National Development Co. v. Triad Holding Corp. & Adnan Khashoggi

930 F.2d 253 (2d Cir. 1991)

Casebook p. 33

Facts:

  • On 12/22/86, NDC handed a summons to Khashoggi’s housekeeper in his Olympic Towers apartment in NYC.
  • Khashoggi was at the apartment from 12/15/86 to 12/23/86
  • Khashoggi is a citizen of Saudi Arabia and resides in a compound in Riyadh.
  • During 1996 he spent 3 months in the Riyadh home.
  • Khashoggi bought the NYC apartment in 1974 and spent $1M in remodeling it. Shortly after this, he transferred ownership to a company that he owns.
  • The NYC apartment is one of 12 locations in which Khashoggi resides

Procedural History:

  • NDC served notice to Khashoggi via his housekeeper on 12/22/86
  • After failing to appear in court on 9/23/87 a default judgment was entered against defendant
  • On 10/25/89 Khashoggi filed a motion to vacated the default judgment
  • The district court held an evidentiary hearing
  • The US District Court refused to vacate the default judgment, holding that even though the NYC apartment was not Khashoggi’s “dwelling house or usual place of abode,” (Rule 4) he was given “actual notice” and the service process was therefore proper.

Contentions of parties:

Defendant: Khashoggi’s “dwelling house or usual place of abode,” (Rule 4) is in Saudi Arabia and therefore the only place in which he can properly receive notice.

Issue:

Whether the service of the summons on 12/22/86 at the NYC apartment was in accordance with Rule 4.

Holding:

The service process was proper because the NYC apartment is Khashoggi’s “dwelling house or usual place of abode,” compliant with Rule 4 but NOT, as the district court held, because he was given “actual notice.”

Rule:

“Dwelling house or usual place of abode,” as stated in Rule 4 can be two or more places if (1) it contains “sufficient indicta of performance” and (2) the person is living there at the time of the service.

Reasoning:

* The wording of “dwelling house or usual place of abode,” (Rule 4) is archaic and should be interpreted in the light of today’s mobile and affluent society.

* Taking modern society into account, “dwelling house or usual place of abode,” as stated in Rule 4 can be two or more places if (1) it contains “sufficient indicta of performance” and (2) the person is living there at the time of the service (RULE).

* The NYC apartment complies with this standard because:

  1. It was owned and furnished by Khashoggi
  2. He spent $1M to remodel it
  3. He Listed it as his residence in a bail application in 1989
  4. He was living there at the time of service

* Given these factors, the NYC apartment was, if not the most likely, a “reasonably calculated, under all the circumstances” Mullane method of ensuring he received notice

Court’s Order:

Affirmed