Appeal from an order of the United States District Court for the Eastern District of New York, Thomas C. Platt, Judge, denying defendants' second motion, made pursuant to Fed.R.Civ.P. 60(b)(6), to vacate a summary judgment entered against them on June 12, 1974. Reversed and remanded for an evidentiary hearing.
Waterman and Gurfein, Circuit Judges, and Blumenfeld,*fn* District Judge.
Salvatore and Margaret Cirami appeal from an order denying their second motion, made pursuant to Rule 60(b)(6) of the Federal Rules of Civil Procedure, to vacate a final judgment of the United States District Court for the Eastern District of New York entered against them in a suit for unpaid taxes. The precise nature of the government's tax claim is set forth in our earlier opinion in this case affirming the denial of the Ciramis' first Rule 60(b) motion, United States v. Cirami, 535 F.2d 736 (2d Cir. 1976).
For the purposes of this opinion, we take the facts to be as the Ciramis allege, for all we are to do on this appeal is determine whether those allegations, if proved, would justify relief. United States v. Karahalias, 205 F.2d 331, 333 (2d Cir. 1953). We believe the Ciramis have now alleged a set of "exceptional circumstances," Rinieri v. News Syndicate Co., 385 F.2d 818, 822 (2d Cir. 1967), resulting in a "situation of extreme hardship" to them. United States v. Karahalias, supra. Because it would be "appropriate to accomplish justice," Klapprott v. United States, 335 U.S. 601, 614-15, 93 L. Ed. 266, 69 S. Ct. 384, judgment modified, 336 U.S. 942, 69 S. Ct. 398, 93 L. Ed. 1099 (1949), we hold that these allegations, if proved, would justify Rule 60(b) (6) relief.
The underlying action was commenced in the Eastern District of New York in February 1973 against the Ciramis, their son James, and others, pursuant to § 7401 of the Internal Revenue Code of 1954, to reduce to judgment certain federal income tax assessments against Salvatore and Margaret,*fn1 to set aside as fraudulent a conveyance of real property to their son James, and for other relief. The Ciramis were represented by an attorney, one Newman, who filed on their behalf a brief answer generally denying the government's allegations, asserting that the complaint failed to state a claim upon which relief could be granted, and asserting a counterclaim for "$10,000.00 in taxes illegally and erroneously collected."*fn2
In December 1973 the government moved before the late Judge Walter Bruchhausen for summary judgment solely on the claim involving the tax assessments then outstanding against Salvatore and Margaret Cirami.*fn3 No opposition to this motion was filed on the Ciramis' behalf. By order of March 18, 1974, Judge Bruchhausen granted the government's motion "there being no opposition."*fn4 On June 12, 1974, final judgment for almost $271,000 was entered against the Ciramis, the judgment itself reciting that the motion for the summary judgment had not been opposed.
In late August 1974 the Ciramis replaced Newman as their counsel. On October 4, 1974, the government was advised that the law firm of Wagman Cannon & Musoff ("Musoff") was now representing Margaret and James Cirami and that one Carl N. Mione was now representing Salvatore. Musoff filed a notice of appearance on December 23, 1974.
On May 1, 1975, Salvatore and Margaret, pursuant to Rule 60(b)(6), Fed R. Civ. P., filed a motion to vacate the June 12, 1974 judgment. By affidavit Salvatore asserted that he had not learned of the entry of summary judgment on the tax assessment claim against him and his wife until after he had retained new counsel to replace Newman. In support of their motion, Salvatore and Margaret submitted extensive evidence relative to the merits of the underlying tax claim but submitted no evidence of any circumstances pertaining to their failure to respond to the government's motion for summary judgment on the tax assessment claim. On October 6, 1974, Judge Bruchhausen denied this motion to vacate the summary judgment on the grounds that Salvatore and Margaret had not shown the "extraordinary circumstances" required by Rule 60(b)(6), and had not made their motion within a reasonable time as required by the rule. He also noted that the Ciramis had not shown a meritorious defense to the tax assessments.
Salvatore and Margaret appealed. On May 10, 1976, we affirmed, United States v. Cirami, 535 F.2d 736 (2d Cir. 1976), observing that (1) the only exceptional circumstance relied upon by Salvatore and Margaret in support of their motion to vacate was the circumstance that their attorney Newman had allowed the entry of summary judgment by default against his clients for "unknown" reasons; (2) Salvatore and Margaret and their new attorneys had failed either to obtain an affidavit from Newman explaining his default or to indicate any efforts which they had taken to obtain Newman's testimony; and (3) there was no indication of any efforts by Salvatore, "an experienced businessman," or Margaret to determine the status of the tax assessment or of the lawsuit against them or of the activity of Newman.*fn5 Noting that a Rule 60(b)(6) motion is addressed to the discretion of the district court judge, we stated that under the circumstances, we could not find an abuse of discretion:
On the record before us we are totally uninformed of the reasons for the failure of the appellants' former counsel to contest the motion for summary judgment or whether the failure was deliberate or inadvertent.
535 F.2d at 739. We went on to note that we have
rather consistently refused to relieve a client of the burdens of a final judgment entered against him due to the mistake or omission of his attorney by reason of the latter's ignorance of the law or of the rules of the court, or his inability to efficiently manage his caseload.
Id. at 739. While declining to hold that gross negligence of an attorney would provide a basis for Rule 60(b)(6) ...