                                                                                                                           Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-24-1994

Durant v. Husband, et al.
Precedential or Non-Precedential:

Docket 93-7414




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http://digitalcommons.law.villanova.edu/thirdcircuit_1994/59


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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT
                          ____________

                          No. 93-7414
                          ____________

                          FRANK DURANT,
                                          Appellee
                               v.

        DAVID HUSBAND; GOVERNMENT OF THE VIRGIN ISLANDS;
           CONTANT RESTAURANT ASSOCIATION, INC., d/b/a
                 OLD MILL AND SUGARS NIGHT CLUB,

                    Government of the Virgin Islands, Appellant
                           ____________

      APPEAL FROM THE DISTRICT COURT OF THE VIRGIN ISLANDS
              (Division of St. Thomas and St. John)
                     (D.C. Civ. No. 90-00281)
                           ____________

                      Argued April 18, 1994

      Before:   STAPLETON, ALITO, and WEIS, Circuit Judges

                    Filed June 24, 1994
                           ____________

Frederick Handleman, Esquire (ARGUED)
Rosalie Simmonds Ballentine, Esquire
Attorney General
Paul L. Gimenez, Esquire
Solicitor General
Darlene C. Grant, Esquire
Office of the Attorney General
4850 Kronprindsens Gade
GERS Complex, 2nd floor
Charlotte Amalie, St. Thomas
USA Virgin Islands 00802

Attorneys for Appellant, Government of the Virgin Islands


Andrew L. Capdeville, Esquire (ARGUED)
Law Offices of Andrew L. Capdeville
201 Nisky Center, Box 6576
Charlotte Amalie, St. Thomas
USA Virgin Islands 00804-6576


                               1
Attorney for Appellee, Frank Durant




                               2
                           ____________

                       OPINION OF THE COURT
                           ___________



WEIS, Circuit Judge.

          In this suit under the Virgin Islands Tort Claims Act,

plaintiff secured a default in the district court after the

territorial government had failed to answer the complaint.    After

a contested hearing that was limited to damages, plaintiff

received a judgment for $25,000.    We hold that the award was a

"judgment by default" against the government and thus proscribed

by the Tort Claims Act.   Accordingly, we will reverse the

judgment and remand for a trial on liability and damages.

          Plaintiff Frank Durant was employed as a security guard

at the Old Mill Restaurant and Sugars Night Club on St. Thomas,

Virgin Islands.   At about 4:00 a.m. on January 14, 1990, a

disturbance erupted among several patrons at the nightclub.

Plaintiff managed to quell the altercation.    Shortly thereafter,

however, defendant David Husband, an off-duty policeman employed

by the Virgin Islands government who was also a patron at the

nightclub, struck plaintiff on the head with a pistol and later

fired a shot that missed him.   For his conduct at the nightclub,

Husband was convicted on charges of assault and using a deadly

weapon.

          After properly serving the Attorney General with a

notice of intent to submit a claim under the Virgin Islands Tort

Claims Act, V.I. Code tit. 33, § 3401 et seq., plaintiff filed a



                                3
suit in the district court on September 18, 1990.      The complaint

named as defendants the owner of the nightclub, the Government of

the Virgin Islands, and Husband.      The government was not served

with the complaint until April 30, 1991.

          In July 1991, the owner of the nightclub was dismissed

on the plaintiff's stipulation.       Meanwhile, pretrial proceedings

in the claim against Husband continued in the district court.

          As of September 1992, the Attorney General's office had

not responded to the complaint, and on September 18, 1992,

plaintiff moved for default against the government.      There is no

indication in the record that the government was ever given

notice of the motion before the clerk entered the default on

January 26, 1993.

          On February 12, 1993, the Attorney General's office

filed an untimely answer without obtaining leave of court.      The

district court struck the answer on February 22, 1993 and

directed that a hearing on damages would begin on March 29, 1993.

          In the period between March 9, 1993 and March 24, 1993,

the Attorney General's office filed motions to file an answer out

of time, to set aside the default, and for judgment on the

pleadings.   The trial judge denied all of these motions, thus

rejecting the government's contention that no judgment by default

could be entered under the governing Virgin Islands law.

          The court conducted a hearing that was confined to the

amount of damages the government would be required to pay.

Plaintiff and one of his physicians testified on the extent of

the physical and emotional injuries that were caused by the


                                  4
incident at the nightclub.   Although a Deputy Attorney General

cross-examined the witnesses, he did not produce any evidence. At

the conclusion of the damages hearing, the district court entered

a judgment in favor of plaintiff in the amount of $25,000.

