United States Court of Appeals, Tenth Circuit
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2d 145
2 Fed.R.Serv.3d 623
H.B. HUNT and Lola N. Hunt, Plaintiffs-Appellees,
v.
INTER-GLOBE ENERGY, INC., Defendant,
John A. Corrente, Defendant-Appellant,
Forest N. Simon, Defendant, Third-Party Plaintiff,
Glenda Perry Simon, Third-Party Defendant.
No. 84-2687.
United States Court of Appeals,
Tenth Circuit.
Aug. 9, 1985.
John A. Corrente, pro se.
John C. Condren, Palmer, Wilson, Condren, Keirsey & Harper, Oklahoma
City, for plaintiffs-appellees.
Before LOGAN and MOORE, Circuit Judges, and BALDOCK, District
Judge.*
PER CURIAM.
This three-judge panel has determined unanimously that oral argument would
not be of material assistance in the determination of this appeal. See
Fed.R.App.P. 34(a); Tenth Cir.R. 10(e). The cause is therefore ordered
submitted without oral argument.
This is an appeal from an order of the district court denying defendant John A.
Corrente's motion to vacate a default judgment. On April 1, 1983, plaintiffs
H.B. Hunt and Lola N. Hunt filed an action in the United States District Court
for the Western District of Oklahoma against defendants Inter-Globe Energy,
Inc. (an Oklahoma corporation), John A. Corrente, and Forest N. Simon.
Plaintiffs asserted that these defendants engaged in common law fraud and
various breaches of state and federal securities laws including, in particular,
violation of Sec. 10(b) of the Securities and Exchange Act of 1934, 15 U.S.C.
Sec. 78j(b), and Rule 10b-5, 17 C.F.R. Sec. 240.10b-5. These alleged violations
occurred in connection with plaintiffs' purchase of fractional working interests
in oil and gas leases from defendants.
3
Plaintiffs were unable to serve the summons and complaint upon Corrente,
despite their diligent efforts. Consequently, the district court authorized service
by publication. When Corrente failed to plead or otherwise defend, the clerk of
the district court entered a default judgment pursuant to Fed.R.Civ.P. 55(a). The
district court subsequently entered default judgment for plaintiffs against
Corrente for the amounts sought in their complaint: plaintiffs' investment of
$30,000 plus interest, attorney's fees, court expenses, and punitive damages in
the amount of $300,000. Defendant Simon was served and defended the case
asserted against him. In March 1984, after trial, a jury awarded plaintiffs
$30,000 actual damages, but no punitive damages, against Simon on the Rule
10b-5 claim.
In September 1984, Corrente filed the motion to vacate judgment that is the
subject of this appeal. Corrente argued that the default judgment rendered
against him was void, apparently seeking relief under Fed.R.Civ.P. 60(b)(4).
In the district court Corrente raised three challenges to service by publication:
(1) that plaintiffs were required to serve him personally by reason of the
provisions of 15 U.S.C. Secs. 77v(a) and 78aa; (2) that plaintiffs improperly
relied on state law to obtain service by publication; and (3) that plaintiffs failed
to exercise due diligence in attempting to obtain service of process. Finally,
Corrente argued that the default judgment should not have been entered against
him until the matter had been adjudicated with regard to all defendants.
Service of process by publication was proper in this case. Fed.R.Civ.P. 4(c)(2)
(C)(i) provides that service may be obtained pursuant to the law of the state in
which the district court is held. Oklahoma law permits service by publication
provided that plaintiff satisfies the procedural rules set forth in Okla.Stat.Ann.
tit. 12, Sec. 170.6 (1978) (repealed Nov. 1, 1984) (revised version appears at
Okla.Stat.Ann. tit. 12, Sec. 2004). Plaintiffs made an adequate showing of due
diligence in their attempts to serve process upon Corrente. The procedural steps
outlined under Oklahoma law were carefully followed. See Okla.Stat. tit. 12,
Secs. 170.6, 173, and 174 (1978) (repealed). Corrente's first three arguments
are without merit.
