Salamone v. Douglas Marine Corporation

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF NEW YORK

____________________________________________

KENNETH E. SALAMONE and

RUFSTR RACING, LLC,

Plaintiffs,

vs. 1:19-CV-01213

(MAD/DJS)

DOUGLAS MARINE

CORPORATION,

Defendant.

____________________________________________

APPEARANCES: OF COUNSEL:

LIPPES MATHIAS, WEXLER, LEIGH A. HOFFMAN, ESQ.

FRIEDMAN LLP JASON A. LITTLE, ESQ.

54 State Street, Suite 1001 JONATHAN D. DEILY, ESQ.

Albany, New York 12207

Attorneys for Plaintiffs

HARRIS, BEACH LAW FIRM ELLIOT A. HALLAK, ESQ.

677 Broadway, Suite 1101 DANIEL R. LECOURS, ESQ.

Albany, New York 12207

Attorneys for Defendant

Mae A. D'Agostino, U.S. District Judge:

MEMORANDUM-DECISION AND ORDER

I. INTRODUCTION

Plaintiffs, Kenneth E. Salamone and RUFSTR Racing, LLC ("RUFSTR"), commenced

this action on September 30, 2019, alleging causes of action including deceptive business

practices, breach of contract, unjust enrichment, fraud, conversion, promissory estoppel, and

breach of the implied covenant of good faith and fair dealing. See Dkt. No. 1. On December 15,

2020, the Court denied a motion by Plaintiffs for partial summary judgment. See Dkt. No. 39.

On April 22, 2021, after a four-day trial, the jury entered a verdict in Plaintiffs' favor for

$131,171.00 in damages. See Dkt. Nos. 64, 67. On August 23, 2021, the Court granted a motion

by Plaintiffs to alter the judgment and granted-in-part a motion by Plaintiffs for a bill of costs.

See Dkt. No. 87. The Court issued an amended judgment in the amount of $451,500.00 in

damages and $3,970.60 in costs. See Dkt. No. 88. Currently before the Court is Defendant's

motion to set aside the amended judgment pursuant to Rule 60(b)(3) and (4) of the Federal Rules

of Civil Procedure. See Dkt. No. 99.1 For the reasons that follow, Defendant's motion is denied.

II. BACKGROUND

The Court assumes the parties' familiarity with the facts and records of this proceeding,

and references it here only as necessary to explain this decision. On October 31, 2019, shortly

after the commencement of this action, Defendant submitted a pre-motion letter2 requesting a

conference and permission to file a pre-answer motion to dismiss Plaintiffs' complaint for lack of

personal jurisdiction under Rule 12(b)(2) of the Federal Rules of Civil Procedure. See Dkt. No. 8.

In the letter, Defendant asserted that—because Plaintiff "Salamone's residence in New York [wa]s

the only connection between the transactions giving rise to the claims in this case and the State of

New York"—New York's long arm statute, C.P.L.R. § 302, was not satisfied and the exercise of

personal jurisdiction over it would violate due process and fail to comport with notions of fair

play and substantial justice. Id. at 1. In response, Plaintiffs submitted a letter asserting that

Defendant had "contracted with a New York customer and afforded that New York customer with

a 35% dealer discount because this transaction was arranged through Performance Marine in

Bolton Landing, New York. Any assertions to the contrary are simply belied by the actual

contract." Dkt. No. 9 at 1. Plaintiffs' letter suggested that Defendant was "attempting to further

1 The parties filed separate notices of appeal on May 24, 2021. See Dkt. Nos. 75, 77.

Those appeals are being held in abeyance pending the determination on this motion. See Dkt. No.

102.

2 See section 2(A)(i) of this Court's Individual Rules and Practices.

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delay answering for its actions by raising a jurisdictional argument that on its face [wa]s untrue."

Id.

The Court began the resulting pre-motion conference by stating:

The reason I asked you to call in pursuant to my practice is I'm

always looking at early motions to see if there's anything that I can

do to, you know, possibly do away with the need for a motion. In

the years that I've been on the bench, I've realized how much time

we lose in the prosecution of a case when early motions are made.

Having said that, I keep a very open mind when motions are made.

Nothing I say during this phone conference should be taken as an

indication as to how I would rule on a motion. I honestly wait until

I get the entire packet, I read the entire packet and then I make a

ruling.

