NO. 84-392 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1985 

YARLENE J. SALWAY and PATRICIA ROESCH, 

Plaintiffs and Appellants. 

DR. MORTON ARKAVA, Social Work Dept., 

University of Montana; DR. ROBERT 

DEATON, Director, Continuing Education, 

Social Work Dept., UNIVERSITY OF 

MONTANA, 

Defendants and Respondents. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Missoula, 

The Honorable James E. Wheelis, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Meloy Law Firm; Peter M. Pleloy, Helena, Montana 

For Respondent: 

1,eRoy H. Schramm, [Jniversity Systems, Helena, Montana 

Submitted on Briefs: Jan. 10, 1985 

Decided: February 21, 1985 

', . , ,.* ..' f-;, ij Filed. /Y?j5 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Patricia. Roesch brings this appeal from an order of the 

District Court, Fourth Judicial. District, Missoula County. 

The order denied appellant's motion under Rule 60, M.R.Civ.P. 

to set aside a previous judgment against her in Missoula 

County. 

Appellant and her coplaintif f , Ma.rlene Salway , brought 

an action against the respondents herein alleging that they 

were wrongfully denied renewal of contracts with the 

University of Montana Social Work Department. Plaintiffs 

all-eged that they experienced harassment and intimidation 

based on sex or race that culminated in defendant's failure 

to renew their teachin.g contracts. The case was tried to the 

court and jud-gment was rendered on December 23, 1982. 

Plaintiff Salway prevailed, but Ms. Roesch was denied relief. 

Marlene Salway secured a judgment from the defendants based 

on race discrimination. She is not a party to this motion. 

In denying relief to Ms. Roesch, the court made the 

following findings: 

"FINDINGS OF -- FACT 

"19. In September 1977, the defendants hired the 

plaintiff Patricia Roesch as a faculty member in 

the Social Work Department and she continued to 

work for the defendants on a yearly contract basis 

until her 1978-1979 contract expired.. 

"20. The defendant terminated Ms. Roesch in 1979 

because there were not enough funds in 1979 to 

retain all the faculty members, and Ms. Roesch had 

been the last hired. 

"21.. Af ter the defendants terminated Ms. Roesch, 

they did not hire a replacement for her vacated 

position. 

"22. The plaintiffs in 1at.e 1978 or early 1979 

f j led complaints with Lynda Brown, the defendant's 

Equa.1 Employment Opportunity Officer, in which they 
alleged sexual d.iscrimir,ation in the Social Work 

Department. 

"24. The defendants did. not retaliate, discha-rge 

or discriminate again.st the plaintiffs because they 

filed a complaint with Lynda Brown. 

"25. The defendants did not discriminate against 

Ms. Salway or Ms. Roesch because of their sex in 

terminating their employment or refusing to grant 

tenure. 

"26. The defendants did comply with the 

requirements of M.C.A. 5 49-3-201 (1979) and they 

did not, during the period of the plaintiffs' 

employment, 'underutilize minority group persons.' 

"CONCLUSIONS OF -- LAW 

"8. The defendants did not unlawfully discriminate 

against the plaintiff Patricia Roesch on the basis 

of sex. The plaintiff Roesch has failed to make a 

prime facie case for unlawful employment 

discrimination based on disparate treatment. 

Specifically, Ms. Roesch failed to prove the 

position for which she applied remained open or was 

filled with a non-protected class employee after 

the defendants terminated her. The preponderance 

of the credible evidence established that Ms. 

Roesch was not retained because the defendants 

could not fund the position. The defendants were 

within their rights to terminate Bls. Roesch, a 

non-tenured faculty member, without cause if they 

did so for non-discriminatory reasons. Board of 

Trustees of Billings v. State (1979), - Mont . - , 664 P.2d 770. 

"9. The defendants did not unlawfully discriminate 

against the plaintiff Patricia Roesch because she 

had sought the assistance of 1,ynda Brown, the EEO 

officer for the defendants, in dealing with what 

she perceived as unfair treatment by the 

defendants; the plaintiff had complained to Lynda 

Brown about sex discrimination in the department. 

Applying the Strong test set out in Conclusion of 

Law No. 4 to Ms. Roesch's allegations, this court 

must conclude that the preponderance of the 

credible evidence establishes that the defendants 

terminated Ms. Roesch because they were unable to 

fund her position and not because she complained to 

1,ynda Brown. '' 

AppelJ.ant contends the adverse findings of the District 

Court were based on the fact that the University established 

in court that it lacked funds to continue her position. Dr. 

grkava, head of the Social Work Department at the University 

and respondent herein, testified. at trial that there were no 
funds available to renew fils. Roesch's contract. Ke is also 

personall-y named as a defendant in this case and allegedly 

responsible for the discrimination. 

On February 2, 1984, the United States Department of 

Justice filed a criminal information charging that Dr. Arkava 

misused federal funds granted to the University. Dr. Arkava 

was accused of funneling grant monies into his own pocket. 

