Brief Fact Summary.
Defendant company loses a lawsuit but later finds evidence that would excuse them from liability which they attempt to use to vacate the judgement.
Synopsis of Rule of Law.
Under FRCP 60(b) the court may upon timely motion relieve a party from final judgement for mistake, inadvertence, surprise, excusable neglect or for fraud or other misconduct by the opposing party.
Fraud on the court is only that species of fraud which does or attempts to, defile the court itself, or is a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the usual manner its impartial task of adjudging cases that are presented for adjudication.View Full Point of Law
In 1961 Vickers, Christy, an underwriter, becomes insolvent and Plaintiff Kupferman takes over during the company’s insolvency. Amongst Vickers, Christy’s assets were 12,500 shares in Defendant Consolidated that Vickers, Christy acquired pursuant to an underwriting agreement with Consolidated in 1960. But by 1962 the shares had lost much of their value. Plaintiff Kupferman filed suit alleging Defendant Consolidated did not comply with SEC filing requirements. In preparing for litigation Plaintiff Kupferman’s attorney Ross found an agreement between Vickers, Christy and Consolidated that released Consolidated from liability for breach based on lost value of shares. Ross concealed the document and Plaintiff Kupferman won a judgement against Consolidated. The company did not have enough to cover the judgement, so Plaintiff Kupferman went after the directors of the company to satisfy the judgement. In 1971, during the course of the litigation against the directors of Consolidated, one of Consolidated’s directors, Jacobsen, found the statement that released Consolidated from liability, the same document Kupferman’s attorney Ross found earlier but did not disclose. Jacobsen attempted to use the release from liability document to vacate the judgement, but the court denied it and Jacobsen appealed.
Does FRCP 60(b) allow a court, upon a timely motion, to relieve a party from final judgement for mistake, inadvertence, surprise, or excusable neglect or fraud or other misconduct by the opposing party?
Yes, FRCP 60(b) allows a court, upon a timely motion, to relieve a party from final judgement for mistake, inadvertence, surprise, or excusable neglect or fraud or other misconduct by the opposing party. The order denying the motion to vacate is affirmed.
1. After the one year period pursuant to FRCP 60(d) the court may consider a motion to relieve the parties from judgement only if there has been fraud.
2. The court will only find fraud in extreme circumstances.
3. That bar for extreme circumstances has not been met.
4. While Ross did conceal the document, there are other reasons outside of fraud that he may have concealed it. For example, he was told that the document was merely for record purposes to show the transfer of shares, or he may have thought that Vickers, Christy’s attorney had come across it and not disclosed it for strategic reasons not dealing with fraud.
5. Ross had no obligation, as this is a civil case, to disclose every relevant document to Consolidated.
6.Because this conduct did not rise to the level of fraud, the judgement of the court below is affirmed.