Dkt. No. 99-5 at 3. The conference then proceeded, and Defendant reiterated its argument that

there was no basis for personal jurisdiction over it and that "the suggestion that there was a dealer

in New York that was involved in this transaction is just completely incorrect." Id. at 6.

Plaintiffs, in turn, asserted that "this [was]n't so much a legal question then as it [wa]s a factual

one" and that "[t]he dealer, Performance Marine, was intimately involved in this boat order." Id.

at 7. Plaintiffs' counsel asserted that they did not "haphazardly" plead the existence of a dealer;

but rather had "investigated . . . very thoroughly" and personally spoke to Jason Saris, co-owner

of the alleged dealer Performance Marine, "on multiple occasions." Id. at 9.

After hearing the parties' arguments, the Court stated:

I have no reason and no information to disbelieve either of you and

I know that you're being genuine in what you're telling me, so at

this point, all I can say is I would like to get this resolved ASAP so

that, you know, we know one way or the other.

* * *

What I would ask is that, [Defendant], after I conclude this phone

conference, doesn't have to be right now, but at some point, you

have a phone conference with [Plaintiffs] and further discuss what it

is that [Plaintiffs have] told me during the phone conference.

* * *

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If, after those discussions, you still believe ... that a motion is

necessary under 12(b)(2) for lack of personal jurisdiction, I'll give a

date to have it filed by and then I'll put the briefing schedule on the

docket for the opposition and for the reply.

Id. at 9-11. The parties raised further questions concerning jurisdictional discovery and setting a

date by which to file a potential motion, and the Court eventually responded:

I'll give sufficient time to get it filed if you're going to go ahead, but

by ... all means, get together and you know, talk about these issues.

Obviously, on a motion like this, if there are questions of fact, I

don't think I need to be too—you don't have to be too imaginative to

know at this stage what a judge is going to have to do with it. So,

before you spend your clients' time and money, talk a little bit. If

there's a bona fide reason to make this motion, go ahead and make

it, but talk first.

Id. at 13. The conference concluded soon thereafter.

Defendant did not thereafter attempt to file a pre-answer motion to dismiss. Instead, it

filed an answer on December 11, 2019. See Dkt. No. 10. In its answer, Defendant denied that the

Court had personal jurisdiction over it and asserted lack of personal jurisdiction as an affirmative

defense. See id. at 3-4, 29. On October 1, 2020, Plaintiffs moved for partial summary judgment

on their causes of action for breach of contract, conversion, and breach of the implied covenant of

good faith and fair dealing. See Dkt. No. 31. Defendant opposed the motion and asserted, in its

preliminary statement, that "the Court should evaluate Plaintiffs' version of the facts with serious

skepticism" because,

[i]n one of the first filings of this case, [Defendant] sought

permission to file a motion to dismiss for lack of personal

jurisdiction . ... In response, Plaintiffs argued that personal

jurisdiction exists in this District because there was a dealer for the

boat in Bolton Landing, New York. Based upon that false

representation to the Court, and the Court's suggestion that it was

not likely to dismiss the matter for personal jurisdiction if there was

a dispute regarding whether there was a New York dealer involved

in the transaction, [Defendant] was persuaded not to file a motion to

dismiss for lack of personal jurisdiction at that time. ... Plaintiffs'

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prior representations to this Court in order to secure this Court's

jurisdiction, which they now acknowledge are untrue but have

never corrected, demonstrate that any statement by Plaintiffs

purporting to represent facts are subject to credibility

determinations that cannot be decided on a summary judgment

motion.

Dkt. No. 33 at 10-11. Defendant also asserted, in its sur-reply on the same motion, that "it is now

clear that personal jurisdiction never existed in this action." Dkt. No. 38 at 3. Defendant did not,

however, request a dismissal for lack of personal jurisdiction or make a cross motion to that

effect. Instead, Defendant asked only that "Plaintiffs' motion for partial summary judgment ... be

denied in its entirety." Id. at 30. Ultimately, the Court denied Plaintiffs' motion. See Dkt. No.

39.

