On Tuesday, the Supreme Court considered whether it’s possible to run out of time to challenge a judgment that never should have been issued.
The dispute in Coney Island Auto Parts Unlimited, Inc. v. Burtonarose arose after Vista-Pro Automotive, LLC began bankruptcy proceedings in Tennessee in November 2014. As part of the bankruptcy process, Vista-Pro’s creditors in early 2015 filed separate lawsuits against companies with unpaid invoices, including Coney Island Auto Parts Unlimited. When Coney Island failed to respond, the Tennessee bankruptcy court issued a default judgment, ordering the company to pay nearly $50,000 to Vista-Pro’s creditors.
In early 2016, the Tennessee bankruptcy court appointed Jeanne Ann Burton to serve as trustee for Vista-Pro, which, by that point, was no longer in business. Burton “began working to tie up loose ends and collect obligations owed to the estate,” as she noted in her brief to the Supreme Court, but Coney Island did not respond until 2021, after Burton had registered the Tennessee bankruptcy court’s judgment in New York and got a hold placed on the company’s bank account.
Coney Island initiated legal action in a New York bankruptcy court, alleging that the 2015 complaint was served improperly and that, for that reason, the Tennessee bankruptcy court did not have the power – known as jurisdiction – to issue a default judgment against it. The New York court declined to intervene and so did a U.S. district court, holding that Coney Island needed to seek relief directly from the Tennessee bankruptcy court.
In July 2022, Coney Island filed a motion with the Tennessee bankruptcy court seeking to have the judgment against it vacated. That court denied the motion, explaining that the seven-year gap between the default judgment and Coney Island’s motion violated the “reasonable time” standard in Federal Rule of Civil Procedure 60, which the U.S. Court of Appeals for the 6th Circuit has said applies to motions to vacate void judgments. “Even if Coney Island can succeed in showing that the judgment is otherwise void due to improper service, its request to set aside the judgment must be denied based solely on the timeliness problem,” the Tennessee bankruptcy court said. A district court and the 6th Circuit later upheld this decision.
During Tuesday’s oral arguments, which lasted less than 40 minutes, the justices reflected on what’s at stake in the case and how Rule 60 compares to other procedural rules. While several justices seemed interested in giving litigants who are subject to a potentially void default judgment plenty of time to challenge it, some noted that allowing unlimited time for such a challenge could be unfair to other parties to the suit or just plain “strange,” as Justice Samuel Alito put it.
Alluding to Coney Island’s claim that imposing a time limit would allow a void judgment to “spring to life” after a reasonable time had passed, Justice Ketanji Brown Jackson stated that there’s a difference between resuscitating a void judgment and imposing a “procedural limitation in terms of time.” Such rules “really don’t speak to the issue of whether or not it’s actually void,” she said. Instead, they speak to how long you have to ask a court to review the judgment. Without such a time limit, the litigant that benefited from the judgment could have their lives or work “upended at any time,” Jackson added.
In response, Daniel Ginzburg, who represented Coney Island, reiterated that “if the judgment is void from the get-go … then there cannot be a time limit.” Congress couldn’t impose one even if it wanted to, he later told Justice Sonia Sotomayor, because doing so would violate the Constitution’s due process clause.
In a move that may have signaled his support for Coney Island’s position, Alito invited Ginzburg to share what other federal courts of appeals and legal commentators have said about applying Rule 60’s “reasonable time” standard to judgments that were “void ab initio,” or from the beginning. “I think they have almost universally … held that … the reasonable time limitation does not apply to a void judgment in the pure sense of the word,” Ginzburg responded.
Alito later asked Lisa Blatt, who represented Burton, to account for that situation. She acknowledged that Ginzburg’s answer was correct, but she contended that, in the rulings at issue, several courts of appeals acknowledged that “they’re not following the literal text.” Such decisions are “not consistent with the Court’s modern approach” to statutory interpretation, Blatt said.
Blatt added that it would not be unheard of for the court to side against all those courts of appeals because “just last term you ruled against a case I argued when all the courts had gone our way,” prompting a burst of laughter in the courtroom.
Although clearly amused by that response, Alito continued pressing Blatt by pointing to a decision from last term in which the court held that when a judgment “is void ab initio,” it should be treated “as if it never existed.” “[D]oesn’t that lead to the conclusion that was drawn by all these courts of appeals?,” he asked.
Blatt contended that it doesn’t. When determining what amount of time is a “reasonable time,” a court could consider factors that led to the long delay, but it shouldn’t automatically treat judgments thought to be “void ab initio” differently than other potentially void judgments, she said.
Blatt built on this answer in responses to questions from Justice Elena Kagan. She wouldn’t accept that responding in a reasonable amount of time could mean responding at any time, but she would accept that a court could interpret “reasonable time” to mean quite a lot of time when a case involves people who are “unsophisticated” in matters of law and didn’t have the resources to hire a lawyer or didn’t realize they should. She also accepted that it would make sense for the clock to start ticking once someone tries to enforce a judgment, rather than when the judgment is issued.
Based on Tuesday’s arguments, it seemed as if a majority of justices are open to applying the “reasonable time” standard but making the actual time limit dependent on the kinds of factors that Blatt discussed. It also seemed as if the court won’t need until the end of the term in late June or early July to issue its decision.
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