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Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 10, 1996 Decided October 29, 1996

No. 95-7301

BALTIA AIR LINES, INC.,

APPELLANT

v.

TRANSACTION MANAGEMENT, INC.,

APPELLEE

Appeal from the United States District Court

for the District of Columbia

(No. 94cv01775)

Kathleen I. McGuire argued the cause and filed the briefs for appellant.

Miguel S. Lawson argued the cause for appellee, with whom Filiberto Agusti was on the brief.

Before: EDWARDS, Chief Judge, WILLIAMS and SENTELLE, Circuit Judges.

Opinion for the Court filed by Chief Judge EDWARDS.

EDWARDS, Chief Judge: This is an action under FEDERALRULEOFCIVILPROCEDURE 60(b).

The appellant, Baltia Air Lines, Inc. ("Baltia"), seeks to reverse a decision of the District Court

refusing to set aside a judgment confirming an arbitration award in favor ofTransaction Management,

Inc. ("TMI"). There is no legal basis upon which to set aside the District Court's decision. As it turns

out, however, the relief sought by Baltia is unnecessary. The contract that was the subject of the

arbitration award terminated years ago, and TMI can make no claims against Baltia for any

commissions on transactions beyond the termofthe expired agreement. Thus, Baltia has all the relief

it seeks.

I. BACKGROUND

Baltia is a start-up airline that hassought to provide airservice between the United States and

Eastern Europe. Several years ago, Baltia signed a consulting agreement with TMI, a financial

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1 Consulting Services Agreement, ¶ III.A.2, reprinted in Appendix to Appellant's Brief at A5-

A6. 

2 Consulting Services Agreement, ¶ III.A.3(a), reprinted in Appendix to Appellant's Brief at

A7. 

3 Consulting Services Agreement, ¶ IV.C, reprinted in Appendix to Appellant's Brief at A7. 

4 Paragraph XVII provides:

XVII. Arbitration. Except as otherwise provided in this Agreement, each

and every dispute under this Agreement or arising out of this relationship that

cannot be settled amicably by the parties shall be settled by arbitration in the City

of Washington, District of Columbia, in accordance with the provisions of the

Federal Arbitration Act under the Commercial Arbitration Rules of the American

Arbitration Association and the "Expedited Procedures" provisions thereof. The

arbitrator shall include all reasonable fees and costs to the prevailing party,

(including, without limitation, reasonable attorneys' fees and expenses) and may be

entered into judgment in any court of competent jurisdiction.

Consulting Services Agreement, ¶ XVII, reprinted in Appendix to Appellant's Brief at A14-A15. 

consulting firm run by Steven Sneed and Ed Rosner. The consulting contract ran from November

1, 1990 to May 1, 1991. It is undisputed that, during the life of the parties' contract, TMI never

obtained any financing for Baltia.

On June 26, 1991, after the expiration of the consulting contract, Sneed read an article in the

New York Times reporting that Baltia had received $148 million in financing. Subsequently, TMI

claimed that, under the consulting contract, it was owed commissions on the $148 million. TMI

contended that, pursuant to paragraphs III.A.21, III.A.3(a)2, and IV.C3of the consulting agreement,

commissions had to be paid on any financing obtained by Baltia whether or not TMI was involved

in procuring the financing. Baltia disagreed, insisting that TMI was only entitled to commissions on

financing that it helped to obtain.

Baltia sought arbitration in accordance with paragraph XVII4of the consulting agreement.

The arbitrator found that under paragraphs III.A.2(a)-(c) and III.A.3(a) of the agreement, "payment

ofthe appropriate cash closing feesin the amounts and at the timesspecified in said Paragraphsis not

subject to the condition that the source of the funds for the closing was obtained by TMI." Award

ofArbitrator, WW1-2,reprinted in Appendix to Appellant's Brief at A1. Accordingly, the arbitrator

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ordered that, in accordance with paragraph IV.C of the agreement, Baltia was obligated to "insert or

cause to be inserted in the relevant documents relating to the Closing, provisions in form and

substance satisfactory to TMI implementing the provisions of Paragraphs III.A.2 and III.A.3, as

interpreted in this Order." Award of Arbitrator, ¶ 3(a), reprinted in Appendix to Appellant's Brief

at A1.

