Opinion ID: 2595805
Heading Depth: 1
Heading Rank: 5

Heading: Lawyer fraud may constitute a fraud upon the court pursuant to NRCP 60(b)'s savings clause

Text: The question thus comes down to whether lawyer fraud in connection with a stipulated final judgment can qualify as a fraud upon the court under NRCP 60(b)'s savings clause. The district court found that Davidson committed a fraud upon the court when he signed and submitted a stipulated judgment for dismissal with prejudice to the court, which the court then signed and entered, terminating the Garners' claims. Fraud upon the court has been recognized for centuries as a basis for setting aside a final judgment, sometimes even years after it was entered. Hazel-Atlas Co. v. Hartford Co., 322 U.S. 238, 245, 64 S.Ct. 997, 88 L.Ed. 1250 (1944) (discussing the historic power of equity to set aside fraudulently begotten judgments and canvassing cases and treatises and vacating a judgment entered nine years earlier), overruled on other grounds by Standard Oil Co. of Cal. v. United States, 429 U.S. 17, 18, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976). It is, of course, true that in most instances society is best served by putting an end to litigation after a case has been tried and judgment entered. Id. at 244, 64 S.Ct. 997. For this reason, a final judgment, once entered, normally is not subject to challenge. However, the policy of repose yields when the court finds after a proper hearing that fraud has been practiced upon it, or the very temple of justice has been defiled. Universal Oil Co. v. Root Rfg. Co., 328 U.S. 575, 580, 66 S.Ct. 1176, 90 L.Ed. 1447 (1946). [A] case of fraud upon the court [calls] into question the very legitimacy of the judgment. Calderon v. Thompson, 523 U.S. 538, 557, 118 S.Ct. 1489, 140 L.Ed.2d 728 (1998). Put another way, [w]hen a judgment is shown to have been procured by fraud upon the court, no worthwhile interest is served in protecting the judgment. Restatement (Second) of Judgments § 70 cmt. b (1982). The problem lies in defining what constitutes fraud upon the court. Obviously, it cannot mean any conduct of a party or lawyer of which the court disapproves; among other evils, such a formulation would render meaningless the [time] limitation on motions under [Rule] 60(b)(3). Kupferman v. Consolidated Research & Mfg. Corp., 459 F.2d 1072, 1078 (2d Cir.1972) (Friendly, J.), cited with approval in Occhiuto, 97 Nev. at 146 n. 2, 625 P.2d at 570 n. 2, and Murphy, 103 Nev. at 186, 734 P.2d at 739. The most widely accepted definition, which we adopt, holds that the concept embrace[s] only that species of fraud which does, or attempts to, subvert the integrity of 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 ... and relief should be denied in the absence of such conduct. Demjanjuk v. Petrovsky, 10 F.3d 338, 352 (6th Cir.1994) (citing 7 Moore's Federal Practice § 60.33 (2d ed.1978)) (now at 12 Moore's Federal Practice, § 60.21[4][a] (3d ed.2009)); Kupferman, 459 F.2d at 1078 (noting the Second Circuit adopted Moore's formulation); In re Intermagnetics America, Inc., 926 F.2d 912, 916 (9th Cir.1991) (also adopting Moore's formulation); see Occhiuto, 97 Nev. at 146 n. 2, 625 P.2d at 570 n. 2 (citing this section of Moore's but without referring to the passage quoted in Demjanjuk ). An attorney is an officer of the court. Where a judgment is obtained by fraud perpetrated by an attorney acting as an officer of the court, the judgment may be attacked for fraud on the court. In re TriCran, Inc., 98 B.R. 609, 616 (Bankr.D.Mass. 1989). The Supreme Court has long recognized the damage that lawyer dishonesty can inflict on courts and litigants: [W]here an attorney fraudulently or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly employed corruptly sells out his client's interest to the other side,these, and similar cases which show that there has never been a real contest in the trial or hearing of the case, are reasons for which a new suit may be sustained to set aside