National Development Co. v. Triad Holding Corp. & Adnan Khashoggi
930 F.2d 253 (1991)
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Rule of Law:
For the purpose of service of process under Federal Rule of Civil Procedure 4(d)(1), an individual can have multiple dwelling houses or usual places of abode, provided each location has sufficient indicia of permanence. Service is proper at such a location if the defendant is actually residing there at the time service is effected.
Facts:
- National Development Company ('NDC'), a Philippine government-owned corporation, entered into a joint venture with Triad Holding Corporation, a company controlled by Adnan Khashoggi.
- After the joint venture dissolved, NDC claimed that Khashoggi converted approximately $3.5 million of the venture's assets.
- Khashoggi is a citizen of Saudi Arabia and a frequent international traveler who maintains at least twelve residences around the world, including a ten-acre compound in Riyadh, Saudi Arabia, which he considers his domicile.
- In 1974, Khashoggi purchased a large, multi-floor condominium apartment in the Olympic Tower in New York City, valued at $20-25 million, which he later transferred to a corporation he wholly owns.
- Khashoggi spent over $1 million remodeling the Olympic Tower apartment, which has a swimming pool, office, and requires a staff of two full-time and three part-time employees.
- During 1986, Khashoggi stayed at the Olympic Tower apartment for a total of 34 days, while staying at his Riyadh compound for three months.
- Khashoggi was physically staying at the Olympic Tower apartment from December 15 through December 23, 1986.
- On December 22, 1986, a process server handed a copy of the summons and complaint for NDC's lawsuit to Aurora DaSilva, a housekeeper at the Olympic Tower apartment.
Procedural Posture:
- National Development Company ('NDC') filed an action in the U.S. District Court for the Southern District of New York to compel Adnan Khashoggi to arbitrate.
- After Khashoggi failed to appear, the district court entered a default judgment on September 23, 1987, compelling arbitration.
- Following an arbitration award against Khashoggi, NDC returned to the district court and obtained a second default judgment on August 4, 1989, confirming the award.
- On October 25, 1989, Khashoggi filed a motion pursuant to Fed.R.Civ.P. 60(b)(4) in the district court to vacate both default judgments for lack of personal jurisdiction due to improper service.
- The district court denied the motion to vacate the first default judgment (compelling arbitration) but granted the motion to vacate the second default judgment (confirming the award).
- Khashoggi (appellant) appealed the district court's denial of his motion to vacate the first default judgment to the United States Court of Appeals for the Second Circuit, with NDC as the appellee.
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Issue:
Does a luxury condominium apartment qualify as an individual's 'dwelling house or usual place of abode' for service of process under Federal Rule of Civil Procedure 4(d)(1), when the individual owns it, maintains it with a full-time staff, and is physically residing there at the time of service, even though he has numerous other residences worldwide and considers his domicile to be in another country?
Opinions:
Majority - McLaughlin, Circuit Judge
Yes. In a modern, mobile society, it is unrealistic to interpret Rule 4(d)(1) to mean that a person can have only one dwelling house or usual place of abode. A person can have multiple 'dwelling houses,' provided each possesses sufficient indicia of permanence. The Olympic Tower apartment qualifies as such because Khashoggi owned it, spent a considerable sum remodeling it to fit his lifestyle, maintained a staff there, and even listed it as a residence in a separate bail application. Critically, Khashoggi was actually living in the apartment on the day service was effected. Therefore, service at that location was reasonably calculated to provide actual notice and was valid under Rule 4(d)(1).
Analysis:
This decision significantly modernizes the interpretation of 'dwelling house or usual place of abode' under the Federal Rules of Civil Procedure. It rejects a rigid, domicile-based approach in favor of a flexible standard that accounts for the lifestyles of affluent and highly mobile individuals. By establishing that a person can have multiple residences for service of process purposes, the court created a precedent that prevents transient defendants from using their multiple homes to evade jurisdiction. The ruling makes it easier to serve such individuals so long as the chosen location has 'indicia of permanence' and the defendant is present at the time of service.
