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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Murray v. Ledbetter (09/29/2006) sp-6053
Notice: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| HERSHELL B. MURRAY, | ) |
| ) Supreme Court No. S- 11530/S-11609 | |
| Appellant/Cross-Appellee, | ) |
| ) Superior Court No. 3AN-01-06624 CI | |
| v. | ) |
| ) | |
| RODNEY D. LEDBETTER and | ) O P I N I O N |
| KATHERINE L. LEDBETTER also | ) |
| known as KATHERINE L. | ) No. 6053 - September 29, 2006 |
| SCHLOTFELDT, | ) |
| ) | |
| Appellees/Cross-Appellants. | ) |
| ) | |
Appeal from the
Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Sen K. Tan,
Judge.
Appearances: Michael Jungreis, Hartig Rhodes
Hoge & Lekisch, PC, Anchorage, for
Appellant/Cross-Appellee. Gregory R.
Henrikson, Marc G. Wilhelm, and Marjorie K.
Allard, Richmond & Quinn, Anchorage, for
Appellees/Cross-Appellants.
Before: Bryner, Chief Justice, Matthews,
Fabe, and Carpeneti, Justices. [Eastaugh,
Justice, not participating.]
BRYNER, Chief Justice.
I. INTRODUCTION
Hershell Murray appeals a decision by the Alaska
superior court that refused to enforce an Idaho judgment against
Katherine Ledbetter because, in the courts view, the judgment had
been obtained by fraud on the Idaho court and had thereby
deprived Katherine of an opportunity to be heard. But the trial
court did not find an intentional fraud or a reckless
misrepresentation. Moreover, Murray was not involved in the
misrepresentation. And the record shows that Katherines failure
to appear and defend in the Idaho action largely resulted from
her own conscious decision not to participate in the case. Given
these circumstances, we find that the alleged misrepresentation
amounted, at most, to a wrong committed between the parties and
was not sufficiently egregious to qualify as a fraud directed
against the court. Accordingly, we reverse the superior courts
judgment.
II. FACTS
The dispute in this case traces its origins to the
1980s, when Rodney and Katherine Ledbetter, who were married at
the time, participated in some business ventures with Hershell
Murray. By the late 1980s their ventures went sour. In 1989 the
Ledbetters applied for bankruptcy in the United States Bankruptcy
Court for the District of Nevada. Murray filed a claim in the
bankruptcy action, alleging that the Ledbetters owed him money
that they had gained by engaging in fraud. The Ledbetters
eventually settled the fraud claim with Murray, stipulating to
give him notes that jointly and severally obliged them to pay
Murray $500,000, plus interest, over five years. As part of the
settlement, the Ledbetters also agreed to sign a confession of
judgment acknowledging their liability to Murray for the amounts
due under the note. The settlement agreement expressly provided
that, if the Ledbetters defaulted on their obligation, Murray
could sue for a judgment on their confession in any state where
either Rodney or Katherine owned property or resided. The
bankruptcy court approved the stipulation in 1990 and
incorporated its terms in the order confirming the Ledbetters
reorganization plan.
The following year Katherine and Rodney divorced in the
Idaho district court. Katherine was represented by a law firm
from Ketchum, Idaho; Rodney was represented by another attorney
from Ketchum, Roger Crist. In April 1991 the Idaho court issued
a decree of divorce. The decree ordered Rodney to assume
liability for most marital debts, and to hold Katherine harmless
from any claims connected with those debts, including debts of
the parties and claims relating to those debts listed in their
1989 bankruptcy proceedings.
In February 1992 Murray sued Rodney and Katherine in
the Idaho district court, alleging that they had defaulted on
their 1990 settlement agreement and seeking entry of a judgment
against them, jointly and severally, on their Nevada confession
of judgment. Katherine received personal service of the summons
and complaint for Murrays suit soon after the complaint was
filed. On March 5, 1992, she wrote a letter to Murrays Idaho
lawyer, Bradley Andrews, enclosing a copy of her recent divorce
decree. Referring to the decrees provision in which Rodney
assumed responsibility for all marital debt, Katherine demanded
to be removed from the suit immediately as is my legal right
according to my divorce. She then added, I look forward to your
immediate response. In response, Andrews simply sent Katherine a
copy of a letter that had recently been sent to Rodney by another
of Murrays attorneys. The letter said that its purpose was to
confirm that we [Murrays attorneys] will give you and Katherine
an extension until March 23, 1992 in which to file a response to
the Motion for Judgment now pending in Blaine, Idaho. The letter
also mentioned that Rodney had offered to settle the pending
action by an agreement that would have allowed Murray to have the
judgment he sought if Murray would agree not to execute on it, in
return for which Rodney proposed to give Murray information on
the whereabouts of a third party who was trying to shelter assets
that could be collected to satisfy the judgment.
Upon receiving this response from Andrews, Katherine
stopped by the office of Rodneys attorney, Roger Crist. Although
she evidently did not meet with Crist, Katherine gave Crists
receptionist all the paperwork she had received concerning the
recently filed lawsuit, including the original summons and
complaint that had been served on her by the sheriff; her copy of
the March 5 letter she had sent to Murrays attorney, Andrews; and
the original letter that Andrews had sent Katherine in response,
together with its attached copy of the earlier letter to Rodney.
According to Crist, he had been contacted by Rodney,
who had asked Crist to file an appearance on Rodney and
Katherines behalf. Rodney had indicated that he wanted to delay
the lawsuit and work out a compromise judgment. Rodney had also
said that Katherine was willing to go along with this approach.
