Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-90-07080/USCOURTS-ca10-90-07080-0/pdf.json

Parties Involved:
Durant Bank And Trust Company
Appellee
O. J. Osborn
Appellant
Roma Lou Osborn
Appellant

Document Text:

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

o. J. OSBORN, and ROMA LOU ) 

OSBORN, ) 

FILED 

Uoited States Court of Appeals 

Tenth Circuit 

FEB 1 9 1991 

&OBERT L. HOECKER 

Clerk 

) 

Plaintiffs-Appellants, ) 

) 

No. 90-7080 

V • ) 

) 

DURANT BANK AND TRUST COMPANY, an ) 

Oklahoma banking corporation, ) 

) 

Defendant-Appellee. ) 

(E.D. Oklahoma) 

(D.C. No. CIV-90-265-S) 

ORDER AND JUDGMENT* 

Before ANDERSON, TACBA and BRORBY, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34{a); 10th Cir. R. 34.1.9. The cause is therefore ordered 

submitted without oral argument. 

O. J. and Roma Lou Osborn appeal from an order of the 

district court which denied the Osborn's motion pursuant to Fed. 

R. Civ. P. 60(b} for relief from a consent judgment entered by the 

bankruptcy court. In that judgment a portion of the Osborn's debt 

to the Durant Bank and Trust Company was determined to be nondischargeable in the Osborn's bankruptcy. We affirm substantially 

for the reasons set forth in the September 28, 1990 memorandum 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

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opinion and order of the district court, a copy of which is 

attached to this order and judgment, and incorporated by this 

reference. 

The relevant facts are as follows. The Osborns consented to 

a judgment which was entered by the bankruptcy court on January 9, 

1989. The Osborns and the Durant Bank agreed that the judgment 

would except from discharge in the Osborn's bankruptcy a debt in 

the amount of $225,000.00 owed to the Durant Bank by the Osborns. 

The agreed judgment included, in part, the following provision: 

[A]s a part of the settlement agreement, the 

[appellants] and [appellee] contemplate that the United 

States of America by and through the Farmers Home 

Administration ("FmHA") shall pay the claim upon the 

guaranteed note as set forth in the settlement agreement 

and further that FmHA will issue a subsequent guarantee 

for all the remaining balance of the note as 

restructured, being more particularly set forth in the 

settlement agreement attached hereto. In the event that 

the FmHA shall fail to pay the claim to be filed or fail 

to issue a subsequent guarantee on the balance of the 

obligation, [appellee] shall have the right to execute 

upon this judgment and take any other legal action as it 

may deem reasonable, appropriate and necessary to 

enforce its rights. (emphasis added). 

As noted by the district court, "[u]ltimately, FmHA refused to 

guarantee the loan due to laws governing its restructuring of 

debt." Memorandum Opinion and Order at p. 3. 

On November 20, 1989, more than ten months after the agreed 

judgment in question was entered in the bankruptcy court, the 

Osborns filed a motion for relief from that judgment pursuant to 

Fed. R. Civ. P. 60(b), alleging that they had consented to the 

judgment under a mistaken belief that the FmHA would renew its 

guarantee of the Osborn's debt to Durant Bank, and that the 

enforcement of the judgment of non-dischargeability would not be 

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equitable because the Osborns allegedly received no benefit from 

their agreement. They also alleged that they always had a "highly 

meritorious defense" to the claim of the Durant Bank that the debt 

in question should be ruled to be non-dischargeable. 

On January 24, 1990 the bankruptcy court denied the Osborn's 

motion, expressly discussing the asserted claims and finding 

insufficient grounds for relief under Rule 60(b). Among other 

things, the court pointed out: "For the Defendants to now claim 

mistake through the inaction of a non-party and yet provide for 

that contingency in the judgment is a non sequitur and 

insufficient grounds for vacating the judgment on file." R. Vol. 

1, Tab 16 at 2. The court also stated: 

Despite the presentation in the Defendant's Motion of 

the merits of possible defenses that the Defendants 

would have raised in a trial on the Complaint, we are 

unable, and it is improper for this Court, to rule on or 

otherwise address the merits of the case having gone to 

final judgment. 