Arkava pled guilty to the charges. It is undisputed that the 

amount of money diverted by Dr. Arkava during the time 

appellant was out of work, from 1979 to 1982, far exceeded 

appell.antls salary. 

After Dr. Arkava pled guilty to the criminal 

information, Roesch filed a motion under Rule 60, M.R.Civ.P 

to vacate the judgment against her in this case. 

The District Court denied the motion stating that the 

time to file a Rule 60 (b) (3) motton had passed; that the 

fraud alleged by appellant was intrinsic fraud consisting of 

false testimony so the motion must be denied under the 

authority of Pilati v. Pilati (1979), 181 Mont. 182, 592 P.2d 

1374. This appeal followed. 

Appellant contends that respondents were able to 

interpose the lack of funds defense and defeat her claim of 

discrimination only because of the fraudulent conduct and 

misrepresentations at trial of Dr. Arkava who was an aaent of 

the University of Montana. Appellant states that because Dr. 

Arkava had misappropriated department money that could have 

been used to fund her position there was no legitimate 

financial reason for not renewing her contract. The 

testimony at trial that funds were not available was false or 

at least misleading since Dr. Arkava continued to divert 

funds after appellant's contract lapsed. Appellant contends 
the fraud perpetrated by the respondents in this case whether 

denominated as intrinsic or extrinsic fraud is sufficient to 

set aside the judgment. We disagree. 

The original judgment was entered on December 23, 1982; 

service of notice of entry of judgment was made on December 

27, 1982. A party is allowed only 60 days after service of 

notice of entry of judgment to file a motion for relief from 

judgment under Rules 60 (b) (I), b(2), or b(3) M.R.Civ.P. Rule 

60 (b) (2) covers evidence that could not have been discovered 

in time to move for a new trial under Rule 59(b) and Rule 

60 (b) (3) provides for relief from a final judgment based. on 

fraud, (whether heretofore denominated intrinsic or 

extrinsic) misrepresentation, or other misconduct of an 

adverse party. These grounds for relief might apply to the 

instant case but are time-ba.rred because Roesch's motion was 

not filed un.til March 22, 1984, more than a year after 

judgment. 

Rule 60 (b) , M. R.Civ. P. contains a residual clause which 

provides : 

". . . This rule does not limit the power of a 

court to entertain an independent a-ction to relieve 

a party from judgment, order, or proceeding, or to 

grsnt relief to a defendant, not actually 

personally notified as may be required by law, or 

to set aside a judgment for fraud upon the court. " 

There is no time limitation imposed under the Rule on a 

motion for relief under the residual clause. The residual 

clause recognizes the inherent power of a court of equity to 

set aside its judgments. This power predates the Rules of 

Civil Procedure. We construe a motion brought under the 

resic?ual clause of Rule 60(b) to be an independent action 

within the meaning of the Rule and the district courts may 

consider the substantive grounds contained in such a motion 
without requiring a separate action to be filed.. Other 

grounds for modification of a judgment available under Rule 

60 could then be joined in the same motion. Such a practice 

would simplify the procedure for obtaining relief under Rule 

60 and would be consistent with the mandate of Rule 1, 

M.R.Civ.P. which states that these rules shall be construed 

to secure the just, speedy, and inexpensive determination of 

every action. 

The residual clause of Rule 60 by its terms sets forth 

three separate avenues to obtain relief from judgment. 

Courts of general jurisd-iction have from the beginning 

possessed the power to entertain equitable actions to set 

aside judgments. Perhaps the chief, although certainly not 

the exclusive, basis for the independent action is fraud; 

though there is some authority that intrinsic fraud will 

support such an action the general view is t-hat fraud must be 

extrinsic. See 7 Moore's Federal Practice 5 60.33, 60-350. 

Montana has typically adhered to the general rule. Lance v. 

Lance (1981), 195 Mont. 176, 635 P.2d 571; Miller v. Killer 

(Mont. 1980), 616 P.2d 313, 37 St..Rep. 1523; Selway v. Burns 

(1967), 150 Mont 1, 429 P.2d 640; Minter v. Minter (1936), 

103 Mont. 219, 62 P.2d 233. 

Extrinsic fraud is collateral to the matters tried by 

the court, and not to fraud in the matters on which the 

judgment was rendered. Hall v. Hall (1924), 70 Mont. 460, 

467, 226 P. 469, 471. Pilati, 181 Mont. at 188, 592 P.2d at 

1377. Extrinsic fraud has also been defined as some 

intentional act or conduct by which the prevailing party has 

prevented the unsuccessful party from having a fair 

submission of the controversy. Pilati, 181 Mont. at 193, 592 

P.2d at 1380. We think the above criteria are proper 
guidelines to follow in det-ernining whether an equitable 

action under Rule 60 to set aside a judgment, proceeding or 

order will Lie. 

