In an earlier securities suit, alleging the mishandling of funds in trust, default judgment was entered into against Charterhouse on behalf of the appellant "and the class of similarly situated persons." Months later, in reconsidering individual defendants' summary judgment motions, the court retrospectively ruled against class certification. In a second action, appellant and the putative class sought recovery as judgment creditors against Charterhouse's insurers. The district court dismissed the claim because the appellant lacked subject matter jurisdiction and the claim was unenforceable because it awarded damages to an uncertified class.
This court held that the district court erred in finding the default judgment void, because the appellant had subject matter jurisdiction, and while the judgement was unenforceable with respect to the class members, the appelllant himself had an enforceable judgment. 2006 U.S. App. Lexis 7793. In regards to the rights of the putative class, this court held that the court may only adjudicate the rights of putative class members upon certification of the class under Rule 23. Therefore in the absence of formal class certification or in certain cases where the record shows that the "parties and the court acted at all times as though a class existed," the court cannot adjudicate the rights of an alleged class. Although the language of the judgment may have implicitly suggested that damages were awarded to the class as a whole, "the fourth circuit has never allowed the rigorous Rule 23 analysis to be accomplished implicitly." As such, this court affirmed that the default judgment was uneforceable with respect to the class. - J.J.