United States District Court, E.D. North Carolina, Northern Division
JAY K. ENGELL, Appellant,
JOHN C. SHEETZ, SR., Appellee.
Earl Britt Senior U.S. District Judge
matter is before the court on the motion of Phillip Hayes,
Esq. (“Hayes”) for relief from the court's 22
November 2016 order. (DE # 36.) Debtor-Appellee John C.
Sheetz, Sr. (“Sheetz”) and Creditor-Appellant Jay
K. Engell (“Engell”) filed responses in
opposition to the motion. (DE ## 39, 40.) Hayes did not file
a reply, and the time within which to do so has expired.
of background, Hayes represented Engell in regards to a state
court action in which Engell obtained a judgment against
Sheetz in excess of $477, 000. According to Hayes, after
Engell began a collection action against Sheetz, Sheetz filed
a Chapter 7 bankruptcy petition with the bankruptcy court for
this district. “Engell requested that his attorneys[,
including Hayes, ] from the state court proceedings continue
to represent his interests in Sheetz's bankruptcy
proceeding, despite cautions that they were not experienced
bankruptcy attorneys.” (Hayes's Mem., DE # 37, at
2.) In the bankruptcy proceeding, Hayes, on behalf of Engell,
filed an objection to the dischargeability of the state court
judgment and subsequently a motion to amend the objection. By
amended order, the bankruptcy court overruled the objection
and denied the motion to amend. The bankruptcy court later
granted Sheetz a discharge.
on behalf of Engell, filed a notice of appeal. Sheetz filed a
motion to dismiss the appeal. Engell did not respond to the
motion. This court granted Sheetz's motion and dismissed
the appeal as untimely.
filed a motion for an award of damages “in the amount
of $5, 500.00 to be paid by the Appellant” pursuant to
Bankruptcy Rule 8020. (DE # 25, at 3.) The motion was served
via cm/ecf on Hayes as counsel for Engell. New counsel filed
a notice of appearance on behalf of Engell, and the court
granted Engell an extension of time to file a response. Hayes
moved to withdraw from his representation of Engell, which
the court allowed. After obtaining a second extension of
time, Engell through new counsel filed a response in
opposition to Sheetz's motion for an award of damages. In
the response, Engell requested that the court in the exercise
of its discretion decline to award damages or, alternatively,
that any award be imposed against Hayes. Although the
certificate of service attached to the response indicates
that Hayes was served via cm/ecf, he was not because, after
the court allowed him to withdraw from representation, he no
longer received notification of filings in the case via
cm/ecf. Hayes did not file a response to Sheetz's motion
for an award of damages. By order of 22 November 2016, the
court concluded that the appeal was frivolous and that the
case was appropriate for an award of damages against Hayes.
Sheetz filed a memorandum regarding his attorney's fees
and expenses, the court ordered that Hayes could contest the
reasonableness of the requested fees and expenses within a
specified time and directed a clerk to serve a copy of the
order on Hayes. In response to the order, Hayes filed the
instant motion. According to Hayes, “no notice was ever
received by him that damages were contemplated against him
personally, and there was no opportunity for him to voice his
objections as he had been withdrawn from the case[.]”
(Hayes's Mem., DE # 37, at 5.) Hayes requests that the
court vacate its 22 November 2016 order as void pursuant to
Federal Rule of Civil Procedure 60(b)(4).
this rule, “the court may relieve a party or its legal
representative from a final judgment, order, or
proceeding” if “the judgment is void.”
Fed.R.Civ.P. 60(b)(4). “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.” United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 271(2010) (citations omitted).
Unlike motions based on other subsections of Rule 60(b), a
motion under (b)(4) need not satisfy threshold requirements,
such as timeliness and a meritorious defense. Vinten v.
Jeantot Marine Alls., S.A., 191 F.Supp.2d 642, 649-50
(D.S.C. 2002); see also Garcia v. Fin. Group, Inc. v. Va.
Accelerators Corp., 3 F. App'x 86, 88 (4th Cir.
motion rests on the fact that he did not receive prior notice
that he might be held accountable for damages for a frivolous
appeal and therefore entry of the order against him was
inconsistent with due process. “Due process requires
notice reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of the action and
afford them an opportunity to present their
objections.” Espinosa, 559 U.S. at 272
(internal quotation marks and citations omitted). The court
finds that the failure of Hayes to receive Engell's
response and the court's subsequent order awarding
damages against him violated due process and renders the
Hayes's motion for relief is ALLOWED, and the court's
22 November 2016 order is VACATED. Within 30 days, Hayes may
file a response to Sheetz's motion for an award of
damages and/or Engell's response to that motion. Within
14 days after Hayes files any response, any party ...