No motions relevant to the issue of personal jurisdiction were filed in the months leading

up to the trial. The parties did, however, file a joint pre-trial stipulation stating that "[t]here was

no contract or financial relationship between [Defendant] and Jason Saris or his company,

Performance Marine[,] relative to the boat." Dkt. No. 43 at 4. The trial proceeded and, at the

close of evidence, Plaintiffs moved "under Rule 50(a) to strike as a matter of law ... the

affirmative defenses asserted in the answer." Dkt. No. 99-16 at 4. The parties specifically

addressed a number of Defendant's affirmative defenses, but not the one concerning personal

jurisdiction. See id. at 4-6. At the subsequent charge conference, the Court ruled that it was

denying Plaintiffs' motion. See Dkt. No. 99-17 at 7. The Court also ruled that, "[t]o the extent

that [D]efendant[] [has] not proven these defenses at trial or given proposed jury instructions

encompassing these defenses, they [were] being waived at this time." Id. The jury then began

deliberation and ultimately issued a verdict in Plaintiffs' favor. See Dkt. No. 67. Defendant did

not raise the issue of personal jurisdiction in response to Plaintiffs' post-judgment motions to alter

the judgment and for a bill of costs. See Dkt. Nos. 83, 85.

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Defendant now moves to set aside the amended judgment (1) under Rule 60(b)(3) and

(d)(3) of the Federal Rules of Civil Procedure on the ground that the amended judgment "was

procured by fraud, misrepresentation, and/or misconduct of Plaintiffs ... including fraud on the

Court"; and (2) under Rule 60(b)(4) of the Federal Rules of Civil Procedure on the ground that the

amended judgment "is void for lack of personal jurisdiction over Defendant." Dkt. No. 99-18 at

5. In opposition, Plaintiffs argue that "Defendant has failed to meet its burden to prove fraud or

failure of personal jurisdiction for the Court to set aside the [a]mended [j]udgment under Rule

60(b)(3) and (4)." Dkt. No. 100-2 at 5. Plaintiffs also request, in cursory fashion, an award of

sanctions "in the form of attorney's fees to Plaintiffs in the amount of $7,500.00." Id. at 13.

III. DISCUSSION

A. Rule 60(b)(3) and Rule 60(d)(3).

Defendant argues that Plaintiffs' "affirmative misrepresentations at the Pre-Motion

Conference" and "subsequent misleading omissions" in the motion for partial summary judgment

"constitute fraud for purposes of Rule 60(b)." Dkt. No. 99-18 at 18. Defendant argues that this

fraud "prevented [it] from fully and fairly presenting its personal jurisdiction defense" at every

stage of this action. Id. at 14. At the motion to dismiss stage, Defendant alleges that it refrained

from making a motion because "any motion would have been an exercise in futility given the

falsehoods being perpetuated by Plaintiffs" and "the Court's statements during the [p]re-[m]otion

[c]onference suggest[ed] that any questions of fact regarding whether there was a New York

dealer involved in the transaction would result in denial of a motion to dismiss." Id. at 18-19. At

the summary judgment stage, Defendant asserts that it "did not file its own motion on its personal

jurisdiction defense" because of "the vagueness" of Plaintiffs' affidavits and the failure of those

affidavits to "explicitly address[] [the] issue of whether Performance Marine/Saris acted in the

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capacity as a dealer for the transaction." Id. at 19. Defendant further argues that this conduct

constituted a fraud upon the Court under Rule 60(d)(3).

In opposition, Plaintiffs argue that "Defendant has failed to even assert, let alone provide

proof of, the most critical elements of fraud, most significantly, that Plaintiffs' counsel made any

representation with knowledge of its falsity; with scienter or an intent to defraud; upon which the

party reasonably relied; and such reliance caused damage to the Defendant." Dkt. No. 100-2 at

11. Instead, Plaintiffs assert, "Defendant only demonstrates that testimony from a witness, Mr.

Saris, was inconsistent with earlier statements made by Plaintiffs' counsel," which fails to meet

"the extraordinary burden of establishing fraud." Id. at 10.

Under Rule 60(b)(3), a district court may relieve a party from a final judgment for "fraud."

Fed. R. Civ. P. 60(b)(3). "[A] Rule 60(b)(3) motion cannot be granted absent clear and

convincing evidence of material misrepresentations." Fleming v. N.Y. Univ., 865 F.2d 478, 484

(2d Cir. 1989). The movant must also "'show that the conduct complained of prevented the

moving party from fully and fairly presenting [their] case.'" State St. Bank and Tr. Co. v.