Based on his conversations with Rodney and the documents he
received from Katherine, Crist thought that he had authority to
represent Katherine. On March 23, he filed a notice of
appearance in the lawsuit on behalf of both Rodney and Katherine.
In May 1993 Crist and Andrews agreed on a settlement.
Under the settlements terms, Rodney and Katherine would allow the
Idaho court to enter judgment for Murray in the amount of the
unpaid principal on their original obligation, as well as accrued
interest, costs, and attorneys fees; they would also agree to a
schedule for paying the judgment. In return, Murray would sign a
covenant not to execute on the judgment as long as Rodney and
Katherine stayed current on their payments. On June 9, 1993, in
accordance with the settlements terms, the Idaho court entered
judgment against Rodney and Katherine, jointly and severally, for
$650,064.82. Crist purported to represent both Rodney and
Katherine in the settlement.
Meanwhile, after dropping the paperwork off at Crists
office in March 1992, Katherine had shown no further interest in
Murrays suit: she made no attempt to participate in the
litigation, never inquired about its status, and had no other
contact with the court or the parties counsel.
Katherine relocated to Anchorage in the summer of 1992.
She remarried there and took the family name of Schlotfeldt in
1995. In June 1998 the Idaho district court renewed and extended
the judgment against Rodney and Katherine for an additional five
years. The judgment evidently remained unpaid.
In 2001 Murray filed the Idaho judgment with the
superior court in Anchorage and served notice on Katherine that
he sought to enforce it against her as an Alaska judgment.
Katherine contested the judgment, alleging that it was
unenforceable because she had never authorized Crist to represent
her in the Idaho litigation.
The superior court held a hearing on Katherines claim.
At the hearing, Katherine initially seemed to question the
validity of the original Nevada confession of judgment, asserting
that the business dealings underlying that settlement had been
between Murray and Rodney and that she knew little or nothing
about them. Ultimately, however, Katherine focused her
challenge on the Idaho litigation. She claimed that Crists
actions in negotiating a settlement on her behalf without her
authorization amounted to a fraud on the Idaho court and rendered
its judgment void. While asserting that she had never authorized
Crist to represent her, Katherine gave conflicting testimony
concerning the underlying facts. Although she acknowledged that
she recalled giving Crists receptionist her paperwork concerning
the case, she claimed not to remember having been served with the
summons and complaint, and she further claimed that she did not
know that the Idaho case was still pending until she recently
received notice that Murray had filed the Idaho judgment in
Alaska. Katherine explained that she believed all along that her
divorce decree made Rodney responsible for their obligation and
gave her the right to be removed from any claims against Rodney.
In opposition to Katherines testimony, Murray presented
deposition testimony given by Crist. While Crist readily
acknowledged that he had never personally spoken with Katherine
about Murrays suit, he insisted that he had firmly believed,
based on assurances given to him by Rodney and the paperwork
Katherine had left at his office, that Katherine had wanted him
to handle her case and was willing to agree to the settlement he
ultimately negotiated for her and Rodney.
During closing arguments at the end of the hearing,
Katherines attorney argued that the Idaho judgment was the
product of fraud on the court because Crist had entered into the
stipulation without Katherines consent after falsely leading the
Idaho court to believe that he represented Katherine. This
critical lie, Katherines counsel asserted, had led to the Idaho
judgment. Insisting that the validity of the earlier Nevada
judgment was not at issue, Katherines attorney maintained that
the key to the fraud was that Crist did not have authority to
represent Katherine regardless of whether he believed that he
actually did.
Responding on Murrays behalf, Murrays counsel relied on
Katherines self-contradictory testimony and Crists relatively
straightforward account to argue that Katherine had actually
authorized Crist to handle her case, or at least that Crist could
have reasonably believed that she had consented. At worst,
Murrays counsel alternatively argued, Crists conduct did not
amount to a fraud on the court. Emphasizing that Katherine had
offered no evidence to prove that she did not actually owe Murray
the amounts claimed in the Idaho judgment, Murrays counsel
contended that the evidence failed to support a finding that
Crist had acted with intent to defraud or that his conduct had
caused any actual prejudice to Katherine. If Crist had done
nothing on Katherines behalf, Murrays counsel pointed out, the
Idaho court would have entered a default judgment against her and
no further notice to her would have been required under Idaho
law.
After considering the evidence and the parties
arguments, Superior Court Judge Sen K. Tan issued a written
decision concluding that the Idaho judgment was unenforceable
because it had been obtained by a fraud on the Idaho court.
Before reaching this conclusion, the judge made a number of
specific findings adopting Murrays view as to many of the
disputed facts. Specifically, the judge found that Katherine had
been personally served with the Idaho summons and complaint and
had thus received notice of the Idaho lawsuit. While noting that
Katherine had been honestly mistaken in believing that she was
not required to participate in the Idaho proceedings, the judge
also found that she had no reason to expect that either Andrews
or Crist would inform her of her misconception. And the judge
further emphasized that the letter Katherine received from
Andrews did not in any way suggest that Ms. Schlotfeldt did not
have to respond to the complaint. Moreover, the judge accepted
Crists testimony that, based on his conversations with Rodney and
the documents he received from Katherine, he actually believed
that he was authorized to represent Katherine. Finally, Judge
Tan flatly rejected the notion that Murray might have been
involved in any fraudulent conduct.
