Opinion
CASE NO. 89-81395 ADVERSARY NO. 90-804 9
09-28-2012
In re: THOMAS CLARKE, JR., Debtor FIDELITY AND CASUALTY COMPANY OF NEW YORK, Plaintiff v. THOMAS CLARKE, JR. Defendant
SO ORDERED.
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UNITED STATES BANKRUPTCY JUDGE
Chapter 7
MEMORANDUM RULING
The present matter before the court is a motion for relief from judgment pursuant to Rule 60(b) of the Federal Rules of Civil Procedure (the "Rule 60(b) Motion") filed by the debtor, Thomas Clarke, Jr. (the "Debtor"). The Debtor seeks relief from a June 1, 2011 order of this court granting an Ex Parte Motion to Revive Judgment filed by Continental Insurance Company f/k/a Fidelity & Casualty Co. of America ("CNA"). For the reasons set forth below, the court DENIES the Debtor's Rule 60(b) Motion.
BACKGROUND
The Debtor filed for relief under Chapter 7 of the Bankruptcy Code in 1989 under Case No. 89-81395. CNA subsequently filed an adversary proceeding, Case No. 90-8049, seeking a declaration that the debt owed to it was non-dischargeable. The parties ultimately settled the case, and, on October 24, 1990, the court entered a consent judgment in favor of CNA against the Debtor in the amount of $200,000.00. On October 24, 2000, CNA commenced proceedings to revive the 1990 judgment in both the bankruptcy court and the district court for the Western District of Louisiana. With respect to the bankruptcy court proceeding, CNA obtained an order granting its motion to re-open the adversary proceeding (Case No. 90-8049) in order to revive its judgment. Docket entry 11 in the adversary proceeding indicates that a petition to revive the 1990 judgment was filed in the separate district court proceeding. No other proceedings took place in the bankruptcy court until March 5, 2007, when the bankruptcy clerk of court issued a notice of proposed dismissal for failure to prosecute. An order of dismissal for failure to prosecute was subsequently entered on March 16, 2007, and the adversary case was closed on May 30, 2007. The parallel district court proceeding, however, preceded to judgment. The Debtor was personally served in the district court proceeding on February 14, 2001, but the Debtor never filed an answer. Default was entered in the district court case on September 23, 2001, and, on October 25, 2001, the district court entered judgment in favor of CNA reviving the 1990 judgment.
On September 24, 2010, CNA obtained an order re-opening the bankruptcy case, and, on May 26, 2011, CNA filed its Ex Parte Motion to Revive Judgment. On June 1, 2011, the court entered an order granting CNA's ex parte motion to revive its judgment. On April 23, 2012, the Debtor filed the instant Rule 60(b) Motion seeking to set aside the court's June 1, 2011 order granting CNA's ex parte motion.
DISCUSSION
A. Revival of Judgments in Federal Court
The execution and revival of federal judgments are governed by the law of the state in which a federal court sits. See Sobranes Recovery Pool I, LLC v. Todd & Hughes Construction Corp., 509 F.3d 216, 219 (5th Cir. 2007); TDK Electronics Corp. v. Draiman, 321 F.3d 677, 678 (7th Cir. 2003); McDaniel v. Signal Capital Corp., 198 B.R. 483, 486-87 (Bankr. S.D. Tex. 1996); Fed. R. Civ. P. 69. In Louisiana, prescription and revival of money judgments is governed by Louisiana Civil Code Article 3501 and Louisiana Code of Civil Procedure Article 2031. Civil Code Article 3501 provides that a money judgment "is prescribed by the lapse of ten years from its signing if no appeal has been taken, or, if an appeal has been taken, it is prescribed by lapse of ten years from the time the judgment becomes final." Article 3501 further provides that a judgment may be "revived before it prescribes, as provided in Article 2031 of the Code of Civil Procedure." The version of Code of Civil Procedure Article 2031 that was in effect at the time CNA filed the October 2000 revival action in the district court provided that a money judgment "may be revived at any time before it prescribes by an interested party in an ordinary proceeding brought in the court in which the judgment was rendered." This version of Article 2031 further provided that the judgment debtor was to be made a defendant in the revival proceeding.
Code of Civil Procedure Article 2031 was subsequently amended in 2003. The 2003 version of Article 2031 provided that a money judgment "may be revived at any time before it prescribes by an interested party by the filing of an ex parte motion brought in the court and suit in which the judgment was rendered." The 2003 version of Article 2031 further provided that the motion need not be served on the judgment debtor. However, once the court enters a judgment reviving the original judgment, notice "of the signing of the judgment of revival shall be mailed by the clerk of court to the judgment debtor at his last known address as reflected in the suit record." La. C.C.P. Art. 2031 (2003). The 2003 version of Article 2031 provides that after the judgment debtor receives notice of the judgment of revival, the judgment debtor may "by contradictory motion, have the judgment of revival annulled, upon showing that the judgment which has been revived was in fact satisfied prior to the signing of the judgment of revival." Id.