Inversiones Errazuriz Limitada, 374 F.3d 158, 176 (2d Cir. 2004) (quoting Taylor v. Texgas

Corp., 831 F.2d 255, 259 (11th Cir. 1987)). "These same principles apply when a movant seeks

to set aside a judgment on the basis of fraud on the court." Id. (citing Davenport Recycling

Associates v. C.I.R., 220 F.3d 1255, 1262 (11th Cir. 2000)). "'[F]raud upon the court[,]' as

distinguished from fraud on an adverse party[,] is limited to fraud which seriously affects the

integrity of the normal process of adjudication." King v. First Am. Investigations, Inc., 287 F.3d

91, 95 (2d Cir. 2002) (quoting Gleason v. Jandrucko, 860 F.2d 556, 558 (2d Cir. 1988)).

Even assuming that Plaintiffs' statements at the November 2019 pre-motion conference

constituted material misrepresentations, Defendant had a full and fair opportunity to move for

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summary judgment on its personal jurisdiction defense or raise the issue at trial. Instead, it

vigorously litigated this action through a jury verdict and a post-judgment motion without ever

making an affirmative motion for relief on its personal jurisdiction defense. Defendant asserts

that "Plaintiffs' representations and omissions were not exposed as fraudulent until [Saris'

testimony at] the trial." Dkt. No. 99-18 at 20. However, in response to Plaintiffs' motion for

partial summary judgment—six months before the trial began—Defendant clearly stated its belief

that Plaintiffs had "acknowledge[d]" that their previously asserted grounds for personal

jurisdiction were "untrue" and that "there was never any dealer involved in [the sale of the] boat."

Dkt. No. 33 at 11. Indeed, Defendant went as far as declaring that, "[b]ased upon these admitted

facts, it is now clear that personal jurisdiction never existed in this action." Dkt. No. 38 at 3.

Defendant's assertion that it was somehow prevented from making a motion for summary

judgment on its personal jurisdiction defense because Plaintiffs' affidavits in support of its

summary judgment motion failed to "explicitly address[]" this issue defies belief. Dkt. No. 99-18

at 19. Defendant is a sophisticated party represented by experienced counsel and had abundant

opportunity to depose Saris on this issue.

Defendant's claim of fraud upon the court fails for the same reason. See State St. Bank

and Tr. Co., 374 F.3d at 176 (holding that a movant must show that the conduct complained of

prevented them from fully and fairly presenting their case to set aside a judgment on the basis of

fraud on the court). Additionally, the fraud alleged here is not of the type that "threatens the very

integrity of the judiciary and the proper administration of justice." Gleason v. Jandrucko, 860

F.2d 556, 559 (2d Cir. 1988) (holding that "fraud on the court involves 'far more than an injury to

a single litigant'") (quotation omitted); see also Azkour v. Little Rest Twelve, No. 10-CV-4132,

2017 WL 1609125, *8 (S.D.N.Y. Apr. 28, 2017) ("[B]ribery of a judge, jury tampering, or

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retention of an attorney 'for the purpose of influencing a judge are examples of fraud upon the

Court,' but 'nondisclosure during pretrial discovery,' 'after-discovered evidence of alleged perjury

by a witness,' and the existence of 'other fabricated evidence' are insufficient") (quotation

omitted).

Accordingly, the portion of Defendant's motion seeking to set aside the amended

judgment under Rule 60(b)(3) and (d)(3) of the Federal Rules of Civil Procedure is denied.

B. Rule 60(b)(4)

Defendant argues that the amended judgment has been rendered void under Rule 60(b)(4)

because "Saris' testimony at trial unequivocally established the truth ... that there is no basis for

personal jurisdiction over Defendant." Dkt. No. 99-18 at 11. Defendant also argues that it "fully

preserved its defense of the lack of personal jurisdiction" by "continually rais[ing] this Court's

lack of jurisdiction." Id. at 14. Defendant claims that it, in fact, "never submitted itself to the

jurisdiction of this Court, but rather was forced into litigating in this Court based upon perpetual

misrepresentations by Plaintiffs" and "the Court's comments that it would not dismiss a case for

lack of jurisdiction where there [we]re disputed jurisdictional facts." Id. at 14-15. In opposition,

Plaintiffs argue that Defendant purposely waived or inadvertently forfeited its personal

jurisdiction defense by participating in the Uniform Pretrial Scheduling Order, discovery

demands, scheduled depositions, mandatory mediation, a full trial, and a post judgment motion,

without ever litigating the defense. See Dkt. No. 100-2 at 5-9.

