Court Opinion

ID: 8917465
Source: CourtListenerOpinion
Date Created: 2022-11-27 05:40:20.054085+00
Date Added: 2024-06-11T17:09:07.276142
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
concurring:
As Judge Pratt quite properly has observed, this Court ordinarily does not consider arguments that were not presented first to the district court. However, “[ojrderly rules of procedure do not require sacrifice of the rules of fundamental justice.” Hormel v. Helvering, 312 U.S. 552, 557, 61 S.Ct. 719, 721, 85 L.Ed. 1037 (1941). Where “the proper resolution is beyond any doubt,” or where “injustice might otherwise result,” we may consider issues not passed on below. Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 2877, 49 L.Ed.2d 826 (1976); see La Bruna v. U.S. Marshal, 665 F.2d 439, 442 (2d Cir.1981); Adato v. Kagan, 599 F.2d 1111, 1116 (2d Cir.1979). “Indeed, if deemed necessary to reach the correct result, an appellate court may sua sponte consider points not presented to the district court and not even raised on appeal by any party.” Washington Gas Light Co. v. Virginia Electric and Power Co., 438 F.2d 248, 251 (4th Cir.1971).. I believe the district court committed such plain error in entering a default judgment without a pri- or hearing on appellee’s claims for unliquidated damages that this Court would be remiss if it did not say so. See Klapprott v. United States, 335 U.S. 601, 611-12, 69 S.Ct. 384, 388-89, 93 L.Ed. 266 (1949) (Opinion of Black, J.); Davis v. National Mortgage Corp., 320 F.2d 90, 91-92 (2d Cir.1963).
The judgment includes awards of $100,-000 for attorneys’ fees, $100,000 as punitive damages, and $257,573.50 in compensatory damages, the latter figure being the amount of a judgment already obtained against appellant Musler. The only support for the award of attorneys’ fees was the following statement by appellee’s attorney in his affidavit accompanying the motion for judgment by default:
A copy of the prior judgment is annexed as Exhibit “A”. The attorneys’ fees are calculated based upon the time extended by plaintiff’s counsel in recovering this judgment.
How the figure of $100,000 for attorneys’ fees was arrived at is as obscure as the legal basis for appellee’s right to recover such fees. Under the circumstances, an award for legal fees should not have been made. Davis v. National Mortgage Corp., supra, 320 F.2d at 91-92.
The punitive damage award finds its sole support in the following statement of appellee’s attorney:
Of the $1,000,000 punitive damages claimed, plaintiff now requests judgment by default in the sum of $100,000, an amount calculated by reference to the amount of attorneys’ fees and loss of use of money in excess of legal interest.
The award of $100,000 in punitive damages also was without adequate factual support. Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir.1974).
Damages in the amount of $257,573.50 were awarded against appellant Maloney on the theory that a prior judgment against appellant Musler had reduced the amount of damages to a liquidated figure. Appellee contends that, since Maloney is charged, among numerous other torts, with interfering with appellee’s right to pursue and collect his judgment, the amount of the judgment is “the exact and readily computable amount by which he has been damaged.” Appellee’s Brief at 36. This is specious reasoning. Appellee has made no showing that, if Maloney had not “interfered”, appellee would have collected from Musler all, or any readily calculable part, of the judgment against him. See Trans World Airlines, Inc. v. Hughes, 449 F.2d 51, 69-70 (2d Cir.1971), rev’d on other grounds, 409 U.S. 363, 93 S.Ct. 647, 34 L.Ed.2d 577 (1973).
If the compensatory damage award against appellant Musler was for a liquidated amount, it was only because appellee already had secured a judgment for that amount against Musler. It is not clear from appellee’s complaint whether he is suing Musler on the prior judgment or wheth*918er he is suing for a second time on the original claim. If it is the latter, appellee has no cause of action. “Once a claim is reduced to judgment, the original claim is extinguished and merged into the judgment; and a new claim, called a judgment debt, arises.” Kotsopoulos v. Asturia Shipping Co., 467 F.2d 91, 95 (2d Cir.1972). If it is the former, suit on the judgment is a useless act, giving appellee no greater security than he already had and imposing an unnecessary burden on an already overburdened court. Vexatious and repetitious suits on judgments should not be encouraged. For either of the foregoing reasons, appellee’s second judgment on the $257,-573.50 claim should be vacated.
Because the judgment of the district court did not rest upon a reliable foundation, it must be vacated. See Oceanic Trading Corp. v. Vessel Diana, 423 F.2d 1, 4-6 (2d Cir.1970); Fed.R.Civ.P. 60(b)(6). However, even though the judgment is vacated, if service on appellants was effected, they will still be in default in answering. If the district court, following the hearing which we now direct, decides that appellants were not served, that will end the matter. If the district court decides that appellants were served, it must then decide whether to open the default. In so doing, the district court should be guided by the liberal standards of Fed.R.Civ.P. 55(c) rather than the more rigorous ones of Rule 60(b). Meehan v. Snow, 652 F.2d 274, 276-77 (2d Cir.1981); Jackson v. Beech, 636 F.2d 831, 835-38 (D.C.Cir.1980).