Despite these favorable findings, the court determined
that Crists conduct amounted to a fraud on the Idaho court
because Crist had purported to represent Katherine under
circumstances in which he took his instructions from [Rodney],
and at no time conferred with [Katherine]. Once Crist took
responsibility for Katherines representation, the court reasoned,
he owed her a duty to inform her of her mistake. In the courts
view, Crists failure to do so had left Katherine out of the
settlement and had thus deprived her of meaningful participation
in the case. Analogizing Katherines situation to one in which
the Ninth Circuit found that a fraud upon the court had been
committed, the judge ruled that the Idaho judgment was
unenforceable in Alaska because Katherine had never had her day
in court.1
Murray appeals.2
III. DISCUSSION
In challenging the superior courts ruling, Murray
argues that the record fails to support the superior courts
conclusion that Crist represented Katherine without
authorization. He further contends that, in any event, Crists
actions on behalf of Katherine caused her no harm and did not
amount to fraud on the court under prevailing standards in either
Idaho or Alaska. Given these circumstances, Murray insists that
the superior court was required to give full faith and credit to
the Idaho judgment.
Katherine responds that the policy against enforcing a
judgment obtained by fraud on the court is universally
recognized and was correctly applied here. Emphasizing that
Alaska cases dealing with fraud on the court have not required a
finding of specific intent to defraud, Katherine maintains that
the superior court properly found that Crist committed a fraud on
the Idaho court by recklessly disregarding his professional duty
to unambiguously secure her consent to be represented. Katherine
further maintains that it is simply irrelevant to speculate as to
what the Idaho court might have done in the absence of Crists
unauthorized actions.
A. Applicable Law
The threshold question raised by these arguments is
what law should apply in determining whether Crists conduct
amounted to a fraud on the court Idahos or Alaskas? Murray
filed his superior court action against Katherine under Alaskas
version of the Uniform Enforcement of Foreign Judgments Act.3
The act allows any person having an out-of-state judgment to file
an authenticated copy with the clerk of court in Alaska.4 The
clerk must then treat the foreign judgment in the same manner as
a domestic judgment.5 This includes allowing the person against
whom the foreign judgment is to be enforced to raise all the
defenses that would be available against a similar Alaska
judgment: A judgment so filed has the same effect and is subject
to the same procedures, defenses, and proceedings for reopening,
vacating, or staying as a domestic judgment and may be enforced
and satisfied in like manner.6 Under the express terms of this
provision, Alaska law would seemingly determine the availability
of a defense to Murrays Idaho judgment. Yet because the specific
defense at issue here involves a fraud allegedly committed in
Idaho against an Idaho court, a strong argument could be made
that Idaho law governing fraud on the court should determine
whether Crists conduct amounted to a fraud on that court.
Although the parties briefing conflicts on this choice-
of-law issue Murray advancing Idaho law and Katherine citing
Alaska law we need not resolve the conflict, for we are
convinced that the law governing fraud on the court in both
states dictates the same conclusion on the particular facts of
this case.
B. Fraud on the Court
As the United States Supreme Court observed in Hazel-
Atlas Glass Company v. Hartford-Empire Company, the equitable
doctrine of fraud on the court is a distinguishing feature of our
common-law tradition:
From the beginning there has existed along
side the term rule a rule of equity to the
effect that under certain circumstances, one
of which is after-discovered fraud, relief
will be granted against judgments regardless
of the term of their entry. This equity
rule, which was firmly established in English
practice long before the foundation of our
Republic, the courts have developed and
fashioned to fulfill a universally recognized
need for correcting injustices which, in
certain instances, are deemed sufficiently
gross to demand a departure from rigid
adherence to the term rule. Out of deference
to the deep rooted policy in favor of the
repose of judgments entered during past
terms, courts of equity have been cautious in
exercising their power over such judgments.
But where the occasion has demanded, where
enforcement of the judgment is manifestly
unconscionable, they have wielded the power
without hesitation.[7]
After recognizing that this common-law rule allowed
relief when after-discovered fraud made enforcement of the
judgment . . . manifestly unconscionable, 8 Hazel-Atlas went on
to consider the rules basic contours. Noting that a fraud on the
court entails more than simply a case of a judgment obtained with
the aid of a witness who, on the basis of after-discovered
evidence, is believed possibly to have been guilty of perjury,
the Court suggested that a finding of fraud on the court required
something like the case then before it: a deliberately planned
and carefully executed scheme to defraud not only the Patent
Office but the Circuit Court of Appeals.9 The Court further
emphasized that, on the record before it, [p]roof of the scheme,
and of its complete success up to date, is conclusive.10 The
Court also observed that no equities had intervened through
transfer of the fraudulently procured patent or judgment to an
innocent purchaser and that the party seeking relief could not
have been expected to do more than it did to uncover the fraud.11
The Court ultimately stressed that [t]his matter does not concern
only private parties. There are issues of great moment to the
public in a patent suit. . . . [T]ampering with the
administration of justice in the manner indisputably shown here
involves far more than an injury to a single litigant. It is a
wrong against the institutions set up to protect and safeguard
the public, institutions in which fraud cannot complacently be
tolerated consistently with the good order of society.12
In the sixty-plus years since the Supreme Court decided
Hazel-Atlas, its description of the traditional equity rule has
become broadly accepted as a definitive statement of the current
form of the rule. The rule is now codified as part of Federal
Rule of Civil Procedure 60(b), which spells out a limited number
of grounds that parties may raise in seeking relief from a final
judgment. Rule 60(b) includes a savings clause declaring that
this list does not limit the power of a court to entertain an
independent action . . . to set aside a judgment for fraud upon
the court.13 Alaska Rule of Civil Procedure 60(b) and Idaho Rule
of Civil Procedure 60(b) also incorporate this savings clause.14
Under all relevant formulations of this rule, the party claiming
a fraud on the court bears the burden of proving the claim by
clear and convincing evidence.15
1. Idaho law
Idaho cases applying Idaho Civil Rule 60(b) espouse
Hazel-Atlass strict definition of the elements necessary to prove
fraud on the court. In Campbell v. Kildew, the Idaho Supreme
Court recently identified Idahos principal case interpreting Rule
60(b)16 to be Compton v. Compton.17 Compton, in turn, construed
Idaho Rule 60(b)s savings clause as preserving preexisting means
of attacking a final judgment.18 In explaining this view, Compton
traced the Idaho rules meaning to Hazel-Atlas:
The term fraud upon the court contemplates
more than interparty misconduct, and, in
Idaho, has been held to require more than
perjury or misrepresentation by a party or
witness, even where the misrepresentation was
made to establish the courts jurisdiction.