Rule 60(b)(4) of the Federal Rules of Civil Procedure provides an avenue for relief from a

final judgment when "the judgment is void." A judgment is void under Rule 60(b)(4) if the court

that rendered it lacked personal jurisdiction over the parties. See City of New York v. Mickalis

Pawn Shop, LLC, 645 F.3d 114, 138 (2d Cir. 2011). Defendant bears "the burden of establishing

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lack of personal jurisdiction" under Rule 60(b)(4). "R" Best Produce, Inc. v. DiSapio, 540 F.3d

115, 126 (2d Cir. 2008). Where an "'underlying judgment is void, it is a per se abuse of discretion

for a district court to deny a movant's motion to vacate the judgment under Rule 60(b)(4).'" Irvin

v. Harris, 944 F.3d 63, 68 (2d Cir. 2019) (quotation omitted). "Indeed, Rule 60(b)(4) 'is unique ...

because relief is not discretionary and a meritorious defense is not necessary." Id. (quoting

Covington Indus., Inc. v. Resintex A.G., 629 F.2d 730, 733 n.3 (2d Cir. 1980)).

Here, the Court did not lack personal jurisdiction over Defendant at the time the judgment

and amended judgment were rendered. Even assuming that there were no grounds for personal

jurisdiction over Defendant at the inception of this action, Defendant submitted to the Court's

personal jurisdiction and forfeited its affirmative defense due to its extensive participation in this

litigation. See Newcard, Inc. v. Van Dijke, 137 Fed. Appx. 384, 386 (2d Cir. 2005) (holding that

the defendant could not qualify for relief under Rule 60(b)(4) because the defendant "submitted to

the court's personal jurisdiction by participating in the litigation"); see also Mickalis Pawn Shop,

LLC, 645 F.3d at 139 (holding that the defendants could not obtain relief under Rule 60(b)(4)

because, "by appearing, litigating, and then intentionally withdrawing from the proceedings," the

defendants "submitted to the jurisdiction of the district court" and "forfeited their jurisdictional

defense"). As addressed above, Defendant knew that "personal jurisdiction never existed in this

action," at the latest, when Plaintiffs moved for partial summary judgment. Dkt. No. 38 at 3.

Defendant thereafter had several clear opportunities to make a motion for resolution of its

personal jurisdiction defense, but did not. Instead, Defendant chose to litigate this case to a

conclusion on the merits—including opposing a post-trial motion to alter the verdict—without

ever requesting the relief it now asserts it is entitled too. Thus, the Court concludes that

Defendant had forfeited its personal jurisdiction affirmative defense by the time the judgment and

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amended judgment were rendered. See Hamilton v. Atlas Turner, Inc., 197 F.3d 58, 61 (2d Cir.

1999) (considering the "passage of time," "the litigation activity that occurred," and "the

opportunities to litigate the jurisdictional issue that were forgone" before holding that the

defendant forfeited its personal jurisdiction defense); see also Roberts v. Bennaceur, 658 Fed.

Appx. 611, 617 (2d Cir. 2016).

Accordingly, the portion of Defendant's motion seeking to set aside the amended

judgment under Rule 60(b)(4) of the Federal Rules of Civil Procedure is denied.

C. Plaintiffs' Sanctions Request

In their opposition papers, Plaintiffs include a cursory request for the imposition of

sanctions on Defendant. See Dkt. No. 100 at 7; Dkt. No. 100-2 at 13. However, Plaintiffs

provide no support for their claim that the present motion was "clearly designed to antagonize and

harass Plaintiffs and impugn the credibility of Plaintiffs' counsel," Dkt. No. 100 at 7, and the

Court does not find that Defendant's motion was completely devoid of a factual basis or legal

support.

Accordingly, Plaintiffs' request for sanctions is denied.

IV. CONCLUSION

After carefully reviewing the entire record in this matter, the parties' submissions, and the

applicable law, and for the above-stated reasons, the Court hereby

ORDERS that Defendant's motion to set aside the amended judgment (Dkt. No. 99) is

DENIED; and the Court further

ORDERS that Plaintiffs' request for sanctions is DENIED; and the Court further

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ORDERS that the Clerk of the Court shall serve a copy of this Memorandum-Decision

and Order on all parties in accordance with the Local Rules.

IT ISSO ORDERED.

Dated: January 12, 2022 J) Le ie (Hpez- le,

Albany, New York Mae A. D’ Agostino”

U.S. District Judge

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