JOSH NORRIS; JILL NORRIS, Plaintiffs - Appellees Cross-Appellants
KARRY CAUSEY, Defendant-Appellant Cross-Appellee GARRY CAUSEY, Defendant - Cross-Appellee JOSH NORRIS; JILL NORRIS, Plaintiffs - Appellants
GARRY CAUSEY; KARRY CAUSEY, Defendants - Appellees JOSH NORRIS; JILL NORRIS, Plaintiffs - Appellees
GARRY CAUSEY, Defendant - Appellant JOSH NORRIS; JILL NORRIS, Plaintiffs - Appellants
GARRY CAUSEY; KARRY CAUSEY, Defendants - Appellees
from the United States District Court for the Eastern
District of Louisiana
REAVLEY, HAYNES, and COSTA, Circuit Judges.
COSTA, CIRCUIT JUDGE:
yet another case that has its roots in the devastation
Hurricane Katrina wreaked on New Orleans. Resilient as the
city is, it swiftly began to rebuild. That effort presented
attractive opportunities for investors and developers looking
to turn a profit. This case involves one such opportunity
that went sour.
lawsuit that followed resulted in a bench trial. One of the
defendants appeared at trial to fight the allegations; the
other did not and whether he was properly served is an issue
on appeal. The district court found that both defendants
breached their agreement with plaintiffs to purchase,
renovate, and sell Katrina-damaged properties. It held Karry
Causey, the defendant who put up a defense, liable for $16,
780. It found the defaulting defendant, Garry Causey, further
liable for breach of fiduciary duty and responsible for $94,
000. After that judgment issued, Garry finally appeared and
sought to vacate the award alleging improper service. Both
defendants sought to vacate the judgment on the additional
ground that they believe the plaintiffs failed to adequately
disclose the claim during their bankruptcy. The district
court denied those postjudgment motions and also awarded
attorneys' fees and costs against the Causeys.
these rulings are challenged as both sides appeal. Plaintiffs
contend the district court should have required both
defendants to pay the full $94, 000 in damages. Defendants
argue that the jurisdictional defects warrant vacating the
judgment, that in any event Karry did not breach the
contract, and that the fee award is excessive. We affirm the
judgment in all respects as to Karry, but remand for
additional factfinding about the attempts to serve Garry.
Norris, a plumber from Michigan, traveled to New Orleans in
early 2007 in search of work. There he met twin brothers
Karry and Garry Causey. The Causeys proposed to Joshua and
his wife, Jill, the following investment opportunity: the
Norrises would supply funds to purchase hurricane-damaged
properties and the Causeys would renovate those properties
and sell them at a profit. That profit would be evenly
divided among them.
reduced this plan to writing. He and the Norrises signed the
joint venture agreement. Karry did not.
agreement divides responsibilities among the parties along
the lines of the original understanding. The Norrises are to
finance the project. Garry is responsible for, among other
things, maintaining accounting records, identifying and
facilitating the purchase of properties, and negotiating with
contractors to obtain the best possible prices. Karry is the
fulfill their end of the bargain, the Norrises obtained a
home equity loan. From those funds, they wrote Garry one
check for $48, 000 and another for $45, 000. This money was
supposed to be used for construction on two separate
properties. Garry wired Karry $15, 780 of those funds. The
Norrises gave Karry an additional $1, 000 for architectural
plans he said were needed.
receiving these funds, the Causeys failed to move forward
with the renovations. They instead spent the money on
personal items. After a few months, they also stopped paying
the Norrises the interest accumulating on their home equity
to repay that loan led the Norrises to file for Chapter 7
bankruptcy in 2009. The Norrises did not list their potential
claim against the Causeys in their bankruptcy schedules.
Before the issuance of the trustee's final report,
however, the claim began to appear in interim reports by the
trustee as "a potential lawsuit regarding LA
property" with an estimated value of $1, 000. The
bankruptcy trustee's final report expressly abandons this
claim to the Norrises. See 11 U.S.C. § 554(c).
That abandonment became final in 2012 when the bankruptcy
court approved the final report and closed the case.
Norrises subsequently filed this lawsuit against the Causeys.
Garry failed to appear despite various efforts, described in
more detail below, to serve him. The district court thus
found Garry in default. Karry, on the other hand, appeared
and actively defended against the Norrises allegations in a
one-day bench trial.
trial resulted in the district court's entering default
judgment against Garry on breach of contract and fiduciary
duty claims and ordering him to pay $94, 000 in damages. The
district court also found Karry tacitly accepted the contract
and likewise breached. But it held him liable for only $15,
780-the amount Garry wired him that Karry used for his own
Norrises subsequently filed a motion for attorneys' fees
and a motion to amend the final judgment. The district court
awarded $58, 736 in attorneys' fees and costs, holding
Garry and Karry solidarily liable for the full amount. And
despite disagreeing with the Norrises' arguments for
holding Karry solidarily liable for the full damages award,
it added $1, 000 in damages to account for the check Karry
received for architectural plans. Karry filed a notice of
appeal. The Norrises filed a cross appeal.
the commencement of these appeals, the bankruptcy court in
the Eastern District of Michigan reopened the Norrises'
case, stating "it appear[s] that Debtors may have
intentionally [misled] the Court as to their assets and said
asset appears to be an asset of the Debtor's
that bankruptcy court activity, and approximately four months
after the New Orleans district court issued its final
judgment, the Causeys filed separate motions under Rule
60(b)(4) seeking to set aside the judgment as void. This was
the first time Garry appeared in the case.
Causeys argued that the Norrises did not have standing as
failure to disclose the claim in bankruptcy meant abandonment
of the claim was improper and the trustee should be
considered the real party in interest. Garry separately
argued that he was not properly served.
district court agreed with the Causeys that the Norrises were
not the proper plaintiffs. But because real-party-in-interest
is not a jurisdictional requirement, it denied relief,
ordering instead that the trustee could substitute as the
plaintiff. The district court further found that Garry was
start our review at the end of the district court litigation,
with the denial of the Rule 60(b)(4) motions. We do so
because if those motions should have been granted, then the
judgment would be void and there would be no need to review
first consider the Rule 60(b) ground that would vacate the
judgment as to both defendants: the argument that the
Norrises lack standing because they did not disclose this
claim during their bankruptcy. The district court's
ruling on this issue is subject to cross appeals. This is
because, although the district court did not void the
judgment, it held that the Norrises are not the real parties
in interest and the bankruptcy trustee could substitute in.
The Causeys argue that the district court did not go far
enough; it recognized the real-party-in-interest problem but
did not see that through to voiding the judgment. The
Norrises contend the district court went too far; whether
they or the trustee was the proper party is not a question
the court should consider at all in a motion for postjudgment
relief. They also argue that the Rule 60 motions were
starters, there is no timeliness problem with the motions
seeking relief from the judgment. Because a "void
judgment cannot acquire validity" through the passage of
time, Rule 60(b)(4) motions have no time limit. 11 Charles
Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal
Practice & Procedure, ...