TMI then filed an action in District Court to confirm the arbitration award. After hearing the

parties' competing claims, the District Court granted TMI's motion to confirm the award.

Transaction Management, Inc. v. Baltia Air Lines, Inc., No. 91-cv-2829 (D.D.C. May 20, 1992).

The judgment of the District Court was upheld on appeal by this court. Baltia Air Lines, Inc. v.

Transaction Management, No. 93-7079 (D.C. Cir. January 12, 1994).

In August 1994, more than a year after the District Court had entered the judgment

confirming the arbitration award, Baltia filed the instant action under FEDERAL RULE OF CIVIL

PROCEDURE 60(b), seeking relief from the judgment. Baltia alleged that newly discovered evidence

showed that the original contract between Baltia and TMI wasfraudulently obtained, that Sneed and

Rosner perjured themselves during the arbitration proceeding, and that TMI's attorney made

misrepresentationsto the District Court during the proceedingsto confirmthe arbitration award. The

District Court granted TMI's motion to dismiss, holding that Baltia was not entitled to relief under

Rule 60(b) of the Federal Rules of Civil Procedure.

II. DISCUSSION

A. The Action for Relief Under Rule 60(b)

FEDERAL RULE OF CIVIL PROCEDURE 60(b) provides in relevant part:

(b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence;

Fraud, Etc. On motion and upon such terms as are just, the court may relieve a party

or a party's legal representative from a final judgment, order, or proceeding for the

following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2)

newly discovered evidence which by due diligence could not have been discovered in

time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore

denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an

adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released,

or discharged, or a prior judgment upon which it is based has been reversed or

otherwise vacated, or it is no longer equitable that the judgment should have

prospective application; or (6) any other reason justifying relief from the operation

of the judgment. The motion shall be made within a reasonable time, and for reasons

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(1), (2), and (3) not more than one year after the judgment, order, or proceeding was

entered or taken.... This rule does not limit the power of a court to entertain an

independent action ... or to set aside a judgment for fraud upon the court.

FED. R. CIV. P. 60(b). Although Rule 60(b) is an appropriate vehicle by which to challenge a

judgment confirming an arbitration award, Baltia has not met the standards for relief under the rule.

Baltia cannot challenge the judgment confirming the arbitration award under either 60(b)(2)

(newly discovered evidence) or 60(b)(3) (fraud), because, under the terms of the rule, any such

motion must be made within one year after the judgment was entered. The judgment confirming the

arbitration award in favor ofTMI was entered in May 1993 and the current action wasfiled in August

1994, more than one year later. Moreover, Baltia cannot circumvent the limitations of 60(b)(2) and

(3) by relying on the catchall provision of 60(b)(6). As this court stated in Williamsburg Wax

Museum, Inc. v. Historic Figures, Inc., 810 F.2d 243 (D.C. Cir. 1987):

Rule 60(b)(6) permits a court to grant relief from a final judgment for "any other

reason justifying relief...." (Emphasis added.) The courts have universally interpreted

"other" to mean other than the reasons specified in subsections 60(b)(1)-60(b)(5)....

Id. at 249. To interpret 60(b)(6) any other way would make the time limitations on motions under

60(b)(1)-(3) meaningless. See id. ("[I]t is generally accepted that cases clearly falling under Rule

60(b)(1) cannot be brought within the more generous Rule 60(b)(6) in order to escape the former's

one year time limitation.").

Nonetheless, Rule 60(b) states that it "does not limit the power of a court to entertain an

independent action ... to set aside a judgment for fraud upon the court." FED. R. CIV. P. 60(b).

"Fraud on the court ... is fraud which is directed to the judicial machinery itself and is not fraud

between the parties or fraudulent documents, false statements or perjury." Bulloch v. United States,

721 F.2d 713, 718 (10th Cir. 1983). Fraud upon the court refers only to "very unusual cases

involving far more than an injury to a single litigant." 11 CHARLES A. WRIGHT, ET AL., FEDERAL

PRACTICE AND PROCEDURE § 2870 at 415 (1995) (internal quotation marks omitted). Examples

include the bribery of a judge or the knowing participation of an attorney in the presentation of

perjured testimony. Id. at 418-20.