Corrente's final argument requires greater attention in light of the case of Frow
v. DeLaVega, 82 U.S. (15 Wall.) 552, 21 L.Ed. 60 (1872). The general rule of
Frow is described as follows: "when one of several defendants who is alleged to
be jointly liable defaults, judgment should not be entered against him until the
matter has been adjudicated with regard to all defendants, or all defendants have
defaulted." 10 C. Wright, A. Miller & M. Kane, Federal Practice and Procedure
Sec. 2690, at 455-56 (1983).
8
In Frow, the plaintiff brought an action against Frow and thirteen other
defendants, charging eight of them, including Frow, with a joint conspiracy to
defraud the plaintiff out of a tract of land. 82 U.S. at 553. Frow failed to answer
timely, and a decree pro confesso was taken against him. The district court
subsequently entered a final decree adjudging the title of the land to be in the
plaintiff and awarding a permanent injunction against defendant Frow. After
the entry of the final decree against Frow, the court proceeded to try the case
and decided the merits of the cause adversely to plaintiff and dismissed the
complaint. Id. at 554.
On appeal, the Supreme Court reversed the default judgment against Frow,
concluding that when multiple defendants are alleged to be jointly liable and
fewer than all defendants default, the district court may not render a liability
determination as to the defaulting parties unless and until the remaining
defendants are found liable on the merits. Id. at 554. This result avoids
inconsistent liability determinations among joint tortfeasors.
10
Several modern cases have recognized and applied the rule of consistency
established by Frow. See, e.g., United States v. Peerless Insurance Co., 374
F.2d 942, 944-45 (4th Cir.1967) (joint and several liability); Exquisite Form
Industries Inc. v. Exquisite Fabrics of London, 378 F.Supp. 403, 416
(S.D.N.Y.1974) (joint liability).
11
Plaintiffs contest Frow 's applicability when, as here, multiple defendants are
allegedly jointly and severally liable. One circuit has rejected Frow 's relevance
in such a situation. See In re Uranium Antitrust Litigation, 617 F.2d 1248,
1256-58 (7th Cir.1980). But that same case held that while severally liable
parties could be subjected to independent default judgments, because they were
jointly liable for damages there could be no differing damage awards:
12 as the several or independent nature of plaintiff's claim permits different
"Just
findings as to liability of individual defendants, the joint nature of plaintiffs' claim
prohibits different findings as to damages against all defendants.
***
13
14
[Plaintiff's
argument that judgments in differing amounts are permissible] ignores
the fact that those defendants ultimately found liable are jointly liable for the entire
damage award, and that [plaintiff] could look to any one defendant for full
satisfaction of the damage award.
15
[Plaintiff] may not split its claim and proceed to damages against the defaulters
and then proceed to a separate damages award against the answering
defendants. [Plaintiff] has chosen to initiate a single claim involving joint
liability. That claim must be concluded just as it began--as one action."
16
617 F.2d at 1262 (footnote omitted).
17
Whether or not Frow is controlling, we agree with the Seventh Circuit that just
as consistent verdict determinations are essential among joint tortfeasors,
consistent damage awards on the same claim are essential among joint and
several tortfeasors. See Dundee Cement Co. v. Howard Pipe & Concrete
Products, Inc., 722 F.2d 1319, 1324 (7th Cir.1983). Otherwise, plaintiffs armed
with joint and several liability on a single claim could seek to execute on a
larger damage award from a party against whom the court awarded a much
smaller damage verdict--the situation that occurred here.
18
Further, we have held that a court may enter a default judgment without a
hearing only if the amount claimed is a liquidated sum or one capable of
mathematical calculation. Venable v. Haislip, 721 F.2d 297, 300 (10th
Cir.1983). Similarly, attorney's fees may not be awarded without a hearing to
determine the amount. Id. Fed.R.Civ.P. 55(b) provides that "the court may
conduct such hearings or order such references as it deems necessary" in order
to "determine the amount of damages." Here the record is devoid of any
indication that the court conducted such a hearing.
19
We reverse the district court's judgment denying vacation of default and remand
with instructions to reduce the default judgment to an amount consistent with
the adjudication of liability and damages against defendant Simon. The court
should determine the attorney's fees and recoverable expenses, other than court
costs, only after a Rule 55(b) hearing.
20
REVERSED AND REMANDED.
The Honorable Bobby R. Baldock, United States District Judge for the District