While the Defendants, with 20/20 hindsight, may have 

determined that the consensual judgment was imprudently 

arrived at, they must now accept the consequences of 

their actions. This in some regard points up the 

foolhardiness of incorporating the actions of a nonparty within a final judgment. 

Id. at 3. 

Two and one-half months later, on April 6, 1990, the Osborns 

filed a supplemental motion to vacate the judgment in question, 

again relying on Fed. R. Civ. P. 60(b), and again alleging 

mistaken belief which led them to consent to the entry of the 

judgment in question, breach of the agreement by the bank, 

misconduct by the bank, and inequitable results from the judgment. 

On May 1, 1990 the bankruptcy court again denied relief to the 

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Osborns under Rule 60(b), reiterating the reasoning used in the 

court's original order, and pointing out that any agreement which 

had been reached between the parties was, in the court's view, 

"merged into the Judgment and this Court has no jurisdiction or 

willingness to determine if any agreement outside the letter of 

the Journal Entry of Judgment was breached. If the Defendants 

wish to proceed in an action for breach of this agreement, the 

appropriate forum should be utilized. This Court is not that 

for urn. " R . Vo 1 . l , Tab 2 4 at 2 . 

On appeal to this court the Osborns renew virtually all of 

the arguments they raised below, and refer us in detail to the 

merits of the original litigation in the bankruptcy court. They 

allege that the complaint filed against them by the Durant Bank in 

the bankruptcy court was lacking in substance, that the Osborns 

had meritorious defenses to that complaint, that Roma Lou Osborn 

played no active role in any of the transactions in question so 

there was no basis for an action against her for exception from 

discharge, that the Osborns proceeded to enter into to the consent 

judgment in question on a mistaken belief, and that a blatant 

inequity will result if the judgment in question is allowed to 

stand. 

Both of the courts below, and the parties to this appeal, 

recognize that our standard of review is one of abuse of 

discretion, and that review of denial of relief under Rule 60(b) 

is meaningfully narrower than appellate review on direct appeal. 

See Bud Brooks Trucking, Inc. v. Bill Hodges Trucking Co., 909 

F.2d 1437 (10th Cir. 1990). Ordinarily an appeal from a denial of 

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relief under Rule 60(b) does not bring up for review the merits of 

the underlying judgment. Id. And, "[r]elief under Rule 60(b) is 

extraordinary and may only be granted in exceptional 

circumstances." Id. at 1440. 

It is apparent from a review of the record in this case that 

the Osborns did not fully think through the consequences of the 

terms of the consent judgment which they voluntarily entered into, 

and that they may have good cause, after the fact, for regretting 

having acted as they did. However, the fact is that they did 

consent to the judgment, including all of the attendant terms, in 

writing, and did so while represented by counsel. See R. Vol. 1, 

Tabs 11 and 12. That the agreement has not worked out as the 

Osborns unilaterally contemplated does not constitute "exceptional 

circumstances" warranting relief under Rule 60(b); nor does our 

reading of the record disclose any such circumstances. As the 

bankruptcy court pointed out, if some agreement leading to the 

judgment in question was breached, relief must be sought in some 

other forum. See,~• Fairfax Countywide Citizens Ass'n v. 

Fairfax, 571 F.2d 1299 (4th Cir. 1978), cert. denied, 439 U.S. 

1047 (1978). Once a judgment has been entered and has become 

final the courts do not retain supervisory or other jurisdiction 

over the case in order to enforce the terms of some underlying 

settlement agreement unless express provisions to that effect are 

incorporated in the judgment such as in the case, for example, of 

an injunction. In any event, such instances are rare. We agree 

with the courts below that the Osborns have failed to make out a 

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case for relief under any of the provisions of Rule 60(b). 

AFFIRMED. Mandate shall issue forthwith. 