Willis v. Willis, 93 Idaho 261, 460 P.2d 396
(1969). Apparently such fraud will be found
only in the presence of such tampering with
the administration of justice as to suggest a
wrong against the institutions set up to
protect and safeguard the public . . . .
Hazel-Atlas Glass Co. v. Hartford Empire Co.,
322 U.S. 238, 246, 64 S.Ct. 997, 1001, 88
L.Ed. 1250, 1256 (1944) (fraud upon the court
found where attorney for patent holder wrote
article describing patent as unique, and
arranged for publication in trade journal
under name of ostensibly disinterested
expert; court relied on article in reaching
decision; construing identical language of
F.R.C.P. 60(b)); 11 Wright and Miller,
Federal Practice and Procedure 2870
(1973).[19]
In keeping with Hazel-Atlas, then, Idahos view of Rule
60(b), as explained in Compton, requires fraud on the court to be
based on clear and convincing proof of a fraudulent scheme
directed against the court. Katherine cites no authority
suggesting that Idaho takes a more expansive view of Rule 60(b)s
savings clause. Thus, under the superior courts findings in this
case, Katherines claim of fraud on the court would appear to be
destined to fail under Idaho law. Here, the superior court
declined to rule that Crist had engaged in a scheme to defraud
Katherine or anyone else, expressly finding that he acted in the
actual belief that he was authorized to represent Katherine. We
think that Crists good-faith, albeit unauthorized, efforts to
represent Katherine could hardly be seen as tampering directed at
the Idaho court, except perhaps in the attenuated sense that it
involves simply a misrepresentation of facts to establish the
courts jurisdiction conduct that Idaho courts regard as ordinary
fraud and refuse to treat as a fraud on the court.20
2. Alaska law
Katherine nonetheless argues that Crists conduct
amounted to a fraud on the courts under Alaska standards.
Although we agree that we have applied Alaskas Rule 60(b) savings
clause somewhat more broadly than Idaho courts have applied their
version of the rule, we cannot agree that Alaskas view of fraud
on the courts is expansive enough to encompass the facts of this
case.
Admittedly, we have previously noted that specific
attempts to define fraud on the court are not particularly
helpful.21 But we have nevertheless consistently recognized that
[a] fraud upon the court may only be found in the most egregious
circumstances involving a corruption of the judicial process
itself. 22 We have also endorsed the views of commentators like
Professors Wright and Miller, who observe in their treatise that
the drafters of Rule 60(b) must have conceived of fraud upon the
court, as they used that phrase, as referring to very unusual
cases involving far more than an injury to a single litigant. 23
We have similarly favored the view that claims of relief from
judgment for fraud must usually be decided under the procedural
limitations spelled out in Rule 60(b)(3) or under Rule 60(b)s
other specifically listed categories.24 And we have specifically
rejected a claim of fraud on the court based on a partys failure
to make full and fair disclosure of evidence regarding property
value, ruling that the matter was only between the two parties
and did not involve a direct assault on the integrity of the
judicial process.25
Of course, as Katherine correctly points out, we have
also declined to hold that an intent to defraud must invariably
be proved to establish a fraud on the court. On two separate
occasions, we have ruled that a fraud on the court was shown even
though the evidence did not prove a specific intent to defraud.
In Mallonee v. Grow, we held that a judgment debtor and his
attorney had perpetrated a fraud on the court by applying for an
ex parte writ of execution that grossly overstated the amount
that was actually owed, by using the writ to levy on property not
owned by the judgment debtor, and by then failing to serve notice
of the motion to confirm the propertys sale.26 While recognizing
that [t]here has been no showing of an actual intent to defraud,
we insisted that [t]he purposeful or reckless disregard of . . .
procedural safeguards which results in the deprivation of
substantive rights constitutes an impermissible corruption of the
court process.27
In Higgins v. Municipality of Anchorage (Higgins II),
despite acknowledging our earlier rulings in Village of Chefornak
v. Hooper Bay Construction and Allen v. Bussell, which
emphasiz[ed] how exceptional conduct must be to find fraud on the
court,28 we relied on Mallonee v. Grow to rule that a municipal
attorney had perpetrated a fraud on the court by recklessly
misrepresenting to this court the municipalitys position in an
administrative appeal.