Fraud contemplated in the residual clause is a narrower 

species of fraud than the type of fraud referred to in Rule 

60b (3) . To hold that the type of fraud denominated in the 

residual clause of Rule 60(b) is equivalent to that 

envisioned by subsection b(3) would render the time 

limitations imposed in Rule 60 meaningless. 

The second ground for relief under the residual clause 

arises when the defendant has not been personally notified as 

may be required by law. This basis for relief is not 

relevant to the case at bar. 

k third and separate ground for relief under the 

residual clause is the power of a court to set aside a 

judgment for fraud upon the court. The power of the court to 

set aside a judgment on the basis of fraud upon the court is 

inherent and independent of statute, and the timeliness of 

the proceedings to set aside a prior judgment as obtained is 

not subject to the 60-day time limitation in Rule 60(h), 

M.R.Civ.P., but must ultimately depend upon equitable 

principles and the sound discretion of the Court. Pilati, 

181 Mont. at 190-91, 592 P.2d at 1379 quoting In Re Ead 

Yellow Hair (1973), 162 Mont. 107, 111, 509 P.2d 9, 12. 

Fraud upon the court should, we believe, embrace only 

that species of fraud which does or attempts to subvert the 

integrity of the court itself, or is fraud perpetrated by 

officers of the court so that the judicial machinery cannot 

perform in the usual manner in its impartial task of 

adjudicatinff cases that are presented for adjudication. 

Re]-ief should be denied in the absence of such conduct. 7 
Moore's Federal Practice, 60.33 at 60-360; See Kerwit 

Medical Products, Inc. v. N & H Instrument, Inc. (5th Cir. 

1980), 616 F.2d 833. Fraud which attempts to defile the 

court has been construed to include only the most egregious 

conduct, such as bribery of a judge or member of the jury; 

the fabrication of evidence in which an attorney has been 

implicated; or the employment of counsel to influence the 

court. Hazel Atlas Class Co. v. Hartford Empi-re Co. (1944), 

322 U.S. 238, 64 S.Ct. 997, 88 L.Ed 1250; Rozier v. Ford 

Motor Co. (5th Cir. 1978), 573 F.2d 1332; Moore's, at 60-357. 

Fraud inter parties without more is not fraud upon the court 

and should be left to a motion under Rule 60b(3) or to the 

independent action. Moore's, at 60-361-. 

The overwhelming majority of courts including Montana 

hold that perjury at trial does not constitute fraud upon the 

court. See Lance v. Lance (1981), 195 Mont. 176, 635 P.2d 

571; Serzysko v. Chase Fanhattan Bank (2d Cir. 1972), 461 

F.2d 699 cert.denied (1972), 403 U.S. 883, 93 S.Ct. 173, 34 

L.Ed.2d 139. Perjury is intrinsic fraud upon a party, not 

fraud upon the court. 

In this case appellant alleges two instances of fraud. 

First, there are the fraudulent activities of Dr. Arkava 

which deprived the Social Work Department and the university 

of substantial funds. Second, there is the in-court 

testimony by Dr. Arkava that Led the court to believe there 

were no funds available. 

The first instance of fraud does not constitute fraud 

upon the court. It was not aimed at subverting the integrity 

of the trial court or interfering with the judicial 

machinery. 
Illegally appropriating the grant money was an activity 

extrinsic or collateral to the court pr~ceedings involving 

Ms. Roesch. Extrinsic fraud, however, must directly and 

materially affect the outcome of the case. The fraud 

practiced by Dr. Arkava is too remote to plaintiff's cause of 

action. The fraud practiced by Dr. Arkava affected the funds 

available to the Department of Social Work but it did not 

directly affect the appellant's cause of action which was 

predicated on discrimination and retaliation. Any employee 

in appellant's postion, the contracting employee with the 

least. amount of tenure, would. not have been retaine? 

regardless of sex. A teacher who was not a member of a 

"suspect class" would have likewise been terminated. We find 

it significant that the appellant.'^ teaching contract was not 

awarded to anyone else. The fraudulent activity practiced by 

Dr. Arkava in misappropriating government funds, although 

reprehensible, is not the type of fraud that furnishes 

grounds on which to vacate the judgment in this case. 

We have stated before that false statements made during 

the course of trial do not constitute sufficient grounds to 

vacate a judgment under the residual. clause in Rule 60 (b) , 

M.R.Civ.P. In the Marriage of Woolsey (Mont. 1984), - P.2d 

-- , 41 St.Rep. 2349, we reiterated our statement in Lance v. 

Lance (1981), 195 Mont. 176, 635 P.2d 571: 

"Intrinsic fraud upon the court, that is 

representatious or concealments made during court 

proceedings assuming they are false or fraud-ulent 

are nevertheless not grounds for reopening a decree 

of judgment." 

We find that the allegations of fraud relied upon. by 

appellant. fall short of what is legally required to vacate a 

final judgment. 

Af f irmed. 
We Concur: 

J 

/4*7L7X. Chief Justice