ENTERED FOR THE COURT 

Stephen H. Anderson 

Circuit Judge 

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(_ 

IN TD UHITBD 8TATBS DISTRICT COURT WOR '1'JIB 

EASTBRlf DISTRICT OF OJCLAHOKA 

FILED 

SEP 2 8 1990 

IN RE: ) 

) 

O.J. OSBORN and ROMA LOU OSBORN, ) Bankruptcy No. 87-01480 

) 

Debtors, ) 

) 

O.J. OSBORN and ROMA LOU OSBORN, ) 

) 

Appellants, ) 

) 

v. ) No. 90-265-S 

) 

DURANT BANK AND TRUST COMPANY, ) 

) 

Appel lee. ) 

MEMORANDUM OPINION AND ORDER 

This is an appeal from a May 1, 1990, order of the United 

States Bankruptcy Court for the Eastern District of Oklahoma 

denying appellants' Supplemental Motion to Vacate Judgment. 1 The 

Bankruptcy court's order denied appellants' request under Rule 

60(b) of the Federal Rules of Civil Procedure to vacate a consent 

judgment determining a portion of their debt to appellee to be non- t 

dischargeable. 

In 1985, appellants executed two notes in favor of appellee. 

The first note was in the amount of $157,909 and was secured by a 

first mortgage on real estate. The second note was in the amount 

of $239,000 and was secured by a second mortgage on appellants• 

real estate and a first lien on appellants' equipment, cattle, 

vehicles, and crops. The second note was guaranteed by the Farmers 

Home Administration (FmHA). A modified loan agreement signed by 

1 This May 1, 1990, order reiterated and readopted the court's 

January 24, 1990, interlocutory order denying the Motion for Relief 

From Judgment of Non-Dischargeability. 

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appellants contained a provision that the pro~eds from O.J. 

•. 

Osborn's retirement fund be paid on the non-guaranteed note. At 

the time of the loan, O.J. Osborn's retirement fund had a projected 

value as of July 1986 of approximately $228,000. O.J. Osborn could 

not liquidate, transfer, or otherwise encumber his retirement fund 

until his retirement. 

Due to financial difficulties and an impending due date on the 

note secured by the real estate, appellants filed a Chapter 12 

bankruptcy proceeding in 1987. The Chapter 12 proceeding was 

subsequently dismissed and appellee filed an involuntary Chapter 

7 proceeding which was subsequently converted to Chapter 11. 

Appellee filed an adversary complaint seeking exception of its debt 

from discharge pursuant to 11 u.s.c. §523 (a) (6) alleging that 

appellants willfully sold and converted crops and cattle subject 

to appellee•s lien. Appellee also alleged that the debt should be 

excepted from discharge under 11 u.s.c. §523(a) (2}(A} in that it 

was induced by appellants into funding the notes by appellants' 

statement that the proceeds from O.J. Osborn's retirement fund 

would be used to pay the debt when appellants had no intention of 

doing so. 

Prior to any further proceedings on the adversary complaint, 

the parties submitted an agreed journal entry of judgment to the 

bankruptcy court which entered the judgment on January 9, 1989. 

The agreed journal entry provided that a debt in the amount of 

$225,000 owed to appellee was excepted from appellants• discharge. 

The agreed journal entry further provided: 

"As a part of the settlement agreement, the [appellants] 

and [appellee] contemplate that the United States of 

America by and through the Farmers Home Administration 

("FmHA") shall pay the claim upon the guaranteed note as 

set forth in the settlement agreement and further that 

FmHA will issue a subsequent guarantee for all the 

remaining balance of the note as restructured, being more 

particularly set forth in the settlement agreement 

2 

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attached hereto. In the event that the FmHA ehall fail 

to pay the claim to be filed or fail to issue a 

subsequent guarantee on the balance of the obligation. 

rappelleeJ shall have the right to execute upon this 

judgment and take any other legal action as it may deem 

reasonable. appropriate and necessary to enforce its 

rights. (emphasis added). 

Ultimately, FmHA refused to guarantee the. loan due to laws 

governing its restructuring o.f debt. 

In the Bankruptcy Court, appellants sought relief from the 

January 9, 1990, judgment under the authority of Rule 60(b). 2 The 

granting of relief under Rule 60(b) is an extraordinary procedure. 