Higgins had filed a wrongful discharge action in the
superior court after the municipality terminated his employment;
the superior court ruled that it would have been futile for
Higgins to have attempted to exhaust his administrative remedies
by asking for arbitration, because, according to Higgins, a
supervisor had told him that the municipality would refuse any
request to arbitrate his grievance.29 The municipality petitioned
for review and convinced this court, in Municipality of Anchorage
v. Higgins (Higgins I), to reverse the superior courts ruling on
the ground that the record failed to support Higginss claim that
he had been told that the municipality would refuse to arbitrate.30
In deciding Higgins I, however, we were unaware that the
municipalitys attorney had failed to disclose a longstanding
municipal policy of refusing all requests to engage in grievance
arbitration.31 Higgins first discovered the existence of this
policy after the superior court had dismissed his case on remand
from our decision in Higgins I, so he moved seeking relief from
judgment on the ground of newly discovered evidence.32 The
superior court denied his motion, ruling that Higgins could have
discovered the policy sooner if he had acted with due diligence.33
In Higgins II, we upheld the superior courts finding
that Higgins had not exercised due diligence in discovering the
new evidence.34 But we nonetheless ruled sua sponte that relief
from judgment was warranted under Rule 60(b)s savings clause
because the municipality had perpetrated a fraud on this court in
Higgins I.35 We likened the municipalitys conduct to the
misrepresentation we considered in Mallonee: Here . . . the
municipality was at least reckless in misrepresenting its policy
on arbitration in Higgins I. It clearly violated its duty of
honest dealing with this court; this case is thus closer to
Mallonee than to Allen and Chefornak. We therefore conclude that
our judgment in Higgins I should be set aside for fraud upon this
court.36
3. Distinguishing features of this case
Katherine insists that Mallonee and Higgins II support
a finding of fraud on the court in her case because [t]here can
be no question that Mr. Crist acted in reckless disregard to the
procedural safeguards that govern attorney client relationships
and the integrity of the judicial process. Yet significant
differences exist between Katherines case, on the one hand, and
Mallonee and Higgins II, on the other.
a. Degree of misconduct
First, in both Mallonee and Higgins II we dealt with
conduct that we expressly found to be reckless misrepresentation
if not outright intentional fraud.37 But despite Katherines
contention to the contrary, the superior court did not
specifically find that Crist acted recklessly. The court here
simply observed that, although Crist believed that he had been
authorized to represent both Rodney and Katherine, he nonetheless
took his instructions from Rodney, never consulted with
Katherine, and did not actually have authority to represent
Katherine. Unlike the express findings of reckless disregard, at
best, in Mallonee and Higgins II, this determination seems more
akin to a finding that Crist merely should have known that he
lacked authority; in other words, that Crist acted negligently
with respect to the question of his authority to represent
Katherine.
Katherine seems to posit that Crists conduct amounted
to a reckless misrepresentation as a matter of law, for purposes
of invoking Rule 60(b)s savings clause, even if he actually
believed that he was authorized to represent Katherine, and even
though the court made no express finding of reckless disregard.
To support her position, Katherine cites various cases
recognizing that attorneys cannot enter binding settlements
without their clients express consent. But none of these
authorities applies Rule 60(b) or relies on a finding of fraud on
the court.38 Katherine also cites several cases holding that
unauthorized representation made a judgment void and
unenforceable. But with the exception of Toscano v. Commissioner
of Internal Revenue,39 which involved a deliberate scheme to avoid
taxes by filing a fraudulent lawsuit against a defendant who
lacked the ability to respond, none of these cases purported to
apply Rule 60(b)s savings clause or held that the conduct at
issue was a fraud on the court.40
b. Effect on outcome
Second, both Mallonee and Higgins II involved
circumstances in which it was undisputed that the
misrepresentation at issue had actually misled the court by
causing it to issue a judgment that could not have been properly
reached if the true facts had been known.41 Here, Katherine has
failed to carry her burden of showing that comparable
circumstances exist in her case.
Although Crist obviously misled the Idaho court
concerning his actual authority to represent Katherine, it is far
from clear that this misrepresentation caused the court to issue
a judgment that it otherwise could not have issued. By the time
Crist entered his appearance on Katherines behalf, Katherine had
been served with a summons and complaint in the case. Instead of
entering an appearance herself and either answering the complaint
or moving for dismissal, Katherine had simply written to Murrays
lawyers, demanding that they dismiss her from the case. Her
letter mistakenly asserted that, because her divorce settlement
made Rodney solely responsible for the debt, Murray had no
recourse against her and could only proceed against Rodney.42 By
Katherines own account, she gave no further thought to the case
after writing to Murrays attorney because, as far as she was
concerned, the debt was Rodneys problem, not hers. She was
content to leave it at that.
Under these circumstances, even assuming that Crist had
not entered his unauthorized appearance, Murray would have been
entitled to obtain a default judgment against Katherine.43
Although Katherine asserts that default proceedings might have
given her further notice that her divorce decree had not
completely eliminated her liability, Idaho law belies the
assertion, providing that a default judgment could have been
entered here without further notice to Katherine.44 More to the
point, the evidence provides no reason to suppose that Katherine
would have responded to any additional notice, even if it had
been given. The correspondence that Katherine received back from
Murrays lawyers in response to her demand for dismissal gave her
clear notice that Murray, even after being informed of the
divorce decree, did not intend to drop his claim against her.
Yet in spite of this notice, Katherine gave no further thought to
the case, adhering to her view that the problem was Rodneys.
