtis V. Gómez

   Submitted under Third Circuit LAR 34.1(a)
               on May 15, 2014
         Before: RENDELL, FUENTES and GREENAWAY, JR., Circuit Judges.

                                (Opinion filed: July 17, 2014)

                                          OPINION

GREENAWAY, JR., Circuit Judge.

         Dawn Prosser and Jeffrey J. Prosser (“Appellants”) appeal from the judgment of

the District Court of the Virgin Islands Appellate Division (“District Court”) relating to a

Turnover Action. For the reasons discussed below, we will affirm the District Court’s

order.

I. Facts

         Since we write principally for the benefit of the parties, we recount only the

essential facts and procedural history.

         After being appointed as the Chapter 7 Trustee, James Carroll (“Trustee”) initiated

the Turnover Action against Jeffrey Prosser, Dawn Prosser, and Jeffrey Prosser’s four

adult children in an effort to recover estate property. Jeffrey Prosser was the owner and

sole member of Innovative Communications Company, LLC, which, in turn, owned

Innovative Communications Corporation, a company which provided telephone, internet,

and cable service to the United States Virgin Islands and other Caribbean islands.

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       The Turnover Action was tried in the District Court of the Virgin Islands

Bankruptcy Division (“Bankruptcy Court”). The Court ordered turnover of various assets

to the Trustee, including a wine collection, cigars, real property, art, antiques, and

furnishings. After entry of an adverse judgment on the merits by the Bankruptcy Court,

that was not timely appealed, Appellants filed a motion under Federal Rule of Civil

Procedure 60(b) for relief, which the Bankruptcy Court denied. The District Court

entered an order affirming this ruling of the Bankruptcy Court. This timely appeal

followed.

II. Jurisdiction

       The District Court exercised jurisdiction over the appeal of the Bankruptcy

Court’s order under 28 U.S.C. § 158(a). This Court has jurisdiction under 28 U.S.C. §

158(d)(1).

III. Analysis

       Appellants seek to have us reverse the District Court on grounds that the judgment

of the Bankruptcy Court is void under Rule 60(b)(4) of the Federal Rules of Civil

Procedure contending that the Bankruptcy Court lacked jurisdiction. The District

Court’s ruling on the motion is reviewable by this Court only for abuse of discretion.

Virgin Islands Nat’l Bank v. Tyson, 506 F.2d 802, 804 (3d Cir. 1974).

       Rule 60(b)(4) allows a court to relieve a party from a final judgment if “the

judgment is void.” Fed. R. Civ. P. 60(b)(4). “[A] void judgment is one so affected by a

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fundamental infirmity that the infirmity may be raised even after the judgment becomes

final.” United Student Aid Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010). “The list

of such infirmities is exceedingly short; otherwise, Rule 60(b)(4)’s exception to finality

would swallow the rule.” Id.; see also Boughner v. Sec’y of Health, Educ. & Welfare,

U.S., 572 F.2d 976, 977 (3d Cir. 1978) (“This Court has also cautioned that relief from a

judgment under Rule 60 should be granted only in exceptional circumstances.”). “Rule

60(b)(4) applies only in the rare instance where a judgment is premised either on a certain

type of jurisdictional error or on a violation of due process that deprives a party of notice

or the opportunity to be heard.” Espinosa, 559 U.S. at 271.

       We have indicated that a judgment will be rendered void for lack of subject matter

jurisdiction only where there is a “total want of jurisdiction” or “in the rare instance of a

clear usurpation of power.” Marshall v. Bd. of Educ., Bergenfield, N.J., 575 F.2d 417,

422 n.19 (3d Cir. 1978) (internal quotation marks and citation omitted); see also

Espinosa, 559 U.S. at 271 (noting that courts generally find a “judgment is void because

of a jurisdictional defect . . . only for the exceptional case in which the court that rendered

judgment lacked even an arguable basis for jurisdiction” (internal quotation marks

omitted)).

       Here, Appellants have failed to identify any alleged jurisdictional error sufficiently

egregious so as to render the judgment void. It is undisputed that the Bankruptcy Court

specifically addressed its subject matter jurisdiction in a Memorandum Opinion. (See

App. 85-88; see also App. 85 (“Dawn Prosser contends that this court lacks subject

matter jurisdiction on the basis that ownership is directly disputed in this turnover action .

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. . . However, even then the court has jurisdiction.”).) This is fatal to Appellants’

arguments, since it has long been the rule that principles of res judicata apply to

jurisdictional determinations—both subject matter and personal. See Chicot Cnty.

Drainage Dist. v. Baxter State Bank, 308 U.S. 371, 376 (1940) (“[District Courts] are

courts with authority, when parties are brought before them in accordance with the

requirements of due process, to determine whether or not they have jurisdiction to

entertain the cause and for this purpose to construe and apply the statute under which

they are asked to act. Their determinations of such questions, while open to direct review,

may not be assailed collaterally.”).

       Because subject matter jurisdiction was litigated prior to the entry of the judgment,

any further challenge on that ground could only have been made on direct appeal. See

Ins. Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702

(1982) (“A party that has had an opportunity to litigate the question of subject-matter

jurisdiction may not, however, reopen that question in a collateral attack upon an adverse

judgment.”). No appeal was taken.

       Contrary to Appellants’ claim, Stern v. Marshall, 131 S. Ct. 2594 (2011) does not

alter this analysis, because this case does not involve a counterclaim, nor is it solely

based on state law. No circumstances, least of all “exceptional circumstances” requiring

“extraordinary relief,” have been demonstrated in this record. Marshall v. Bd. of Educ.,

Bergenfield, N.J., 575 F.2d at 426.

        Therefore, Appellants cannot collaterally challenge the Bankruptcy Court’s

Turnover Opinion and Order in this instance.

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III. Conclusion

      For the foregoing reasons, we will affirm the order of the District Court.

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