Cessna Finance corp, Y, Bielenberg Masonry contracting. Inc,, 715 

F.2d 1442, 1444 (10th Cir. 1983). In reviewing a denial of a Rule 

60(b) motion, this court is functioning in an appellate capacity 

and will overturn the Bankruptcy Court's decision only upon a 

showing of "manifest abuse of discretion." Caribou Four Corners. 

Inc. v, Truck Insurance Exchange, 443 F.2d 796, 799 (10th cir. 

1971); Greenwood Explorations v. Merit Gas & Oil corp., 837 F.2d 

423, 426 (10th Cir. 1988); V,T.A •• Inc, Y, Airco. Inc., 597 F.2d 

220, 223 (10th Cir. 1979). The question is not whether this court 

would have granted the requested relief, Thompson v. Kerr-McGee 

Refining Corp., 660 F.2d 1380, 1385 (10th Cir. 1981), cert. denied, 

2 Rule 60(b) of the Federal Rules of Civil Procedure provides in pertinent part: 

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; ••• (3) fraud (whether heretofore 

denominated intrinsic or extrinsic) ; • • • ( 5) the 

judgment has been satisfied, released, or discharged, or 

a prior judgment upon which it is ba·sed 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. 

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455 U.S. 1019 (1982), but rather, whether the 138.nkruptcy Court 4 . 

abused its discretion. This court will not substitute its judgment 

for that of the Bankruptcy Court as that court is in the better 

position to evaluate the facts of this case. Mid-West Underground 

storage. Inc. v. Porter, 111 F.2d 493, 502 (10th cir. 1983). 

In denying appellants' request, the Bankruptcy Court placed 

great emphasis on the above-quoted language from the agreed journal 

entry with its provision which contemplated FmHA's refusal to reguarantee the obligation. No mistake under the Rule 60 (b) (1) could 

be found in light of this provision. The Bankruptcy Court held 

that " [ f] or the (appellants) to now claim mistake through the 

inaction of a non-party and yet provide for that contingency in the 

judgment is a non-sequitur and insufficient grounds for vacating 

the judgment on file." Further, the Bankruptcy court held that the 

equitable grounds founded on Rule 60(b)(6) were not available to 

appellants under circumstances where "a free deliberate choice" was 

made by appellants as evidenced by the agreed journal entry. 

The Bankruptcy Court did not abuse its discretion in denying 

appellants' requested relief under Rule 60 (b) • The parties to this 

action mutually agreed to a consent judgment which settled the 

differences between them according to the specified terms of the 

judgment. Each side walked away from the bargaining table with 

something of value. It cannot be said that the Bankruptcy Court 

abused its discretion by not electing to alter the terms of a 

mutually bargained for settlement agreement. The agreement spoke 

for itself and the parties must live with the terms and 

repercussions of such agreement. • This consent judgment, unlike a 

default judgment, has the same force and effect for Rule 60(b) 

purposes as a judgment on the merits following trial. V.T.A. v, 

Airco, Inc,, 597 F.2d 220, 224 (10th Cir. 1979). Whether the 

agreement was a good one as far as appellants are concerned or 

whether they had legitimate and compelling defenses to the 

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underlying complaint are of no consequence to the ~termination of 

the propriety of awarding relief under Rule 60(b). Further, any 

contention that appellee breached its obligation under the 

agreement for entry of the agreed journal entry is not an 

appropriate basis for relief under Rule 60(b). Rather, such 

contention is, as found by the Bankruptcy Court, appropriately 

addressed by way of a separate action for breach of contract in the 

appropriate forum. 

Accordingly, this court finds that the Bankruptcy Court had 

substantial bases for denying appellants' requested relief under 

Rule 60(b) and that it did not abuse its discretion in so ruling. 

The Bankruptcy Court's order of May 1, 1990, is, in all respects, 

affirmed. 

XT XS BO ORDERED this$..- day of September, 1990, 

tJn 

5 

Frank H. Seay 

States District 

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