          The plaintiff's claim against the government is based

on the Virgin Islands Tort Claims Act.1      The statute is a limited

waiver of the Virgin Islands' sovereign immunity conferred by the

Revised Organic Act of the Virgin Islands, 48 U.S.C. § 1541(b).

See Deary v. Three Un-Named Police Officers, 746 F.2d 185, 193

(3d Cir. 1984).2

          One of the limitations on the government's conditional

waiver can be found in V.I. Code tit. 33, § 3408.       This section

provides that the government assumes liability with respect to

personal injury "caused by the negligent or wrongful act or

omission of an employee . . . while acting within the scope of

his office or employment, under circumstances where the

Government of the Virgin Islands, if a private person, would be

liable to the claimant . . . ."       Id. § 3408(a).   However, those

provisions do not apply if the injury "is caused by the gross

negligence of an employee . . . while acting within the scope of

his office or employment."   Id. § 3408(b).




1
 The complaint also asserted damages under 42 U.S.C. § 1983, but
the Virgin Islands government is not subject to such suits, see
Ngiraingas v. Sanchez, 495 U.S. 182 (1990); Brow v. Farrelly, 994
F.2d 1027, 1037 (3d Cir. 1993), and that claim is not raised in
this appeal.
2
 For a discussion of the sovereign immunity of a U.S. Territory,
see Ngiraingas, 495 U.S. at 203-06 (Brennan, J., dissenting).


                                  5
            A further limitation of the government's conditional

waiver can be found in section 3411(a):    "No judgment shall be

granted on any claim against the [g]overnment . . . except upon

such legal evidence as would establish liability against an

individual or corporation in a court of law, and no judgment by

default shall be entered against the [g]overnment."      No case

law defines the meaning of "judgment by default" as that term is

used in the Virgin Islands Tort Claims Act.

            The Federal Rules of Civil Procedure are in effect in

the Virgin Islands.    In moving for a default, plaintiff followed

the procedures set out in Rule 55, which makes a distinction

between an "entry of default" and a "judgment by default."       Rule

55(a) allows the court clerk to enter a default against a party

on its failure to plead or otherwise defend.    However, when the

claim is unliquidated, plaintiff must apply to the court for a

"judgment by default."    If it is necessary "to determine the

amount of damages or to establish the truth of any averment by

evidence," the court may conduct a hearing.    Fed. R. Civ. P.

55(b)(2).

            Rule 55(e) provides that "[n]o judgment by default

shall be entered against the United States . . . unless the

claimant establishes a claim or right to relief by evidence

satisfactory to the court."    Fed. R. Civ. P. 55(e).     However,

because that subsection is expressly limited to the government of

the United States, it is not applicable to the case at hand, and

consequently, decisional law interpreting that subsection is not

controlling.    Moreover, the clause beginning with "unless" is


                                 6
conspicuously not present in the Virgin Islands statute.     Thus,

the cases allowing the entry of a "default" against the federal

government and granting relief to a plaintiff under the exception

provided by that clause are not particularly helpful, even by

analogy.

           Plaintiff proceeded in the district court as if the

Virgin Islands Tort Claims Act and Federal Rule of Civil

Procedure 55 were compatible and complementary.    The language of

the Tort Claims Act, however, is quite specific and unambiguously

prohibits any judgment by default against the territorial

government.

           The Rules Enabling Act provides that the federal rules

must not "abridge, enlarge or modify any substantive right."       28

U.S.C. § 2072(b).    Rule 55(e), however, substantially restates

the now-repealed last clause of 28 U.S.C. § 763 (action against

the United States under the Tucker Act).   See Fed. R. Civ. P. 55

advisory committee's note; see also 10 Charles A. Wright et al.,

Federal Practice and Procedure § 2702 (1983).     Because Rule 55(e)

in a sense incorporates a statute addressing the limitation on

the sovereign immunity of the United States, the Rule is not

wholly procedural.

           To the extent that the Virgin Islands waiver of

sovereign immunity is flatly conditioned on the non-availability

of a default judgment, the matter is one of substance and not

procedure.    Applying Rule 55(e) to permit default judgments

against the Virgin Islands government in the present case would

significantly "enlarge" the substantive rights conferred on

                                 7
claimants under section 3411(a) of the Tort Claims Act Therefore,

where a conflict between Rule 55 and the substantive Virgin

Islands statute exists, as here, the Rule must give way.3

           Before presenting his testimony on damages in the

district court, plaintiff argued that a judgment entered after a

damages hearing would constitute a judgment on the merits, even

though the government was prohibited from contesting its

liability because of the default.   The district court accepted

this reasoning, but we cannot agree that the clear statutory

prohibition against a judgment by default may be so evaded.

