Unpublished Disposition, 900 F.2d 263 (9th Cir. 1990)

MEMORANDUM^** 

Laroque appeals from the district court's orders vacating the default judgment against Qantas, ruling on procedural matters, and dismissing Laroque's complaint for lack of subject matter jurisdiction. We affirm.

The existence of subject matter jurisdiction is a question of law which we review de novo. America West Airlines v. GPA Group, Ltd., 877 F.2d 793, 796 (9th Cir. 1989). Laroque's complaint alleged jurisdiction under 28 U.S.C. §§ 1332 and 1605-07.

The Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1605-07 (1976) ("FSIA"), is the exclusive source of subject matter jurisdiction over all suits involving foreign states or their instrumentalities. See Security Pac. Nat'l Bank v. Derderian, 872 F.2d 281, 284 (9th Cir. 1989); Compania Mexicana de Aviacon v. United States District Court, 859 F.2d 1354, 1358 (9th Cir. 1988) (citing, inter alia, Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 103 S. Ct. 1962, 76 L. Ed. 2d 81 (1983)). Qantas is owned by the Australian government and is thus its agent or instrumentality. See 28 U.S.C. § 1603(b) (2); cf. America West, 877 F.2d at 796; Compania Mexicana, 859 F.2d at 1359.

The FSIA establishes a presumption of immunity for foreign states and their agents. 28 U.S.C. § 1604; see also Security Pac., 872 F.2d at 285. A United States court can only assume jurisdiction over such an entity when one of the statutory exceptions to immunity applies. See 28 U.S.C. § 1605; Verlinden B.V., 461 U.S. at 485 n. 5; America West, 877 F.2d at 796; Compania Mexicana, 859 F.2d at 1359. Laroque's complaint does not point to a specific statutory exception authorizing jurisdiction.¹  See 28 U.S.C. § 1605. On this record, none of the exceptions listed in the statute applies, see id., and Qantas therefore possesses immunity from jurisdiction in the United States courts.² 

We review the district court's decision to set aside the default judgment for abuse of discretion. Falk v. Allen, 739 F.2d 461, 462 (9th Cir. 1984). A decision to set aside a default is not an abuse of discretion unless the court is "clearly wrong" in its determination of good cause. Mendoza v. Wight Vineyard Management, 783 F.2d 941, 945 (9th Cir. 1986).

The district court did not err in setting aside the entry of default and default judgment against Qantas. When a court lacks subject matter jurisdiction, the judgments it renders are void. Watts v. Pinckney, 752 F.2d 406, 409 (9th Cir. 1985). "A void judgment is a legal nullity and a court considering a motion to vacate has no discretion in determining whether it should be set aside." Id. at 410 (citing Jordan v. Gilligan, 500 F.2d 701, 704 (6th Cir. 1974), cert. denied, 421 U.S. 991 (1975)).

In Falk, the Ninth Circuit looked to three factors to determine whether a default judgment should be set aside: (1) whether the plaintiff will be prejudiced; (2) whether the defendant has a meritorious defense; and (3) whether culpable conduct of the defendant led to the default. 739 F.2d at 463. Setting aside the judgment was appropriate under these standards.

A plaintiff is prejudiced when the court's action hinders his ability to pursue his claim on the merits. Id. at 463. In this case, the effect of the district court's setting aside of the default judgment is the same as if the district court had refused to enter the default judgment; neither action has any effect on Laroque's ability to prosecute his case on the merits.

Qantas had a meritorious defense based on the court's lack of subject matter jurisdiction. In addition, the default judgment was not entered as a result of Qantas' culpable conduct. At most, Qantas' Hawaii manager was careless in signing the acknowledgment of service but failing to realize that the document was an official pleading requiring a response. Qantas received no notification of Laroque's request for a default judgment, or indeed of the entry of judgment, until a year after judgment was entered. Upon receiving notification, it took immediate action.

Because the district court lacked subject matter jurisdiction, we need not examine the claimed procedural errors on their merits.

AFFIRMED.