and annul the former judgment or decree, and open the case for a new and a fair hearing. United States v. Throckmorton, 98 U.S. 61, 66, 25 L.Ed. 93 (1878). See Savage v. Salzmann, 88 Nev. 193, 195, 495 P.2d 367, 368 (1972) (citing Throckmorton and noting that fraud on the court involves situations where, as a result of the fraud, a party is kept away from the court by ... such conduct as prevents a real trial upon the issues involved). In addition to his duties to his clients, a lawyer also owes a duty of loyalty to the court, as an officer thereof, [that] demands integrity and honest dealing with the court. And when he departs from that standard in the conduct of a case he perpetrates fraud upon the court. Demjanjuk, 10 F.3d at 352 (citing 7 Moore's Federal Practice, supra, § 60.33) (now at 12 Moore's Federal Practice, § 60.21 [4][a]; see Restatement (Second) of Judgments § 70( l )(a) (stating the general rule that a judgment in a contested action may be avoided if the judgment ... [r]esulted from corruption of ... the attorney for the party against whom the judgment was rendered). Although not present in all fraud on the court cases, attorney involvement in the fraud is a signal characteristic of many. Demjanjuk, 10 F.3d at 352 (noting that [c]ases dealing with fraud on the court often turn on whether the improper actions are those of parties alone, or if the attorneys in the case are involved); Eastern Financing Corp. v. JSC Alchevsk Iron, 258 F.R.D. 76, 85 (S.D.N.Y.2008) (analyzing Hazel-Atlas, Kupferman, and H.K. Porter Co. in these terms). In this case, Davidson obtained Valley Hospital's lawyer's signature on the stipulated judgment and presented it to the district judge, who signed and entered it as the final judgment in the case, forever concluding the Garner family's wrongful death claims. In so doing, Davidson acted as an officer of the court and misrepresented a fraudulent settlement to the district court judge as genuine. Other courts, confronted with like facts, have found fraud on the court, egregious enough to justify vacating the judgment and allowing the claims to proceed. Southerland v. Irons, 628 F.2d 978, 980 (6th Cir.1980), aff'g, Southerland v. County of Oakland, 77 F.R.D. 727 (E.D.Mich.1978) (upholding order vacating stipulated judgment for fraud on the court, where the plaintiffs lawyer fraudulently misrepresented the status of his fee and responsibility for liens); Huffman v. Delacruz, 719 So.2d 385, 385-86 (Fla.Dist.Ct.App.1998) (upholding order vacating a stipulated dismissal for fraud on the court where the plaintiffs attorney signed the settlement stipulations without his client's permission and forged his client's signature on the settlement check, reprinting the passage from United States v. Throckmorton, 98 U.S. at 65-66, as the basis for its holding); Flowers v. Rigdon, 101 Ohio App.3d 172, 655 N.E.2d 235, 236 (1995) (upholding order vacating a stipulated judgment on the basis the plaintiff automobile accident victims' attorney perpetrated a fraud on the court by falsely informing defendants that he had authority to settle, by forging plaintiffs' signature on the entry of dismissal, release, and settlement check, and by keeping settlement proceeds for himself); see McKinney v. Boyle, 404 F.2d 632, 634 (9th Cir.1968) (reversing for evidentiary hearing in case alleging fraud by the plaintiffs attorney in cahoots with the plaintiff's wife to settle his case and keep the money while the plaintiff was in prison; decided under the catchall clause in Fed.R.Civ.P. 60(b)(6) (which Nevada has not adopted, so fraud on the court not expressly addressed)); General Med. P.C. v. Horizon/CMS Health Care Corp., ___ F.Supp.2d ___, No. 96-72624, 2009 WL 1447346, at  (E.D.Mich. May 21, 2009) (vacating a stipulated judgment under new Fed.R.Civ.P. 60(d)(3) for fraud on the court where the failure to disclose material facts resulted in [the] court placing its imprimatur on a consent judgment, the primary purpose of which was to ambush a nonparty).