And in any event, Katherine has failed to meet her
burden of showing any appreciable likelihood that she might have
received an Idaho court judgment more favorable than the one the
court actually entered. In the proceedings before the superior
court, Katherine offered no evidence challenging the validity of
the original Nevada bankruptcy judgment or the confession of
judgment that Katherine executed as part of the settlement
agreement incorporated in that judgment. Nor did Katherine
dispute that the settlement agreement was in default when Murray
filed his complaint in Idaho. So the record offers no basis for
assuming that Katherine could have avoided being held jointly and
severally liable for the unpaid debt due under the Nevada
confession if she had appeared and contested the Idaho case.
If Katherine had appeared and defended, then, she
presumably would have faced the possibility of a judgment
allowing immediate execution against her for the amount of the
unpaid debt, plus updated interest and Murrays attorneys fees.
Compared to that outcome, Crists negotiated settlement did
markedly better: it left Katherine liable for the amount of the
unpaid debt, plus interest and Murrays fees, but it buffered
Katherine against immediate execution by giving her around three
more months to make good on the payments (or to force Rodney to
make good on the payments), due to the covenant not to execute on
the judgment if she complied with this schedule.
c. Party securing unfair advantage
The third important point of distinction between the
circumstances in Mallonee and Higgins II and those at issue here
is that in both of the earlier cases the party who committed the
misrepresentation (or the party represented by the attorney
committing the misrepresentation) sought to enforce the judgment
procured by the misrepresentation to the obvious detriment of the
party against whom the judgment was issued. Thus, in effect, the
offending party affirmatively used the power of the court to
secure an unfair advantage over an innocent opponent. In
Mallonee, the judgment creditor not only obtained an inflated
judgment for execution, he then used that judgment to execute
against the judgment creditor in a blatantly improper way.45
Similarly, in Higgins II, the municipality relied on a
misrepresentation to obtain an appellate decision (Higgins I)
reversing the superior courts initial ruling in Higginss favor;
on remand, the municipality then used the improvidently issued
opinion in Higgins I as the primary basis for convincing the
superior court to dismiss Higginss case.46
It is this aspect of Mallonee and Higgins II the
misrepresenting partys affirmative use of the improperly secured
judgment against the party damaged by the misrepresentation that
elevated the conduct in each case from a matter of ordinary fraud
between the parties, a private concern, to a fraud directed
against the court itself. Granting relief became necessary as a
matter of equity to avoid the manifestly unconscionable result of
allowing the defrauding party to use the court as an instrument
of power against an opponent.
Here, by contrast, the misrepresentation was committed
by Crist, who was not a party to the Idaho action. Nor was he an
attorney who represented the party who is seeking to enforce the
Idaho judgment. Crist represented Rodney in that action. But it
is Murray, not Crist or Rodney, who now seeks to enforce the
Idaho judgment against Katherine.
4. The balance of equities
Katherine has neither alleged nor established that
Murray played any role in Crists misrepresentation. And she
makes no attempt on appeal to explain how equity would be served
by shifting the consequences of Crists actions from her to Murray
a party who, unlike Katherine, apparently pursued his case by
diligently complying with all applicable procedural rules. On
appeal, Katherine insists that such equitable considerations are
simply irrelevant; according to Katherine, they should play no
role in determining whether Crists conduct amounted to a fraud on
the court.
Yet Katherines argument disregards the source of the
courts power to grant relief from a judgment obtained by fraud on
the court: it is a power born from common law traditions of
equity; it is an equity rule developed and fashioned to fulfill a
universally recognized need for correcting injustices . . .
deemed sufficiently gross to demand a departure from rigid
adherence to the term rule in those rare situations where
enforcement of the judgment is manifestly unconscionable. 47 In
Mallonee v. Grow, we qualified our decision to excuse Grows
lengthy delay in moving to set aside Mallonees fraudulently
obtained judgment by expressly noting that there has been no
reliance upon the judgment or order by anyone other than by the
party who perpetrated the fraud on the court.48 The same cannot
be said here.
As the party claiming fraud on the court, Katherine
bore the burden of proving by clear and convincing evidence that
an order relieving her from the Idaho judgment a judgment
resulting from Katherines own knowing decision not to contest the
Idaho action would avoid saddling Murray with a manifestly
inequitable result by depriving Murray of his settled right to
rely on the Idaho judgment. Katherine has failed to meet this
burden.
5. Sufficiency of findings
We recognize that the superior courts decision to grant
relief from judgment on the ground that Crist committed a fraud
on the court is reviewable only for abuse of discretion.49 The
superior court expressly recognized that the fraud alleged in
this case is not fraud by Mr. Murray, the party seeking to
enforce the judgment. The court nonetheless granted relief based
on Crists representation of Katherine because Crist took his
instructions from [Rodney], and at no time conferred with
[Katherine]. In the courts view, this barred her from receiving
any information on the case after Mr. Crist entered an appearance
on her behalf, and therefore deprived her of meaningful
participation in the case.50
But as we noted above, the superior court did not
specifically find that Crist had acted recklessly or with intent
to defraud. To infer a tacit finding of recklessness, moreover,
would seem incompatible with the courts express acceptance of
Crists testimony that he concluded, based on Rodneys
communications and the papers that Katherine left at his office,
that he had been authorized to represent Katherine. And the
record fails to support the trial courts finding that Crists
conduct barred [Katherine] from receiving any information on the
case. Undisputed evidence shows instead that Katherine stopped
receiving information regarding the Idaho litigation largely
because she knowingly, albeit inadvisedly, chose to ignore the
case. Last, despite recognizing that Murray had no involvement
in Crists misconduct, the superior court declined to consider the
offsetting equities from Murrays perspective a necessary
consideration because fraud on the court is a rule grounded in
equity.