           The judgment against the government was grounded on two

essential bases -- liability and damages.   Lacking either

element, the judgment can have no validity under the Tort Claims

Act.   In the case at hand, the default ruling on liability goes

to the very heart of the judgment, despite the fact that a

hearing was conducted to enable the government to contest the

amount of damages.   The judgment here was not based on the merits

of both liability and damages, but on damages only.   The

judgment, therefore, is fatally deficient under the Virgin

Islands Tort Claims Act.

           The facts before us support the legislative decision to

ban default judgments against the government.   The Attorney

General's office was indeed negligent and inefficient in its case


3
We are not presented here with the situation where a federal
rule has merely an incidental effect on a substantive right and
is "reasonably necessary to maintain the integrity of that system
of rules." See Burlington N. R.R. v. Woods, 480 U.S. 1, 5
(1987).


                                8
processing procedures by allowing so much time to elapse before

it filed an answer.   However, the circumstances in which

plaintiff was injured suggests that there may be serious

questions about whether the government is liable.   There is

reason to believe that the government might ultimately prevail if

given a full opportunity to defend and present evidence.

          In discussing a default against the federal government

in a different context, the United States Court of Appeals for

the Fifth Circuit explained:   "[Rule 55(e)] rests on the

rationale that the taxpayers at large should not be subjected to

the cost of a judgment entered as a penalty against a government

official which comes as a windfall to the individual litigant."

Campbell v. Eastland, 307 F.2d 478, 491 (5th Cir. 1962).    In the

present state of the record, we cannot determine whether the

award to plaintiff would be a windfall, but we must recognize

legitimate concerns for taxpayers who would be detrimentally

affected by the entry of a judgment by default.

          The problem in this case was apparently brought about

by someone in the Attorney General's office who had placed the

civil complaint in the file on the criminal case pending against

defendant Husband.    Although efficient procedures can minimize

the risk of such an occurrence, misfilings can occur in any

office.   It may well be that the legislature had anticipated such

human failings when it prohibited default judgments against the

government.

          The district court is not powerless to cope with delays

such as occurred in this case.    We are confident that if the

                                 9
court -- at the plaintiff's urging -- had called the delinquency

to the attention of the Attorney General, an answer would have

been forthcoming.   There is no evidence in the record to indicate

that the Attorney General's office was being uncooperative or

deliberately delaying disposition of the case.4   We expect that

the Attorney General will improve the procedures in the office so

that similar incidents of this nature will not occur in the

future.

          Because the territorial government had the power to

completely retain its sovereign immunity and thus bar all relief

to tort claimants, the legislature's decision to deny recovery

based on default judgments is obviously defensible.   We conclude

that a judgment entered after default on liability and following

a contested hearing on damages is nevertheless a "judgment by

default" prohibited in actions brought under the Virgin Islands

Tort Claims Act.    See Concepcion v. Soto, 519 F.2d 405, 407 n.2

(3d Cir. 1975).

          We emphasize that our holding applies to the situation

where the government has failed to appear or file an answer in

response to a properly served complaint.   We do not consider in

this case the circumstances where sanctions -- whether

categorized as a default or simply having the effect of one --may


4
Plaintiff opposed the government's motion to set aside the
default, arguing: "`After several demands, not only from my
office but also from the Court, when this case was pending with
no response from the government. Default was the only avenue
that we had.'" Br. of Plaintiff-Appellee at 11-12 (quoting R. at
18). We have found nothing in the record to support this
statement.

                                 10
be imposed as a penalty for government conduct during the

progress of litigation.    Cf. Reynolds v. United States, 192 F.2d

987, 998 (3d Cir. 1951) (Federal Rule of Civil Procedure 55 does

not apply to sanctions for the government's failure to produce

discovery materials), rev'd on other grounds, 345 U.S. 1 (1953).

            Our holding is consistent with Anchorage Assocs. v.

Virgin Islands Bd. of Tax Review, 922 F.2d 168 (3d Cir. 1990). In

that case, we pointed out the difference between granting a

default judgment and granting a motion for relief pursuant to a

local rule upon the complete failure of a party to respond.       The

defendant had failed to file an answer to a motion for summary

judgment.    However, we held that delinquency was not sufficient

to justify the entry of summary judgment in the absence of facts

in the record to support the action on the merits.   Id. at 176.

            Plaintiff suggests that if the default is found to be

improper, then the finding on damages should be sustained to

avoid retrial on that issue if liability is ultimately found

against the government.    We decline to follow that suggestion

because the limited scope of the hearing on damages did not

permit inquiry into the potential effect of the settlements

reached between plaintiff and the other two defendants, nor did

it address issues of joint or several liability and primary or

secondary liability.

            Accordingly, we will reverse the judgment of the

district court and will remand for a trial on both liability and

damages.



                                 11
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