B. The Revival of CNA's Judgment
1. The October 24, 2000 Revival Proceeding
The Debtor's first ground for seeking to vacate the court's June 1, 2011 revival order is that the judgment had already prescribed pursuant to Civil Code Article 3501 in October 2000 because CNA had failed to follow the proper procedure for reviving the judgment. As a threshold matter, CNA argues that the 2003 version of Code of Civil Procedure Article 2031 governs the validity of its October 2000 revival action because, as a rule of procedure, it is retroactive. CNA argues that its October 2000 revival proceeding in the district court complied with this new version of Article 2031. Alternatively, CNA argues that its revival proceeding also complied with the pre-2003 version of Article 2031. The court disagrees with CNA because the change in Article 2031 is not wholly procedural with respect to the Debtor's substantive rights under Civil Code Article 3501. Specifically, if CNA failed to comply with the version of Article 2031 in effect as of October 2000, its judgment would have prescribed under Article 3501 in light of the dismissal of the bankruptcy court proceeding and the Debtor's right to claim prescription would have vested at that time. See La. Civ. Code Art. 3463. If CNA's October 2000 revival action was defective under the prior version of Article 2031, it could not rely on a subsequent amendment to that provision after October 2000 to impair the Debtor's vested right to claim prescription under Article 3501. Federal Deposit Insurance Corporation v. Shaid, 142 F.3d 260, 262 (5th Cir. 1998) (once a claim is barred, "the right to rely on a statute of limitations is vested, and a statute is unconstitutionally retroactive if it takes away or impairs vested rights acquired under existing law."). Accordingly, the pre-2003 version of Code of Civil Procedure Article 2031 governs the validity of CNA's October 2000 revival action.
The Debtor's primary argument against the district court's judgment of revival is that CNA did not comply with the requirement of Article 2031 that a revival proceeding be filed in the court that issued the original judgment. CNA counters by arguing that even though the original judgment was entered by the bankruptcy court, the bankruptcy court is a unit of the district court and, therefore, CNA could seek revival in the U.S. District Court for the Western District of Louisiana consistent with Article 2031. After reviewing the relevant authorities, the court agrees with CNA. A bankruptcy court is a "unit" of the district court and is "for jurisdictional purposes, inseparable from the district court." Grewe v. U.S., 4 F.3d 299, 304 (4th Cir. 1993); In re Clay, 35 F.3d 190, 193 (5th Cir. 1994) (noting that Congress had styled bankruptcy courts as "a unit of the district court."); c.f. In re Gandy, 299 F.3d 489, 499 (5th Cir. 2002) (observing that the "bankruptcy court and the district court acting as one unit have exclusive jurisdiction over all of the property" of a debtor's estate). Indeed, one court has opined that a "bankruptcy court is not a free standing court." Browning v. Levy, 283 F.3d 761, 778(6th Cir. 2002)(quoting In re Frontier Airlines, Inc., 84 B.R. 724, 727 (Bankr. Colo. 1988)). Moreover, although CNA obtained the judgment of revival in the district court, the docket sheet in the adversary proceeding (Case No. 90-8049) includes a notation that a petition requesting revival was filed in the district court. Accordingly, the court concludes that the filing of the revival action in the U.S. District Court in October 2000 and the district court's subsequent judgment of revival complied with Code of Civil Procedure Article 2031 because either the district court or the bankruptcy court for the Western District of Louisiana was the "court" where the original judgment was entered for purposes of Article 2031.
2. The May 26, 2011 Ex Parte Motion to Revive
Clarke separately challenges the court's June 1, 2011 revival order on the grounds that it was entered as a result of misrepresentations made in CNA's ex parte motion. The crux of Clarke's arguments in this regard, however, appear to be CNA's representation that it had properly revived the judgment in 2000. These arguments track Clarke's argument that CNA's October 2000 revival proceeding did not comply with Louisiana state law. As the court has already held, that revival proceeding and the district court's judgment of revival were valid under governing state law. Clarke's remaining allegations of misrepresentations do not rise to the level sufficient to vacate this court's June 1, 2011 revival order. Clarke also challenges this court's revival order on the grounds of lack of notice. Based on the court's review of the record, CNA's ex parte motion and the court's revival order comply with the current version of Louisiana Code of Civil Procedure Article 2031. This article does not provide for service of an ex parte motion to revive, but instead merely provides for notice once an order is entered by the court. Article 2031 provides that this notice is to be "mailed by the clerk of court to the judgment debtor at his last known address as reflected in the suit record." In the present case, the Debtor was served with notice of the court's order through the BNC noticing center at the last known address for the Debtor in the records of the bankruptcy case. The Debtor argues that the address on file with the bankruptcy court was not an address where he has resided since 1996 and that he did not receive adequate notice. While this fact is regrettable given that the Debtor's more recent address was used for purposes of service in the October 2000 district court revival action, the fact remains that the service of this court's June 1, 2011 order complied with Article 2031 in that it was served on the Debtor at the last known address in this court's case files. Courts have generally held that notice to a debtor's last known address satisfies due process and fundamental fairness. See, e.g., In re La Sierra Financial Services, Inc., 290 B.R. 718, 733 (9th Cir. BAP 2002) (holding that "timely notice by first class mail to a party's last known address is sufficient to satisfy due process."). Accordingly, the Debtor's request for relief from the court's June 1, 2011 revival order under Rule 60(b) is DENIED.
The Debtor also questions why CNA filed the 2000 action in the district court, but then chose to file the 2011 action in the bankruptcy court. The likely answer to this question is that the 2003 amendment to Article 2031 requires that the ex parte motion not only be filed in the court that issued the original judgment, but that it also be filed in the same suit. Here, CNA requested that the bankruptcy court re-open the original adversary proceeding (Case No. 90-8049), and then filed the motion in that proceeding. This procedure comports with the 2003 amendments to Article 2031.
CONCLUSION
For the foregoing reasons, the court DENIES the Debtor's Rule 60(b) Motion.
IT IS SO ORDERED.