Considering the totality of these circumstances, we
think that this case falls squarely within the ambit of earlier
cases in which we have concluded that nondisclosure by a party or
his attorney has not been enough51 to support a finding of fraud
on the court, and that the wrong, if wrong there was, was only
between the parties in the case and involved no direct assault on
the integrity of the judicial process.52 In analogous cases of
this kind, we have required the aggrieved party to seek relief
under the more demanding procedural framework that governs
specifically listed provisions of Rule 60(b).53 Accordingly, we
conclude that it was an abuse of discretion to find that Crists
conduct amounted to a fraud on the court.54
IV. CONCLUSION
Because Katherine advances no other ground for relief
from the Idaho judgment,55 we REVERSE the superior courts ruling.
_______________________________
1 Toscano v. Commissioner of Internal Revenue, 441 F.2d
930 (9th Cir. 1971).
2 Katherine also cross-appeals, challenging the superior
courts denial of her motion for prevailing-party attorneys fees.
Our decision reversing the superior courts decision declining to
enforce the Idaho judgment based on fraud on the court makes it
unnecessary to consider Katherines cross-appeal.
3 AS 09.30.200 - .270.
4 AS 09.30.200.
5 Id.
6 Id.
7 Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S.
238, 244-45 (1944) (internal citations omitted).
8 Id. (quoting Pickford v. Talbott, 225 U.S. 651, 657
(1912)).
9 Id. at 245.
10 Id. at 246.
11 Id.
12 Id.
13 Fed. R. Civ. P. 60(b).
14 The savings clauses of Alaska Rule of Civil
Procedure 60(b) and Idaho Rule of Civil Procedure 60(b) both say
that the rule does not limit the power of a court to entertain an
independent action . . . to set aside a judgment for fraud upon
the court. This language is identical in all material respects
to the savings clause language in Federal Rule of Civil
Procedure 60(b).
15 See McCall v. Coats, 777 P.2d 655, 658 (Alaska 1989)
(one who asserts that an adverse party has obtained a verdict
through fraud, misrepresentation or other misconduct, including
fraud on the court, has the burden of proving the assertion by
clear and convincing evidence); Campbell v. Kildew, 115 P.3d 731,
740 (Idaho 2005) (the party alleging fraud, including fraud on
the court, bears the burden of proof by clear and convincing
evidence that the judgment was obtained by fraud); England v.
Doyle, 281 F.2d 304, 309-10 (9th Cir. 1960) (the burden is on
moving party to establish fraud on the court by clear and
convincing evidence); 37 Am. Jur. 2d Fraud and Deceit 471 (2006)
(When it is alleged, each element of fraud must be established by
clear and convincing evidence. The party alleging fraud bears
the burden of proving it.).
16 Campbell, 115 P.3d at 739.
17 Compton v. Compton, 612 P.2d 1175, 1180 (Idaho 1980).
18 Id.
19 Id. at 1181.
20 Id. (citing Willis v. Willis, 460 P.2d 396 (1969), for
the proposition that perjury or misrepresentation to establish
the courts jurisdiction does not by itself amount to fraud on the
court).
21 Allen v. Bussell, 558 P.2d 496, 500 (Alaska 1976).
22 Lowe v. Lowe, 817 P.2d 453, 457 n.9 (Alaska 1991)
(quoting Allen, 558 P.2d at 500).
23 See Allen, 558 P.2d at 500 (approvingly quoting 11
Charles Alan Wright & Arthur A. Miller, Federal Practice and
Procedure: Civil 2870, at 253 (1973)).
24 See, e.g., Livingston v. Livingston, 572 P.2d 79, 85
(Alaska 1977) (In reversing finding of fraud on court and
remanding to consider granting relief under Rule 60(b)(6)
instead, opinion quotes with approval Professor Moores
observation: Fraud in obtaining jurisdiction may at times be a
fraud upon the court. But appropriate relief can usually be
afforded under other concepts of fraud; and better judicial
administration will result in most cases if this species of fraud
is not put within the rather nebulous category of fraud upon the
court. While fraud as to jurisdiction may improperly put the
judicial machinery in operation, it usually does not corrupt the
judicial power. 7 James Wm. Moore et al., Moores Federal
Practice 60.33, at 514-15 (2d ed. 1975)).
25 See OLink v. OLink, 632 P.2d 225, 231 (Alaska 1981),
cited in Lowe, 817 P.2d at 460.
26 Mallonee v. Grow, 502 P.2d 432, 438 (Alaska 1972).
27 Id. at 438-39.
28 Higgins v. Municipality of Anchorage, 810 P.2d 149, 154
(Alaska 1991) (Higgins II) (citing Village of Chefornak v. Hooper
Bay Contsr. Co., 758 P.2d 1266, 1271 (Alaska 1988), and Allen,
558 P.2d at 500).
29 Higgins II, 810 P.2d at 150.
30 See id. at 151; see also Municipality of Anchorage v.
Higgins, 754 P.2d 745 (Alaska 1988) (Higgins I).
31 Higgins II, 810 P.2d at 151-52.
32 Id. at 150.
33 Id.
34 Id. at 153.
35 Id. at 154.
36 Id.
37 See Mallonee, 502 P.2d at 439; Higgins II, 810 P.2d at
154.
38 See, e.g., Musso v. Seiders, 98 F. Supp. 2d 197 (D.
Conn. 1999) (granting challenge to unauthorized settlement
agreement on which no judgment had yet issued); Saxton v.