There are suggestions in the record of this case that Sneed and Rosner may have been

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5 The young attorney assigned to argue for TMI seemed reluctant at first to posit such an

extraordinary argument, but he forged ahead upon receiving a nod of approval from a more senior

attorney who was sitting at counsel table. 

involved in some underhanded dealings, that the consulting agreement between TMI and Baltia may

have been fraudulently obtained, that Sneed and Rosner may have perjured themselves during the

arbitration, and that TMI's attorney may have misled the District Court during the proceedings to

confirm the arbitration award. Even assuming that all of this occurred, there is still no basis for a

finding of fraud on the court as that concept has been defined. It is particularly noteworthy in this

regard that any misrepresentations to the District Court were not relevant to the court's decision to

confirm the arbitration award. Accordingly, we affirm the District Court's dismissal of Baltia's

complaint.

B. The Meaning of the District Court's Judgment

During the course of oral argument before this court, a question arose as to why this action

had been brought by Baltia. The consulting contract that gave rise to the disputed arbitration award

expired years ago, on May 1, 1991, so it was unclear to the court what was at stake. Baltia's counsel

explained that her client sought relief from judgment because, even today, officials at TMI continue

to demand commissions whenever Baltia pursues business financing arrangements. According to

counsel, TMI's harassing tactics have made it all but impossible for Baltia to secure financing.

In response, counsel for TMI did not deny the substance of Baltia's contentions. Indeed,

TMI's attorney made the astonishing claim that the arbitration award, and the District Court's

judgment confirming it, give TMI a right in perpetuity to commissions on any financing obtained by

Baltia, i.e., fromany source, at any time for the life ofthe corporation! And counsel added that Baltia

is obliged to pay commissions even though TMI is doing absolutely nothing to assist Baltia, and has

no obligation under the contract to do anything. After listening to TMI's counsel, and the absurd

position that he advanced,5it was easy to understand why Baltia had returned to the District Court

for relief.

Although it cannot obtain relief under Rule 60(b), Baltia does not leave this litigation empty

handed. TMI's position evinces a flagrant distortion of the District Court's judgment. If nothing else,

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6 Paragraph II.B provides:

The provisions of Sections III, IV, V, VI, VIII, IX, XVII, XIX, and XX.A of this

Agreement shall survive any expiration, termination or cancellation of this

Agreement.

Consulting Services Agreement, ¶ II.B, reprinted in Appendix to Appellant's Brief at A5. 

we can confirm for Baltia that TMI's position is groundless and that the rulings in this case pose no

danger for Baltia in the future. The District Court never held that TMI is entitled to commissions in

perpetuity; indeed, the arbitrator never held that TMI has such a right, and the contract between the

parties cannot support such a claim. The only language in the contract cited by TMI in support of

its astounding assertion of perpetual commissions, paragraph II.B,6simply means that any right to

commissions that arose during the term of the contract may be enforced after the expiration of the

contract. TMI could cite no authority whatsoever for any other reading of this provision, and the

arbitrator's award does not even cite this paragraph of the contract,so it would be ridiculousto think

that the arbitrator or the District Court meant to endorse a different construction of the contract.

In short, TMI can make no claims against Baltia for commissions on any transactions beyond

the term of their expired agreement. Since the parties' contract has now long expired, the only

possible financing to which the arbitration award could apply is the alleged "Waterford" financing

reported by the New York Times in June 1991. As Baltia has represented that no financing was ever

obtained from Waterford, the arbitration award would appear to be worthless.

III. CONCLUSION

We affirm the judgment of the District Court dismissing the action under Rule 60(b).

However, we note that the reliefsought byBaltia is unnecessary, because TMI can advance no claims

against Baltia for commissions on transactions beyond the term of the long expired consulting

contract.

So ordered.

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