Splettstoezer, 557 P.2d 1126 (Alaska 1976) (denying relief on
direct appeal from judgment enforcing authorized settlement
agreement); Kimball v. First Natl Bank of Fairbanks, 455 P.2d 894
(Alaska 1969) (affirming the setting aside of a settlement
agreement because the attorney did not have authority to settle
the claim); Gray v. First Natl Bank, 57 N.E.2d 363 (Ill. 1944)
(vacating for trial court lack of personal jurisdiction); Leffler
v. Bi-State Dev. Agency, 612 S.W.2d 835 (Mo. App. 1981) (denying
relief on direct appeal from judgment enforcing authorized
settlement agreement).
39 Toscano v. Commissioner of Internal Revenue, 441 F.2d
930 (9th Cir. 1971).
40 See, e.g., Higbee v. Sentry Ins. Co., 253 F.3d 994 (7th
Cir. 2001) (relief under unspecified provision of Rule 60(b)
based on lawyers lack of authority to settle); Fennell v. TLB
Kent Co., 865 F.2d 498 (2d Cir. 1989) (relief under Rule
60(b)(1)); Pembroke State Bank v. Warnell, 471 S.E.2d 187, 190
(Ga. 1996) (granting relief on grounds unrelated to fraud); Marx
v. Fore, 51 Mo. 69 (1872) (relief under general equity principles
based on finding of ordinary fraud); Parrillo v. Chalk, 681 A.2d
916 (R.I. 1996) (relief based on lawyers lack of authority to
settle).
41 See Mallonee, 502 P.2d at 439; Higgins II, 810 P.2d at
154.
42 The superior court recognized that Katherines reliance
on the provisions of her divorce decree was unjustified, and
Katherines briefing on appeal does not seriously dispute this
finding. The proposition seems universally settled that a
divorce decree incorporating an agreement between divorcing
spouses does not affect the rights of third-party creditors.
See, e.g., Hanson v. Hanson, 350 P.2d 859, 861 (Wash. 1960) (in a
divorce action the court cannot adjudicate the rights of
creditors who are not parties to the action); Community Guardian
Bank v. Hamlin, 898 P.2d 1005, 1009 (Ariz. App. 1995) (the courts
allocation of community obligations does not affect the rights of
third party creditors); In re Marriage of Waker, 834 P.2d 522
(Or. App. 1992) (other shareholders in corporation of which
husband was shareholder were not parties to marriage dissolution
proceeding and could not be bound by judgment to guarantee his
payments to wife); In re Marriage of Easterla, 613 P.2d 1100 (Or.
App. 1980) (corporations were not parties to the divorce action,
and no judgment or decree could be entered against them); see
generally 15A Am. Jur. 2d Community Property 108 (2005)
([g]enerally, both former spouses remain jointly liable for
community obligations after their divorce).
43 In relevant part, Idaho Rule of Civil Procedure
55(a)(1) states: When a party against whom a judgment for
affirmative relief is sought has failed to plead or otherwise
defend as provided by these rules and that fact is made to appear
by affidavit or otherwise, the court shall order entry of default
against the party.
44 Idaho Rule of Civil Procedure 5(a) says that no service
need be made on parties in default for failure to appear. Idaho
cases confirm that no notice of an entry of default is required
if a party fails to plead or otherwise defend, as Katherine
undisputedly failed to do here. See, e.g., Phillips v. Miles,
780 P.2d 593, 594-95 (Idaho 1989); Olson v. Kirkham, 720 P.2d
217, 220 (Idaho App. 1986). Alaskas law accords with Idahos on
this point. See, e.g., Snyder v. American Legion Spenard Post
No. 28, 119 P.3d 996, 1001 (Alaska 2005); Alaska R. Civ. P.
55(c)(1) (if [a] party fails to appear for trial . . . the court
may proceed ex parte upon any motion for default or default
judgment).
45 Mallonee, 502 P.2d at 438-39.
46 Higgins II, 810 P.2d at 154.
47 See Hazel-Atlas Glass Co., 322 U.S. at 244-45 (citation
omitted).
48 Mallonee, 502 P.2d at 437.
49 Id. at 439.
50 In reaching this conclusion, the superior court relied
mainly on the Ninth Circuits decision in Toscano v. Commissioner
of Internal Revenue, 441 F.2d 930 (9th Cir. 1971). But as
already indicated, see above, Toscano is inapposite: it involved
convincing evidence of an elaborate, ongoing, and intentional
scheme to avoid taxes by falsely claiming a marriage and
fraudulently seeking a divorce from a party who had no notice of
the fraudulent action. Id. at 931.
51 OLink, 632 P.2d at 230.
52 Livingston, 572 P.2d at 82 (holding in custody
modification action where mother and her counsel improperly
served the father by publication and failed to disclose that the
child was currently living outside the state with her father a
fact relevant both to the childs best interests and the courts
jurisdiction that relief could be granted under Rule 60(b)(6)
but that the case involved wrong between the parties and did not
amount to a fraud on the courts in large part because the father
had independently learned of the pending custody action and had
simply chosen not to appear in the modification proceedings).
53 See id. at 83-85.
54 Our decision makes it unnecessary to consider Murrays
alternative claim that the superior courts ruling violated the
United States Constitutions Full Faith and Credit Clause.
55 We emphasize that our ruling addresses only Katherines
challenge to the 1993 Idaho judgment. Because Katherine has
disclaimed any attempt to challenge the underlying Nevada
confession of judgment and has advanced no ground for challenging
the Idaho courts renewal of the 1993 judgment, we have no
occasion to address these issues.
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